August 20th, 2008

FTC Commissioner Tackles Ads for Kids

By Ross Kenneth Urken
The Wall Street Journal

Official Leads Charge For Food, Drink Firms To Regulate Themselves

Jon Leibowitz has no shortage of critics.

The Federal Trade Commission commissioner is at the center of the agency’s scrutiny of marketing to children by food and beverage companies. He was particularly outspoken in a recent FTC study on the issue, urging marketers to do more to regulate themselves and saying that if they don’t, the FTC could step in and do it for them.

That has made him something of a lightning rod for people on both sides of the issue. Groups such as the Campaign for a Commercial-Free Childhood say his call for more self-regulation is too passive, while food and beverage companies argue that Mr. Leibowitz is already trampling on their First Amendment right to advertise as they choose.

Even Mr. Leibowitz’s daughters, ages 11 and 13 years old, think their dad may be overreaching. “They think that we’re right to try to encourage companies to focus on marketing healthier foods, but they also believe they have the right to eat whatever they want,” he says. One of their peeves is when he buys lower-calorie versions of their favorite sugary breakfast cereals.

Mr. Leibowitz, 50, who has taken a stand against what he sees as excessive advertising for soft drinks and fatty foods, says he is far from perfect when it comes to his own eating habits. He admits to a weakness for pizza, including a current pepperoni kick, and stops at fast-food restaurants when he is on the road.

An FTC commissioner since 2004, he has had a long career in public service, serving as chief counsel to various Senate subcommittees and as counsel to former Sen. Paul Simon (D., Ill.) and Sen. Herb Kohl (D., Wis.). As vice president for congressional affairs for the Motion Picture Association of America from 2000 to 2004, he became interested in product placement and promotional tie-ins between the movie and food and beverage businesses—a practice he is now trying to rein in.

Below are some excerpts from a conversation with Mr. Leibowitz:

The Wall Street Journal: You have articulated a harder line on the issue of food and beverage marketing to children than your FTC colleagues. As long as you’re outnumbered on the commission, do marketers need to take your comments seriously?

Jon Leibowitz: I don’t think I’m outnumbered on the commission. We are a very collegial, consensus-driven commission, and we all voted in favor of this report. I think I might have been a little sharper in my criticism, and I certainly believe that if companies don’t do the right thing, the failure of self-regulation may make the next Congress and the next president more inclined toward government regulation.

WSJ: The FTC is calling on food and beverage marketers to do more to regulate themselves. How do you envision this working, and are there any precedents in other industries for effective self-regulation?

Mr. Leibowitz: The answer is yes. For example, in the alcohol area, companies set voluntary standards about the percentage of people under 21 they will advertise to, and if there’s a percentage over 30% [of people over the age of 21] they won’t do advertising. In the entertainment industry, some of the studios and some of the videogame manufacturers and even the music industry have either stickered products or imposed some restrictions on themselves. We’ve been doing entertainment-industry marketing reports going back to 2000, and I think they’ve been very effective.

WSJ: There are countries that ban food and beverage marketing to kids altogether. If you had your way, what would companies like Kraft, Kellogg and Coke be able to do—and not do—when it comes to marketing to children?

Mr. Leibowitz: I’d like to think that the approach we’re taking at the FTC is in some ways a middle ground. It’s not the government-mandated advertising restrictions that some foreign nations have adopted. On the other hand, it’s not the laissez-faire approach that some industries once supported. What we’d like to see companies doing is real self-regulation—adopting meaningful, nutrition-based standards for marketing their products to children and applying those restrictions to all forms of marketing.

Another thing I’d like to see is the criteria that some companies use to determine what qualifies as a healthy dietary choice. If the standards are lax, and only a handful of TV shows and Internet sites are covered, then the self-regulatory efforts are not going to be terribly effective.

WSJ: The FTC report mentions soft-drink companies—are they a big part of the marketing problem?

Mr. Leibowitz: On average, soft-drink companies spent $20 per American teenager in 2006; that’s an awful lot of money for a particular product. The soft-drink companies have made a commitment in the context of the schools. If they could head down the road of making a similar commitment outside the context of the schools, that would be a step forward.

WSJ: The FTC has focused on food and beverage marketing in traditional media. How much of this advertising spending goes to nontraditional outlets, from online games to in-store ads?

Mr. Leibowitz: One of the surprises in the [recent FTC] report was the prevalence of integrated advertising campaigns. They’re sophisticated, they’re multi-platform, they’re cross-promotional. It’s very different than what you see on, say, “Mad Men,” and it’s a whole virtual ecosystem, so you can see an ad on TV, you buy the product, you go on the Internet, you enter a code, you collect points, you win a prize, the prize is a T-shirt, the T-shirt advertises the product. So we are seeing a fair amount of cross-promotional marketing. We only found $77 million in Internet advertising, but our guess is that it’s very efficient advertising, because it’s targeted.

WSJ: What are some of the characters, tie-ins, etc., that have been the most successful as marketing vehicles to kids?

Mr. Leibowitz: I think it’s sort of self-evident the ones that are the most popular. I do know some of the companies like Viacom and Disney have put restrictions on what types of marketing their popular characters will do, and they’ll only market, for example, healthy or healthier products. I think it’s about the ubiquity of this character usage. We have a whole index in our report of character cross-licensing, this is just 2006, and there are dozens of movies and TV shows.

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