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June 6, 2012

FTC Takes New Look at Alcohol Industries, Focusing on Digital Media

By: Ifrah Law

The media world has changed radically since the last time that the Federal Trade Commission took a look at the marketing efforts of the nation’s major alcoholic beverage producers. So the FTC is taking a fresh look, emphasizing the recent explosive growth of social media in its continuing effort to determine whether the industry is self-regulating its marketing efforts as well as it should.

The FTC is requiring fourteen major producers, including Anheuser-Busch, Diageo and Bacardi, to release information about their Internet and digital marketing presence. The FTC will then use the data collected in the study to make recommendations about how the industry should regulate itself.

The commission’s last marketing study was completed in 2008 and was based on data from 2005. In 2005, Twitter did not exist yet, YouTube had just been launched, and Facebook was a year old. In that study, of the companies surveyed, only 1.9 percent of their $3.3 billion in marketing expenditures were spent on digital media.

This study marks the first time that the FTC is asking alcohol producers to provide detailed information on their Internet and social media practices, data collection and tracking practices of visitors. The 14 major alcoholic producers must produce responses to the FTC by June 11, 2012.

The FTC is limited in what it can do with the data collected, but the goal is a report that would help determine future advertising rules for websites and social media. The FTC generally lets the industry set its own advertising guidelines, and the three main alcoholic beverage industry trade associations have compliance systems in place to ensure that advertising targeted at underage audiences is minimized. Two of the three trade associations have implemented new guidelines to address marketing on social media sites.

This is an ambitious action by the FTC that could lead to increased government involvement in Internet activities. Industry self-regulation has been effective thus far and can continue to be effective. It remains to be seen what recommendations the FTC will develop after this study, but we will keep you posted.