The Concealed Truth about Unethical Ads

The Concealed Truth about Unethical Ads

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The Concealed Truth about Unethical Ads

Businesses in the modern era are operating in a highly competitive environment that is causing them to seek for ways of gaining a competitive advantage for their survival and success. However, as entities, businesses are increasingly in the limelight for their behavior. Stakeholders are concerned about and demanding ethical behavior in businesses, if the enterprises are to continue enjoying the social license to operate and being successful (Tuan, 2012). Therefore, business ethics is critical to the performance and success of organizations. As a specialized branch of ethics, business ethics is about the moral principles, values and standards that guide the behavior of organizations and the individuals therein in a business setting (Abend, 2016). Businesses use these principles to distinguish the right and acceptable individual and corporate behavior from what is not. Moreover, business ethics reconcile the legal behavior of organizations and the pursuance of competitive advantage.

Businesses with competitive advantage avail goods and services that are unique, desirable and useful to customers in the market, thus endearing the customers’ loyalty. Therefore, companies engage in aggressive marketing initiatives to appeal to their customers and position their goods or services favorably against those of their competitors. Advertising is one aspect of marketing that has an immediate and significant impact on the purchasing behavior of consumers, the reason why it is the most commonly applied marketing tool. Consumers expect that businesses conduct their advertising ethically and that the information presented is truthful, realistic and accurate (Ferrell, Crittenden, Ferrell, & Crittenden, 2013). However, with the rising cases of unethical advertisements, focus on marketing ethics has increased lately. The line between ethical and unethical ads is very thin, ill-defined and often blurred, which presents significant ethical dilemmas to businesses (LaMarco, 2018). Unethical advertisements hide, misrepresent, or overstretch the truth about their products and services to persuade consumers. This marketing behavior distorts the competitive business environment while exposing firms to various risks that threaten their revenues, image and survival. This paper discusses the business ethics of advertising as a marketing activity by delving into the importance of truthful product information and the implications of unethical advertisements.   

Theoretical Framework and Topic Statement

Marketing ethics can be viewed using various theoretical frameworks that inform ethical decision-making when confronted by moral dilemmas. Virtues, rights, utilitarianism, and deontology are four ethical schools of thought that can explain the different aspects of business ethics (Yazdani & Murad, 2015). These theoretical categories can explain the diverse circumstances and outcomes encountered in businesses that are related to marketing ethics.

Utilitarian ethical theories assert that an ethical act is one that delivers the greatest benefit to the most people. In the business environment, ethical advertisers are those whose advertisements deliver the greatest benefit to most consumers of the products or services (Gustafson, 2013). While act utilitarianism deals with actions as being ethical regardless of societal constraints and personal emotions, rule utilitarianism judges as action as being ethical, provided it is executed fairly and justly. In this regard, an ethical advertisement benefits the masses through fair and just means (Gustafson, 2013). Unfortunately, some consumers may be disadvantaged at the expense of the majority.

Deontological ethical theories ascribe ethical correctness to the adherence of duty and principles. In business ethics, the righteousness of the business process overrides the results of the business. Therefore, advertisements that deceive consumers or take advantage of them for profits are unethical (Vitell & Hunt, 2015). In turn, unethical advertisements should be restricted because of their harmful effects on those who need social protection such as children and other vulnerable members of society (Tuan, 2012). Therefore, advertisers have a moral duty to be truthful and transparent with consumers.   

Virtue ethical theories emphasize the moral character of an individual rather than the action and the consequences of such activities. In a business setting, the focus is on the moral character of a manager or employee rather than their actions and the consequences of their actions. Therefore, ethical business behavior is judged using the moral character of an individual, which is subjective because it is not based on any laid-down rules or laws. Honesty and care are virtues that influence the truthfulness of an advertisement, with a falsified ad being judged as being dishonest and uncaring in the part of the marketer (Ferrell, Crittenden, Ferrell, & Crittenden, 2013).  

Rights ethical theories focus on the protection of people as human beings against violations. For instance, customers have moral rights that should not be violated by businesses for their selfish interests, such as profits. Therefore, advertisers should exhibit self-regulation and self-control in their advertisements, which should be guided by the respect of the dignity of consumers as human beings.

