April 25, 2006

Legislative Activity

April 25, 2006

To: AAF California Advertising Clubs

From: Clark Rector, Senior Vice President – State Government Affairs

Re: Anti-Advertising legislation

Earlier this year, California Senator Carole Migden introduced Senate Bill 1180, which would have prohibited the placement of alcoholic beverage advertising in media with an expected youth audience of 15 percent or more.

An initial hearing before the California Senate Government Organization Committee was scheduled for April 4 but subsequently delayed until April 25.

In late March, the AAF alerted our California membership to the threat of the bill and urged the industry to contact members of the committee and ask them to oppose the bill. Prior to the April 25 hearing Senator Migden amended the bill to remove the advertising restrictions. They were replaced with a requirement that the state secretary of Health and Human Services and Department of Alcoholic Beverage Control issue a report summarizing recent information regarding recent research and other information regarding alcoholic beverage use by underage youth. The amended bill passed the committee by a 7-1-1 vote on April 25.

We have reason to believe that Senator Migden amended her bill because the original version lacked the support to pass. We also believe a major reason the bill lacked support was because of the large and vocal outcry from the advertising and alcoholic beverage industries.

Thanks must go to Jennifer Castlberry of Runyon Saltzman & Einhorn, Inc. and president of the Sacramento Advertising Club. Jennifer was prepared to testify against the legislation at the April 25 hearing before the bill was amended. Her draft testimony is pasted below and outlines the advertising industry's objections to the bill.

Do not hesitate to contact me at (202) 898-0089 or crector@aaf.org if you have any questions or comments.

Good morning, my name is Jennifer Castleberry. I work for Runyon, Saltzman & Einhorn here in Sacramento. I am also president of the Sacramento Advertising Club and am testifying on behalf of our national organization, the American Advertising Federation and the over 2,500 members of 13 AAF advertising federations across the state.

The advertising industry is strongly opposed to Senate Bill 1180, and we urge you to reject it. While we certainly support the goal of reducing underage drinking, this bill would not further that goal. It would, however, violate the free speech protections for advertising and restrict the flow of information to lawful consumers.

I know you have received extensive legal analyses conclusively showing that the proposal is unconstitutional. I am not a legal scholar so in the interest of time I will just reiterate that the U.S. Supreme Court has ruled that truthful advertising of legal products is protected by the First Amendment. Potential governmental regulations of advertising should only be a last resort when all other options have failed. They also must pass a strict test of efficacy. S.B. 1180 fails that test.

The Court has also ruled that the government cannot ban speech to adults in an attempt to protect children. To quote the Court, the level of public discourse cannot be reduced to that of the sandbox.

Even if the legislation could pass the constitutional test, it would do nothing to help reduce the consumption of alcohol by minors. No credible research exists that points to advertising as a significant causative factor for underage drinking. Since advertising does not cause the problem, it only stands to reason that reducing advertising will not solve the problem.

The legislation prohibits advertising of alcoholic beverages targeted to children. However, the definition of "targeting" is so vague as to be nearly worthless in providing guidance in the creation of an advertisement. Many production techniques and designs meant to appeal to an adult audience might also have some appeal to certain youth. The legislation gives no specific guidance as to what these techniques may be. This standard would seem to contradict language in the statute stating that "nothing in this section shall be deemed to restrict or prohibit any advertisement of alcoholic beverages to those persons of legal drinking age."

As an advertising professional, I am disturbed by the precedent in the bill of holding an advertiser legally liable for targeting a specific population based upon audience measurement data. While the field of audience measurement has made—and is continuing to make—great strides in recent years, it is still falls short of the precision that should be necessary for legal liability.

When an advertiser, or its agency, buys media time and space, it does so based upon anticipated audience demographics. It is only after the fact that we learn whether the expected audience was delivered. Under S.B. 1180 an advertiser could make a media buy that it "reasonably believes" would comply with the 15 percent standard as required in the bill. However, "reasonably believes" is a vague standard that could still result in a violation if the actual audience delivered differed in composition from what was delivered in the past.

I believe the bill is unnecessary. The alcoholic beverage industry voluntarily limits advertising to media where the audience is expected to be at least 70 percent 21 or older. The 70 percent figure was adopted at the suggestion of the Federal Trade Commission. The FTC has spoken positively about the alcoholic beverage industry's self-regulatory advertising guidelines and has recognized that "well-constructed industry self-regulatory efforts offer many advantages over government regulation" because of greater speed and flexibility and decreased constitutional concerns.

Finally, I believe that the alcoholic beverage industry deserves acknowledgement for its many efforts-through the Century Council, Beer Institute and individual company programs-to combat underage drinking, impaired driving and promote responsible consumption. Few, if any, industries devote a similar amount of resources to public service initiatives.

I thank you for consideration of the advertising industry's views and respectfully urge you to reject Senate Bill 1180.