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9 PROFESSOR TIMOTHY P. MEYER UNIVERSITY OF WISCONSIN, GREEN BAY • My name is Dr. Timothy P. Meyer (Ph.D., 1970, Ohio University). I am the ! • Ben J. and Joyce Rosenberg Professor, the University of Wisconsin, Green Bay. I am Chair of the Information Sciences program and teach courses in communication, mass media, advertising and consumer behavior. For the past 28 years, I have taught and conducted research on the effects of advertising. One of my areas of specialty is the impact of advertising on children and adolescents. Many of my research papers have won awards at various conferences and I have published nearly 100 books, refereed book chapters, and refereed articles in scholarly journals. Leading journals in which I have published include: Journal of Advertising, Journal of Advertising Research, Journal of Marketin~,Y, Marketing Research, Journal of Business Communication, Business Communication QuarterlX, and Journal of Broadcasting & Electronic Media. I have served as a referee for many of these same journals and have reviewed research, research proposals, and grant proposals for organizations including the American Academy of Advertising, Association for Consumer Research, and the International Communication Association. I have reviewed the Food and Drug Administration ("FDA") plan to address the issue of underage smoking by banning and restricting cigarette advertising, marketing, and promotion. For all of the reasons set out below in my comments, FDA's proposal is unwarranted, unjustified, unnecessary -- and most importantly -- will not be effective in reducing underage smoking. In fact, as discussed in greater detail below, FDA's

• • • proposed ban on color and imagery in cigarette advertising is tantamount to a ban on cigarette advertising, the premises upon which the proposal rests are inherently flawed, and the evidence relied on is incomplete, inaccurate and scientifically invalid. I. A Ban On Color And Imagery In Cigarette Advertising Is Tantamount To A Ban On Cigarette Advertising • • Color and imagery in advertising for cigarettes is important -- to adult consumers as well as to individual cigarette companies -- and does not influence non-smokers, young or old, to begin smoking. By restricting the use of color and imagery in cigarette advertising, FDA is effectively destroying the primary means by which individual cigarette companies can develop brand identities, differentiate brands, and communicate important brand information to adult consumers -- which is precisely the role that advertising plays for mature products such as cigarettes. Accordingly, FDA's proposed restriction on color and imagery in cigarette advertising is, as a practical matter, tantamount to an outright ban on cigarette advertising. As FDA recognizes, and as discussed below, brand advertising -- i.e., advertising which includes the color and imagery that are associated with the brand and all of the qualities and attributes that the brand represents, is an important type of communication between a company and its customers. Throughout the record, FDA concedes that any 2

0 • • 0 • regulation should preserve for adults (if possible) the informational aspects of contemporary cigarette advertising -- including color and imagery.' FDA however, has demonstrated a fundamental lack of understanding about brand advertising and the marketplace -- and about consumer behavior and consumer decision-making generally. FDA is "iconophobic" when it comes to imagery in cigarette advertising -- it has expressed an irrational fear of images in cigarette advertising -- a fear that is unsupported by the record and unsupported by history, research in the field, or common sense.2 Set out below is a brief look at the history of brand advertising, the research in the field -- and common sense. A. Modern Advertisiniz Is Brand Advertising -- A Brief History In Victorian times, products were just commodities. They were undifferentiated goods. Very few products were branded. Salt was galt, not Morton's from the familiar 1 For example, FDA states, "FDA believes that advertising in publications that are read primarily by adults should be allowed to use imagery and color..." 60 Fed. Reg. 41335; "[T]he proposed rule would not affect advertising in publications with primarily adult readership -- imagery and color would continue to be permitted in such publications." 60 Fed. Reg. 41315; "Advertising in any publication that is read primarily by adults would be permitted to continue to use imagery and color." 60 Fed. Reg. 41328. 2 For example, FDA itself cannot specify the colors or images to which it objects. For example, FDA states, "it is difficult to draw the line between advertising that should be restricted or regulated and advertising that does not pose an unreasonable risk of influencing young people..." 60 Fed. Reg. 41335; 'Tobacco advertising contains an unlimited variety of claims that make categorization difficult." 60 Fed. Reg. 41340. 3