Falsified and exaggerated advertisements can be judged as being unethical is they i) do not benefit a majority of the people under utilitarian ethics, ii) harm vulnerable consumers under deontological ethics, iii) violate the rights consumers, and iv) are dishonest under value ethics. As such, unethical advertisements that are falsified and exaggerated have ramifications on businesses and consumers.

 Falsified and exaggerated advertisements erode consumer and public trust, which destroys the reputation of the brands and companies. Besides, consumer feedback is negative, further injuring the reputation of the company. In some instances where the advertisements harm consumers, the company may be sued and fined, if found to be guilty, further damaging the firm’s reputation due to the negative publicity while losing it money as well. If the falsification and exaggeration are not corrected promptly to salvage the organizational reputation, the afflicted firm may lose customers and revenues due to lowered sales. The long-term relationships with suppliers and investors and the trust gaps with consumers and other stakeholders may be destroyed irreparably. Ultimately, the business may lose its license to operate and close down.  

Falsified and exaggerated advertisements take advantage of ignorant and naïve consumers for profits’ sake. Consumer behavior is unduly influenced by encouraging purchases. Some of the consumers may make unintended purchases of the advertised items by taking advantage of their impulsive buying behavior. These actions are due to the exaggerated value that the products promise to deliver to the customers, which gives the perception of value for money. Moreover, customers are influenced to choose the advertised product when presented with several options. This creates an uneven and unfair competitive environment, which goes against ethical business practices.       

Business organizations have a right to pursue sales through advertisements under the right to free speech in a liberal economic setting. The free market environment provides the marketer with the moral responsibility to sell a product in any possible way that serves the interest of its stakeholders, which is usually a profit. To this extent, the advertiser can edit the information by accentuating the positive attributes of the product to drive sales. However, the consumer has the right to information, which is a fundamental ethical right to know the product they are purchasing. While many jurisdictions provide laws that guide the disclosure and truthfulness of the product information communicated in advertisements, the laws are preventative rather than punitive. Altogether, the information disclosed should be as truthful as can be supported by scientific evidence. Moreover, advertisers have an ethical duty to inform truthfully (Ferrell, et al., 2013). Such rights should not eclipse the overall public good.

Organizations have a social responsibility to disclose realistic and transparent information in their advertisements. Producers sign an implicit contract with consumers when products are purchased and advertisements persuade the signing of this contract (Hartman, DesJardins, & MacDonald, 2014). Therefore, advertisers are obligated ethically to help consumers gain the expected value from the products they are to purchase following the advertisements. Social responsibility requires that the messages in advertising do not violate the moral principles of society, such as taking advantage of children, women and other vulnerable members, and no not damage the society (Hartman, DesJardins, & MacDonald, 2014). In this regard, advertisers are duty-bound to be socially responsible in the advertising practices for the good of society and the business as well.

To promote ethical public advertisements, various ethical advertising principles have been advanced. In addition to maintaining high ethical standards and sharing truthful information, personal ethics should be applied when making and disbursing advertisements (Ferrell, et al., 2013). Advertisers should clearly distinguish paid advertisements from news and editorial content to avoid public confusion (Snyder, 2011). Moreover, the source of information in the advertisements and whether the source was paid for the information should be disclosed (Snyder, 2011). Advertisers should exhibit the ethics of duty and care, along with compliance with the advertising laws and regulations (Snyder, 2011). Transparency in business transactions and advertising practices is a desirable quality of an ethical organization.    

Results

A survey conducted by Rakuten Marketing involving 2,500 people from Australia, Germany, France, the United Kingdom and the United States, sought to determine the perceptions of consumers on the trustworthiness of advertisements. The study revealed that 75% associated advertisements with fake news compared to 54% in France and Germany, as summarized in figure 1 (Davies, 2017). 

Figure 1. Perceptions of advertisements as fake news

Source: Davies (2017)

In the same study, people mistrusted online pop-up advertisements the most, at 25%, while they trusted the advertisements on print media the most, at 82%, as illustrated in figure 2 (Davies, 2017). Advertisements place in online channels were least trusted while those in traditional media such as print, television, radio and outdoor were trusted the most (Davies, 2017).    

Table 2. Ad trust level in different advertising channels

Source: Davies (2017)

Falsified ads are costly to companies that are found guilty, in addition to damaging their reputation. For instance, the Federal Trade Commission sued Marketing Architects, Inc. for making unsubstantiated claims about the weight-loss capabilities of their products. The company was fined $2 million by the District Court in Maine and banned from making the erroneous claims (Federal Trade Commission, 2018). 

