The Pros And Cons Of The FTC Improvement Act

Imagine a challenge that tests our ideas about money and how we respond to it under certain conditions. This test involves the auction of a twenty-dollar bill with very simple rules. The highest bidder will get the bill and the second highest bidder receives nothing but pays the amount of the losing bid. As the test progresses players in the room bid above the face value ending the bid at twenty-eight dollars. The question now is, ‘Why would anyone want to pay above the face value?’ Behavioral economists believe that when decisions are made on value, the human mind often behaves irrationally. People judge value based on prior knowledge fed to them at some point in their lives and not something thoroughly researched. This is the kind of misinformed

thinking that has shaped the world of governance, business and policy in today’s world. ‘The consumer embryo begins to develop during the first year of existence. Children begin their consumer journey in infancy and they certainly deserve consideration as consumers of that time.’
Not since the end of WW2 and at the peak of the baby boom era has there been so many kids in the world today. There are now more than 73 million children in the US under the age of 12, making it the largest youth population recorded in half a century. For American businesses millennials will represent the ultimate prize for their brand recognition loyalty from cradle to grave. Marketers have their sights on children because of their ever increasing buying power. The amount of money spent by younger audiences now on everything from clothes to music to electronics total a whopping 90 billion dollars a year. This figure ignores the amount of adult spending influenced by kids under the age of 12, which contributes over 700 billion dollars a year. This figure is the equivalent of the economies of the poorest 115 countries in the world with a combined GDP of 704 billion dollars. One economic impact of kids is the amount of money they themselves spend. Kids often receive money from their parents or grandparents in the form of an allowance. When they get older the money earned themselves is significant as well when brand loyalty comes into play. However, advertisers know that the real money is in their purchasing influence.
With such great purchasing power and influence marketers/advertisers have become much more deliberate in their strategies in influencing those dollars. Often it’s the children who determines what kinds of cars get bought, computers, cellphones, furniture, TV’s and family vacations. Most parents and other people don’t realize how corporations and marketers try to make parents miserable. In fact, corporate marketers throughout the years have spent billions on researching “nagging” and how it impacts parents’ purchases. Sometimes kids use the phrase “Can I” as much as 9 times after viewing an advertisement. With the nag factor in place, it’s able to help maximize the number of times kids will be asking for a particular item. With that being said kids hold immense power in the economy and corporations know this. Our generation of youngsters is marketed to like never before through product placement, brand licensing, marketing in schools, self-marketing, videogames, internet and many other ways. When you think about it, every minute there’s a brand in a child’s face in the form of 360-degree marketing. Kids now multitask with media using more than one source at the same time. They’re surfing the web at times and viewing television. This makes them more vulnerable and open to on average 3000 messages per day. Think of kids as media hogs that absorb ‘secured brand loyalty’ for life.
This involves individuals that life is about buying and getting what you want, whenever and wherever you want. The philosophy changes to getting kids at an early age, targeting them often and in as many places as possible. Not just by getting a parent to fork out money for their kid but rather to convert them to a consumer lifestyle. This uptick in mass consumption of median, good and services weren’t recent but can be linked to as far back as the early 1800’s. in the past children’s consumer culture was a very cheap culture. Back then before the 70’s, kids only had nickels to spend so advertising to kids was very confined.
In the 70’s the FTC proposed a ban on ads directed at kids due to misleading information.

This was done because cereal companies were selling sugary foods which led to cavities. The FTC also believed that kids below the age of eight weren’t able to figure out if advertisers were deceiving them. This ban would ultimate affect the sugar and cereal companies if congress approved for the motion to adopt this bill. These industries responded by persuading congress to pass the “FTC Improvement Act”, which mandated the FTC would no longer have any authority to decide any matters on children’s advertising. Soon after this ruling other regulatory arms of government would be dealt a fatal blow during the early 1980’s. During the 80’s decade consumers began investing in the financial bubble as many people were becoming rich overnight. Under the Raegan Administration many industries were deregulated and in 1984 advertising restriction to kids were completely deregulated. Corporations were now free to do as they please. Prior to the deregulation of advertising authorities, kids on average spent at a conservative rate of about 4.2 billion dollars a year. After the Raegan Administration’s decision to wipe out regulatory boards, kids spending increased to 40 billion dollars, an 850 percent increase. As the walls of the FTC fell, the top best selling toys such as Transformers, Marvel, GI Joe and WWE Figures were all based of TV shows. The success in the booming media industry paved the way for a new generation of advertising. For example, when the Marvel superhero TV shows came out, there were over 4000 products sold related to the show. Kraft’s Mac and Cheese highest selling cartoon character was SpongeBob Squarepants. ‘Product Placement- A practice in which manufacturers of goods or providers of a service gain exposure for their products by paying for them to be featured in movies and television programs.’ (Google

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