7. A governmental restriction on speech that proposes a commercial transaction must satisfy four criteria to
survive First Amendment scrutiny: 1) the speech must concern lawful activity and not be misleading; 2) the
asserted governmental interest in restricting it must be substantial; 3) the restriction must directly and materially
advance the governmental interest asserted; and 4) the restriction must be no more extensive than necessary to
serve that governmental interest. Central Hudson Gas & Elect. Corp. v. Public Serv. Comm'n of New York,
447 U.S. 557, 566 (1980). See also Greater New Orleans Broadcasting Association, Inc. v. United States, No.
98-387, 1999 U.S. LEXIS 4010 (June 14, 1999) (striking down FCC regulation prohibiting broadcast
advertising of lawful private casino gambling); 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484
(1996)(striking down state ban on alcohol price advertising).
8. NAD decisions are reported in the NAD Case Reports, issued ten times per year. Press releases and other
information regarding the NAD self-regulatory system, including the appeals process and operations of the
Children's Advertising Review Unit, are available at http://www.bbb.org/advertising/index.html.
9. M. Shanken Communications, Inc., The U.S. Beer Market: Impact Databank Review and Forecast (1998
ed.), at 321 (Table 7-3) (reporting media advertising expenditures).
10. Although not the focus of this report, the media also engage in self-regulation relating to alcohol advertising.
The broadcast networks (ABC, CBS, NBC, Fox, UPN and WB) prohibit distilled spirits advertising but permit
beer and wine advertising, which must not encourage excessive or underage drinking. Some networks also
prohibit alcohol ads in or adjacent to "family programs." Cable networks that target their programming in
substantial part to an underage audience (e.g., Fox Family, Nickelodeon) do not accept alcohol advertising. In
some instances, local cable systems retain the ability to place a limited number of ads on cable channels each
day. As a result, an alcohol ad does from time to time appear on one of these child-oriented channels. A number
of cable networks are members of the Cabletelevision Advertising Bureau, whose voluntary guidelines provide
that beer and wine advertising is acceptable, and that distilled spirits advertising will be considered on a
case-by-case basis.
11. Economic theory predicts, and various empirical research studies confirm, that advertising can influence
consumer demand for products. See generally Robert McAuliffe, Advertising, Competition, and Public Policy,
at 33-46 (1987); Bureaus of Consumer Protection and Economics, Federal Trade Commission,
Recommendations of the Staff of the Federal Trade Commission: Omnibus Petition for Regulation of Unfair
and Deceptive Alcoholic Beverage Advertising and Marketing Practices, Docket No. 209-46 Appendix A at
1-3 (March 1985) [hereinafter 1985 FTC Staff Report]. An example is where alcohol ads are used to "associate
the brand with activities the target group is apt to enjoy and identify with and [so] conclude that the brand is for
someone like them." Joseph Fisher, Advertising, Alcohol Consumption, and Abuse: A Worldwide Survey
(1993) [hereinafter Fisher 1993], at 24. Although most of the effect of advertising is on particular brands,
advertising can also produce overall increased demand for products in the category.
In well-established product markets such as beverage alcohol, many factors influence consumer buying, making
it difficult to isolate and scientifically demonstrate a positive and statistically significant effect of advertising on
overall product demand. In the case of alcohol, the largest body of research consists of econometric studies
designed to evaluate the relationship between changes in advertising and changes in population-wide alcohol
consumption or abuse. Although some of these studies find a relationship between advertising and consumption,
many do not.
See
Fisher 1993
,
supra
, at 96-116; U.S. Department of Health and Human Services,
Ninth
Special Report to the U.S. Congress on Alcohol and Health
(June 1997), at 287-89;
see also
1985 FTC Staff
Report, supra, Appendix A at 9, 10.
While econometric study is an important tool for evaluating the effect of an individual factor on a multi-factor
result, efforts to measure the effects of differing levels of alcohol advertising on overall consumer behavior face
significant methodological challenges. These difficulties have been described in prior Commission testimony
before Congress, in a prior report by the National Institute on Alcoholism and Alcohol Abuse, and by
economists. See Health Warnings on Alcoholic Beverage Advertisements: Hearing Before the Subcommittee
on Transportation and Hazardous Materials of the Committee on Energy and Commerce on H.R. 4493, U.S.
House of Representatives, 101st Cong., 2nd Sess. 35-41 (1990) (statement of FTC Chairman Janet Steiger);
Susan E. Martin, Introduction to The Effects of the Mass Media on the Use and Abuse of Alcohol, at v (Susan
E. Martin, ed.) (NIAAA Research Monograph No. 28, NIH Pub. No. 95-3743) (1995); Henry Saffer,
Alcohol
Advertising and Alcohol Consumption: Econometric Studies
,
in
id.
, at 82, 95. Further, the econometric
research focuses only on the effect of advertising on population-wide alcohol consumption, and thus it may not
effectively test for the very small part represented by underage consumption. (For data regarding beverage
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A Review of Industry Efforts to Avoid Promoting Alcohol to Underage Consumers
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