Nuseir (2018) revealed that misleading and false advertisements caused consumers to abandon brands. Such ads changed the behavior of consumers by lengthening the purchasing process, in which the buyers spent much time verifying product information before making purchase decisions.

The 2017 Pepsi ad, dubbed, Live for Now, illustrated how advertisements can be socially irresponsible by deriding a section of the society. The advertisement depicted a protest similar to that of Black Lives Matter, from which Jenner Kendall emerges with a Pepsi can of to quell police brutality (Mulcahy, 2019).

Discussion

Falsified or exaggerated advertisements are increasing in businesses as firms pursue profits aggressively. Technological advancements such as the internet, social media and mobile devices have not only revolutionized advertising but have also provided fertile ground for Falsified or exaggerated advertisements to thrive. While these advertisements injure the reputation of a company, are costly to companies and destroy the long term relationships between producers and consumers, these effects are often short-term. The implicated companies usually engage in aggressive rebranding and product improvement initiatives, along with improving their advertising practices. As such, many firms and brands often rebound strongly after advertising debacles. For instance, although Protein World, a diet and nutrition firm, was fined £250,000 for misrepresenting its weight-loss supplements, the resulting media coverage helped the company generate £1 million in direct sales Mulcahy, E. (2019). This example illustrates the difficulty in reinforcing business ethics among organizations.  

The prevalence of unethical advertisements indicated that value ethics and egoism were commonplace in the marketing industry. The companies presenting falsified ads were condoned by their peers most of the time (Ramanathan & Swain, 2019). Moreover, although customers were often the cause of sanctioning of these advertisements, their patronage was restored after the crisis had lifted. As such, the ethical judgment of the advertisements was subjective and brief, reflecting the individualism and materialism and the lack of virtue ethics in the advertising fraternity (Audi, 2012). In other words, unethical advertisements could go unnoticed unless they caused a major public uproar.  

Organizations felt that they had a right to conduct their businesses freely and promote their products as they wished, in accordance with the free market and free speech principles. In this regard, the rights ethics was not sufficient in solving the dilemma, considering that every party claimed to have an unalienable right to hold his or her position in the advertisement ethics matter. Although both parties have a right to edit and interpret the message in the advertisement as they wished, they had no right to falsify the information. Firms considered controlling advertising as an infringement of their rights. Similarly, the offended and misinformed clients invoked their right to information when presented with falsified advertisements.

Deontological and utilitarian ethics may be used to resolve the ethical dilemma presented by the rights argument. Advertisers presenting falsified advertisements were ethically bound to their shareholders rather than the consumers. Their sense of duty is to generate as much profits as possible, provided the consumer is not harmed (Vitell & Hunt, 2015). Inasmuch as advertisers are expected to exhibit the ethics of duty and care for the shareholders and consumers, they almost always lean towards profits.

Utilitarianism is used as the most common deterrent of exaggerated advertisements, because it focuses of the benefit to the consumers and public instead of on the gains of the producers and advertisers as minorities. Laws and regulation governing the business ethics of advertising are the most commonly used measure of deterring unethical marketing practices because they are based on well-defined guidelines, unlike virtues and dutiful obligations. The courts serve as the neutral arbiter of the ethical dilemmas and conflicts presented by falsified advertisements. However, advertiser is restrained and punished when the harm to the consumer is demonstrated and the consumer’s rights are violated. 

Recommendations

Organizations can avoid falsifying their advertisements is they develop morals and a duty of care towards the wellbeing of their customers. It is not enough to present advertisements that please the masses and disadvantage the minorities who may either misconstrue the information or find it offensive. Self-regulation can supplement the external controls provided by laws and regulations. As such, investing in an ethical culture that is based on virtues is essential if the advertisers are to make ethical decisions on their own volition rather than being coerced by the courts (Audi, 2012; Leonidou, Leonidou, & Kvasova, 2013). Companies encountering unethical advice from marketing agents should be bold enough to decline authorizing falsified advertisements for profit purposes.   

Research Limitations

These findings are limited by the restricted sources of information, which was obtained from secondary sources. Most literature contains studies conducted in western and highly developed countries where the legal framework governing the ethical conduct of business is robust and well-developed. Therefore, these finding may not be generalized to other business settings where the marketing industry and its supporting legal structure is underdeveloped.

References

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