• • • • • • blue box. In the late nineteenth century, if you went into a general store to buy soap, the storekeeper would cut a slice off a bar. No one knew or cared about the brand name. There were very few brand names at all. Food was purchased in bulk. Beers were just beer, coffee was just coffee. Most things we now think of as consumer goods were just nameless, undifferentiated commodities. Around the turn of this century, as the Victorian era gave way to what scholars have called the "consumer age" -- "consumer culture" fueled by advances in industry and technology became the norm. Whereas, prior to the 1950's demand for goods had generally outstripped industries' ability to supply goods, there was now an abundance of products and a proliferation of brands competing with each other in the marketplace. From the beginning of the "consumer age," marketers used "brand" advertising to attempt to break through the clutter in the marketplace, to differentiate their brand from the vast array of other brands, to develop an "image" for the brand that would serve as a cue and • a reminder to consumers of the quality and attributes associated with that brand of the product, to encourage loyalty among consumers to the brand, and to assist consumers by way of color, imagery and packaging in locating and selecting the brand from among • competing brands, as well as to achieve other, like objectives. ~ Today, brand advertising is the way marketing is done. In fact, today we brand everything from plant food (Miracle Gro) and water (Perrier, San Pelegrino) to toilet ~p tissue (Charmin) and lemons (Sunkist). In the case of mature products, differentiating Cst 1~ .© ~ 4 ~ ~

* • • • • your brand is about all you can do. The reasons for this make sense. When a product is established or "mature," consumers already have information about that product category from a variety of sources -- from their life's experience, what they have learned about the product category from family, friends, peers, formal education, informal experience, and observation. It defies common sense to think that consumers consult advertising for mature products such as cars, detergent, and tobacco for information about what the product category does or how it operates. For a mature product, this type of information has already been "mediated" into the culture -- about the only thing really left in advertising that is of interest to a consumer at this stage in a product lifecycle is brand information -- information about the attributes of that particular brand of the product. That is what brand advertising is all about -- differentiation -- nothing more, nothing less. There is no evidence that brand advertising does anything other than differentiate the brand. (See Wilcox 1991 for a review.) Cigarette brands, like brands for many other products and services, need to advertise regularly and widely, repeating their messages many times over. This requirement characterizes the process because the channels available to advertisers trying to reach those most likely to buy their brand are recognized as inefficient (Star, 1989). And this, in turn, contributes to the advertising clutter further adding to the obstacles facing marketers. Cigarettes have of course been around for decades. Information about this . ~ © C3t product category has already been "mediated" into society - information about all aspects .,~ © ~ . W 5 ~'

! • • s • of smoking has been communicated and repeated at least throughout this century by government authorities, educators, family, friends, peers, health care professionals, etc. The only salient commercial information remaining for consumers regarding the product is the brand information -- the brand image, the attributes of the brand and the quality that has become associated with the brand. Cigarette manufacturers -- with over 300 different brands of cigarettes on the market -- rely on the color and imagery in brand advertising to differentiate their brands in a highly competitive marketplace, to compete for their customers' loyalty, and to try to encourage their competitors' customers to switch brands. FDA acknowledges that the cigarette companies have been effective in developing brand loyalty among consumers: "Brand loyalty is seen in many consumer products (such as toothpaste, coffee and automobiles) but is particularly strong for tobacco products." 60 Fed. Reg. 41330. FDA suggests, however, that because there is brand loyalty for tobacco products, the cigarette companies do not need to advertise in order to promote brand loyalty. ("Furthermore, brand loyalty runs higher for cigarettes than for any other product. Thus, significant expenditures would not appear to be necessary to retain loyal consumers and would appear to be excessive and wasteful if they are expended merely to get people to switch brands.") 60 Fed. Reg. 41336. This conclusion of FDA is wholly inconsistent and at odds with research on brand preferences in mature markets. Contemporary research on advertising's role in

• • • • maintaining brand image and brand equity illuminates several important ways in which advertising functions for mature products with consumers in a highly competitive consumer environment. These studies focus on different dimensions that are all applicable to cigarette advertising and brand image/brand equity. Deighton, Henderson, and Heslin (1994) studied advertising's effects on brand switching and repeat purchases. The implications of this research for cigarettes, where repeat purchases are frequent, is that it is essential to continue to advertise to maintain brand loyalty or to induce switching by advertising on a steady, consistent basis. If the advertiser's message is not constantly out there reaching their current customers and potential brand switchers, current and future business may be lost in the form of declines in market shares and the inability to increase share of market. In another recent study, D'Souza and Rao (1995) focused on how more frequent repetition of an advertisement as compared to the competition can affect brand preference in mature markets. They reported "strorig evidence that effects of advertising repetition can show up even in mature product categories" and that advertising is vital for "mature product categories ... to maintain the accessibility of brand associations in the consumer's product-brand knowledge structure." Ibid. 39-40. The implication is that cigarette brands must continue to advertise their brands to reinforce their brand image and message with their customers. 7

• B. Color and Imagery Are Essential To Brand Advertisin~ 1 i • • • One of the most important topics in advertising and marketing in the 1990's is the value and importance -- and the need to manage -- brand equity. Brand equity refers to the set of assets and liabilities linked to a brand, its name and symbol, that add or subtract from the value provided by the brand to its firm and/or its customers (Aaker 1991). The economic impact of brand equity can be seen in the purchase price paid for acquiring companies with well known and established names and symbols.3 The first step in developing brand equity is to establish and maintain a unique identity for a brand. Aaker defines a brand as, "a distinguishing name and/or symbol (such as a logo, trademark, or package design) intended to identify the goods or services of either one seller or a group of sellers, and to differentiate those goods or services from Differentiation via branding contributes to a brand having inelastic demand. Elasticity is defined as .s/.p: where s is sales, and p is price. The seller of goods or services wants to be able to have sales be relatively unaffected by changes in price, where demand stays the same even when price increases. This desirable condition is known as • inelastic demand. Achieving inelastic demand is every marketer's goal. Demand elasticity is largely determined by the number of perceived acceptable substitutes. A brand which has no perceived acceptable substitutes, thus has complete brand loyalty and inelastic demand. It is differentiation through advertising that creates demand inelasticity. In pure economic terms, sellers and their advertisers want the most inelastic • demand for their products. They want to be able to charge a premium price and suffer no resultant loss in sales. This is fundamental capitalism, which branding facilitates. Brands, and brand imagery, make it possible for Bayer aspirin (which is, by law, just aspirin) to sell for three and four times the price of generic aspirin (also, by law, just ~ aspirin). Demand for Bayer aspirin is thus more inelastic, as a result of the power of ~ branding. ~j • a ~ 8 0

i! • • • • • • those of competitors" (Aaker 1991: p.7). With the number of brands proliferating in the marketplace, it is particularly important for a brand to find a way to stand out and be recognized. Brand images are created using, for example, distinctive colors, symbols and imagery and even packaging to associate with the brand. The establishment and maintenance of brand image costs millions upon millions of dollars, and takes years and years to establish. This is reflected in the history of many national advertisers, e.g. Campbell's, Coke, Ivory, etc. as well as in the thousands of advertising failures, e.g. the Edsel, "New" Coke, etc. This is particularly true in a cluttered and highly competitive advertising environment, such as the one that exists today. The ability to use color in brand advertising is essential. Examples of the use of color to establish brand image are numerous. For example, among brands of photographic film, the gold color of Kodak and the green of Fuji are highly recognizable and clearly associated with these companies. (Certainly FDA does not really believe that Kodak and Fuji could effectively compete against each other if forced to use a black and white text-only format.) Similarly, the red used by Coca-Cola has become a recognized symbol around the world, as has the ,"Big Blue" IBM symbol. When people encounter these shades of color, this stimuli alone can help trigger recall of the related brand and this serves as an aid to brand recall for these companies. 9

• • • Symbols and imagery are also essential in creating a distinct and highly recognizable identity for a brand. Effective symbols used in advertising can include inanimate objects and shapes (Transmerica pyramid, Travelers umbrella, Prudential - Rock of Gibraltar); animated characters (Jolly Green Giant; Mr. Clean; Pillsbury Doughboy; Michelin Man; Energizer Bunny) or people (Colonel Sanders; Mr. Whipple; Betty Crocker; the Maytag repairman). Each of these symbols has allowed advertising for these products to create strong brand awareness and identity. Packaging can also serve as an important element of brand equity. Brands such as Federal Express, Morton's Salt, Leggs pantyhose, Tide, Brillo, Campbell's Soup, Absolut Vodka and Perrier have developed highly distinctive packaging that aids consumers in identifying and remembering the brand. Since consumers are better able to recall and recognize visual symbols (Aaker 1991), distinctive packaging prominently shown in ads can be particularly helpful to consumers in quickly identifying and finding desired brands in the cluttered retail environment. I Brand image development and maintenance is largely dependent upon advertising and promotion -- advertising and promotion are at the core of the image process. And, since brand image in turn drives brand equity, it is vital to the economic value of the brand and is a key link to the company's return on its investment in the brand. If the opportunity to advertise is restricted or eliminated, so is the opportunity to maintain ~ brand image and brand equity. This limitation on the advertiser's ability to build brand 4t) ~ . a ~. 10 W

equity is likely to harm both the advertisers and the public. Brand advertising attempts to differentiate the brand from other brands, attempts to break through the clutter in today's cluttered commercial information environment, and attempts to instill in consumers loyalty to the brand, and helps consumers efficiently locate the desired brand. • • Developing brand identity through the use of unique symbols, packaging and color aids both consumers and manufacturers in several ways. From the consumer viewpoint, the ability to quickly and easily recognize desired brands with the desired attributes allows consumers to save time in shopping for desired products, provides a reminder cue about preferred brands, and provides a mnemonic device to aid in brand recall and information processing of relevant brand information (Hine, 1995). In the cluttered environment of today's media, many people do not stop to read ads. Instead, they very briefly process the elements as they casually flip the pages of a magazine. Well known colors, packages and visuals 'are more likely to be noticed and recognized by consumers who use the brand being advertised in this type of rapid processing. For current users this provides a reminder for this brand and helps to maintain brand loyalty. Cigarette advertising is brand advertising -- nothing more, nothing less. Color and imagery are essential to brand advertising. FDA's proposal to restrict and ban imagery and color in cigarette advertising is tantamount to an outright ban on advertising for 11

0 • • • • • • cigarettes. Given the total absence of any evidence that color, visual imagery or any other brand attributes in cigarette brand advertising play any role in stimulating primary demand for the product category (as opposed to demand for specific brands among users of the product category), FDA's proposed restrictions on cigarette advertising will be a burden on consumers by reducing consumers' access to important information, and of course, a burden on the cigarette manufacturers. II. FDA's Proposal To Ban Imagery And Color In Outdoor Advertising For Cigarettes Is Unsupported By The Record And Is Tantamount To A Ban On Outdoor Advertisin~ FDA's proposal would ban the use of color and imagery on billboard advertising for cigarettes. Billboards that are not banned outright under FDA's "1000 foot" rule will be restricted to black and white text-only format. FDA's proposal to ban imagery and color in billboard advertising for cigarettes is unsupported by the record and is tantamount to a ban on billboard advertising for cigarettes. FDA's rationale for banning color and imagery in cigarette advertisements appearing on billboards is that: (1) based on the media selected FDA "cannot say" - -- o - -- cl~ 12 W Gt - W - - ~+~A

! • • • • • • • whether it is advertising directed at young people;4 and, (2) "billboards are always visible to young people."5 First, as discussed in more detail below, it is well-established in the field of marketing and advertising that billboards are not a "youth vehicle" for advertising messages: outdoor advertising is a vehicle for reaching commuters traveling to and from their jobs on a daily basis.6 The mere fact that billboards "are visible" to young people does not make billboards a youth vehicle for advertising messages. Second, FDA itself recognizes that billboards are not, relatively speaking, an effective medium for reaching teens and children. That is why FDA is mandating that the majority (80%) of the "corrective" educational program be on television -- "the usual medium of information for children and adolescents" (60 Fed. Reg. 41332), -- and that the remaining funds be spread out over a variety of other media, including, among other things, billboards. ` '"jT]he agency has been unable to define the subset of advertising and labeling directed to young people based upon the media selected or the location of the • advertising." 60 Fed. Reg. 41336. 5 Id. ~ ~ Cocheo, Steve. "The Inside Story On Outdoor," ABA Banking Journal, Marketing CP Report, December, 1987, p.64. -1I ~ 13 W C32 C.~? -- CR

0 ! ! ! ! • • Finally, restricting outdoor advertising for cigarettes to black and white text-only format is tantamount to a complete ban. It is well-established in the field of marketing and advertising that, because the audience is moving and does not have the luxury of time, billboard messages should be simple and "text" in billboard advertising be kept to a bare minimum: Under FDA's proposed regulations, billboard advertising for cigarettes would be loaded with text. Therefore, as a practical matter, restricting outdoor advertising for cigarettes to text-only format is tantamount to a ban on outdoor advertising for cigarettes. For example, under FDA's proposal, billboard advertising might look something like this: Real good flavor, real good taste 100's, 16 mg. "tari,1.Z mg. nicotine av. per dgares te by FTC method. ! SURGEON GENERAL'S 1t+iARlWG: Smoking Causes Lung Cancer, lie, Disease, EtY>phyema, And May Compicate Pregnancy. ' See, e.g., statements by creative directors for outdoor advertising companies, quoted in Cocheo, Steve. "T'he Inside Story On Outdoor," ABA Banking Journal, ! Marketing Report, December, 1987 -- "You don't have the luxury of time"; "[y]ou have to consider what people can digest in one go-by"; "[g]enerally, experts find that an outdoor ad should contain no more than seven to ten words -- 'Given the opportunity, I'd use even fewer"'; "a common mistake...is trying to cram too many words and ideas onto a single board; "[c]reative directors turn their thumbs down on the all-type board." 14 O ~

0 • • • • • • • • The consensus among advertising professionals is that outdoor advertising is of virtually no use in reaching children and teens. Billboards are directed primarily at adults. Primarily products and services used by adults are advertised on billboards. A recent study conducted by Taylor and Taylor which identified the content of billboards demonstrated that products advertised on billboards are directed primarily at adults. This study analyzed the content of over 700 billboards appearing along 690 miles of state and interstate highways in both rural and urban areas. The researchers reported the following categories of products and services advertised on billboards: restaurants, hotels, gas stations, tourism, entertainment, auto dealers, department stores, specialty retailers, supermarkets, alcohol beverages, tobacco products, insurance, health care, real estate, banks, telecommunications, political, public service.$ If billboards were an effective vehicle for reaching children and teens, one would expect to see manufacturers of children's and teens' products advertising their brands on billboards - particularly since billboard advertising is widely regarded as a relatively inexpensive advertising vehicle. In fact, however, looking at five of the biggest advertisers of children's and teens products -- not a single penny is spent on billboard advertising. $ Taylor, Charles R. and John C. Taylor, "Regulatory Issues In Outdoor Advertising: ~ A Content Analysis Of Billboards," Journal of Public Policy and Marketing, Vol. 13 (1), W7 • p. 101, Spring 1994. o CID 15 W Grt W ~

0 • • • 0 • • Popular Teen Products/Brands 1994 Media Spending9 PRODUCT/BRAND TOTAL MEDIA EXPENDITURE EXPENDITURE ON BILLBOARD S Sega Genesis Game Software $31,376,900 $0 Covergirl Ultimate Finish Liquid Powder Makeup $13,630,300 $0 Oxy 10 Acne Medication $4,209,700 $0 Arrid Teen Anti-Perspirant and Deodorant $1,284,100 $0 General Cinema Theaters $5,289,200 $0 In fact, professional marketing companies whose job it is to measure and document "audience exposure" to advertising vehicles for purposes of "selling" advertising space -- and who therefore have every incentive to find and document audience exposure -- do not even bother to collect data on children's and adolescents' exposure to billboard advertising.lo 9 Data is from LNA/Mediawatch Multi-Media Service, January-December 1994. . lo The outdoor industry changed its audience measurement base to adults 18 and over in January 1992. Hennessey, Larry. "A View from the Road," Traffic Audit Bureau Convention, Colorado Springs, Colorado, April 11, 1994, p. 10. The Outdoor Advertising Association of America (OAAA) collects extensive data regarding adult (18 and over) exposure to billboard messages but does not even collect data on youth exposure. Major ~ research firms, including both Simmons Market Research Bureau and MediaMark Research, collect extensive data on adults' exposure to billboards, but do not measure teens' or children's exposure to outdoor advertising. These facts suggest that the children and teen markets are not worth measuring with respect outdoor advertising. This is because people under the age of 18 do not represent a viable target audience for ~ O ~ billboards. ~ ~ © 16 ~ W --W • 00

• • • • • i In addition, although FDA asserts that it has been unable to identify advertising directed at young people based on the media selected, it is clear that FDA is aware that today marketing experts agree that the primary way to reach young people is through television. In fact, it is for this very reason that FDA insists that the overwhelming majority (80%) of the expenditures on its proposed "corrective" educational program which is "specifically directed at adolescents" must be spent on television -- the medium that is heavily used by young people. If FDA truly believed that billboards were an important "youth vehicle" and that billboards were an effective way to reach "youth," FDA would not relegate billboard advertising to the "other" category of media on which the remaining 20% of the funds may be spent. III. FDA Cites No Evidence Of Any Causal Connection Between Exposure To Cigarette Advertising And The Decision To Smoke • The FDA maintains that regulation of cigarefte advertising is necessary in order to reduce underage smoking because underage youth can "recognize" and "recall" at least some tobacco advertising/promotion and because some minors choose to smoke. The • FDA relies on studies which show high levels of recognition for heavily advertised cigarette brands among smokers and non-smokers and a correlation between ad ,• recognition and smoking behavior. None of the research cited by FDA demonstrates a ~ 0 cause and effect relationship between cigarette ad or logo awareness and the decision to ~rt ~ start smoking. The inferences drawn by the FDA regarding the connection between ad 17 w CG

0 • • • • recognition and smoking initiation are unsupported and their proposed regulations restricting (in effect, banning) tobacco advertising and promotion are unjustified. The FDA (as well as some of the research on which it relies) wrongly interprets a statistically significant correlation as evidence of cause-and-effect. Even the most elementary textbooks on research design and statistical analysis inform the reader that a correlation -- even a "statistically significant" correlation -- is not evidence of a cause-and- effect relationship (e.g., Babbie, 1992). Correlation evidence does not support cause-and- effect argument, because the presence of a correlation says nothing about which of the variables is the cause and/or the effect. Indeed, the existence of a correlation does not even mean that either variable is a cause or effect at all. While two variables may be related, both may be caused by an unidentified or unmeasured third variable, or both may be the cause of unidentified or unmeasured effects. In the case of cigarette ads/promotion recognition and the decision to start smoking, higher levels of ad recognition among smokers may well be the result of the fact that these people smoke. In fact, the studies FDA cites discuss the likelihood that smokers are more attentive to cigarette ads than are nonsmokers. Common sense too, tells us that smokers would be more likely to pay attention to, and remember, cigarette ads, since these ads logically would be more relevant to smokers (who make brand choices) than nonsmokers for whom the product advertised is irrelevant. Cause-and-effect relationships simply cannot be inferred from correlational analyses. 18

0 0 0 Proving causality in social science requires evidence of "necessary or sufficient causes" for any given effect (See Babbie, 1992). Labeling something a"contnbutory factor" is not a substitute for proof of a causal relationship. Without proof of causality, any connections or inferences made between two factors are based on pure conjecture and speculation. Ideally, both conditions of necessity and sufficiency are met. To support FDA's position, FDA would need necessity evidence that would have to show that smoking would only be initiated by someone if there was at least some cigarette advertising present. This is clearly not true -- many people decide to smoke in the total absence of cigarette advertising. Sufficiency evidence would require that cigarette advertising and promotion alone would cause people to start smoking; again this condition has never been and cannot be demonstrated because there are literally hundreds of factors other than advertising that are always operating (e.g., presence and influence of parents, peers, older siblings who smoke). It is clear, therefore, that FDA has failed to demonstrate that either of the conditions of necessity or sufficiency are met in the case of cigarette advertising and the initiation=of smoking. The FDA's proposal completely ignores the entire field of consumer behavior -- and the fact that commercial brand advertising is only one factor among countless hundreds in the complex array of interrelated processes implicated in consumer decisions and consumer behavior. FDA has proposed a simplistic solution to alter a behavior that research has shown is influenced by a variety of factors. FDA has chosen to ignore the host of factors -- over which marketers have absolutely no control -- that influence 19

• • • • • • • • • consumer decision-making and purchase behavior -- most notably, the influence of parents, friends, peers and culture. As I noted at the outset, FDA's proposal to address the issue of underage smoking by restricting cigarette advertising is unwarranted and unjustified, it will not be effective in reducing underage smoking, and it is tantamount to an outright ban on cigarette advertising. Professor Timothy P: Meyer !a z z S.J' Dated i.~ O 20 tst ~ 2~