A report from The Economist Intelligence Unit THE IMPACTS OF BANNING ADVERTISING DIRECTED AT CHILDREN IN BRAZIL August 2017 Sponsored by The impacts of banning advertising directed at children in Brazil Contents Preface 2 Executive Summary: Main messages of the study 4 Introduction 8 Part I Trends in child-directed marketing 12 a) Global trends 12 b) Trends in Brazil 14 Part II Literature review on impacts of advertising bans 16 a) Studies that analyse the impact of bans on advertising to children 16 b) Studies on advertising bans on products 17 High caloric food and beverages 17 Toys and entertainment 18 Tobacco and alcohol 18 Part III Impacts of banning child-directed advertising in Brazil 20 a) Findings 21 b) Assumptions 22 c) Scenario 1: The advertising industry shrinks by 5% 24 d) Scenario 2: The advertising industry targets adults 26 e) Other impacts 28 Part IV The business case for socially responsible marketing 38 a) Socially responsible marketing and childhood protection 39 b) Good practices from self-regulation: Company case studies 43 Challenges 47 Conclusion 48 Bibliography 49 Annex: Methodology for estimates 56 1 © The Economist Intelligence Unit Limited 2017 The impacts of banning advertising directed at children in Brazil Preface The impacts of banning advertising directed at Project teams: children in Brazil is a study by The Economist Intel- ligence Unit, commissioned by Instituto Alana. This The Economist Intelligence Unit report discusses the main findings in three areas: international trends in child-directed advertising, David Humphreys, Project Director the impacts of banning child-directed advertising Romina Bandura, Project Manager in Brazil, and the business case for an ethical ap- Katherine Stewart, Consulting Analyst proach by firms in terms of the targeting of chil- Gonzalo Aguilera, Research Intern dren in their advertising practices. The study pre- sents key findings on the issue to inform policymakers, companies, advertising firms, con- Instituto Alana sumer groups and non-governmental organisa- Isabella Henriques, Director of Advocacy tions on the topic of restricting child-directed ad- Renato Godoy, Researcher vertising. 2 © The Economist Intelligence Unit Limited 2017 The impacts of banning advertising directed at children in Brazil Acknowledgements The following economists, researchers, specialists Expert panel members and country analysts contributed to the report. The following experts on child-directed advertis- We thank them for their participation. ing contributed significantly to shaping the meth- odology. Their diverse backgrounds and exten- sive experience ensured that a wide variety of Researchers views were considered. The panel met as a group James Broughel, Maria-Fernanda Cortes, Agnes in September 2016 in Washington, DC to review Nairn, Paul Pedley, Guilherme Valente and the proposed methodology. Marcio Zanetti. Danilo Doneda (Consumer Office of the Ministry Interviews conducted of Justice—Senacon); Josh Golin (Campaign for a Laura Chiavone (independent consultant), Lucia- Commercial-Free Childhood); Fabio Gomes na Correa (ESPM), Andrea Mota (Category Senior (Regional Adviser on Nutrition and Physical Activ- Director, Coca-Cola Brasil), Victor Bicca Neto ity, Pan-American Health Organisation/World (Senior Director of Stakeholder Relations, Co- Health Organisation); Susan Linn (Boston ca-Cola Brasil), Larissa Prado (Zoo Moo TV) and Children’s Hospital); Agnes Nairn (Hult Internation- Jacqui Stephenson (Global Responsible Market- al Business School); Skip Nelson (US Food and Drug ing Officer, Mars Chocolate). We also interviewed Administration); Patricia Sakowski (Institute for Ap- company representatives from Panera Bread and plied Economic Research—IPEA); and Veet Vivar- a spokesperson for Mercur. ta (ANDI Latin American Network). 3 © The Economist Intelligence Unit Limited 2017 The impacts of banning advertising directed at children in Brazil Executive summary Main messages of the study tached to Brazil’s Department of Human Rights; its MESSAGE 1 Resolution 163 states that any market communi- Although Brazil bans advertising cation, including advertising, to children under 12 directed at children through various years old is abusive.) However, the ban is not prop- legal instruments, enforcement remains erly enforced. Despite the illegality of child-tar- weak. geted advertising in Brazil, children are still ex- posed to commercials and advertising that are l Television is the main form of communication aimed at them. A 2015 study of commercials in for advertising, being present in 95% of Brazilian Brazil highlighted the fact that most child-direct- households.1 The amount of time that children ed commercials (64%) used children’s language and adolescents spend in front of the television and characters, 43% used songs sung in children’s has risen steadily. In 2004 average television expo- voices and over 20% linked food purchases to the sure per day was 4 hours 43 minutes, but by 2014 it receipt of free gifts. had increased to 5 hours 35 minutes. This is longer than the average amount of time that a Brazilian child spends at school per day (about 3 hours 15 MESSAGE 2 minutes).2 New forms of advertising are reaching l Use of and access to the internet is also rising: in children, and these need closer 2015 one-half of Brazilian households had internet monitoring by content providers, access, and almost 50% of Brazilians used the in- government agencies and parents. ternet. Over one-third of them do so every day.3 l Between 2000 and 2016 Brazil experienced l Brazil bans advertising directed at children (un- population growth of 18.8% and a 135% increase der 12 years of age) in its constitution, its Consum- in GDP per head. This growth has been accom- er Defence Code, the Child and Adolescent Stat- panied by a rise in consumerism and access to ute and CONANDA’s Resolution 163 (2014). media. The growth of internet access and use (CONANDA is the National Council for the Rights among children and teenagers is particularly no- of Children and Adolescents, an agency at- table: over 80% of Brazilian children and teenag- ers used the internet in 2014, up from just over 50% 1 Instituto Brasileiro de Geografia e Estatística. Available at: in 2013. www.ibge.gov.br 2 Television National Panel (IBOPE/2010), cited in Goncalves, T l Increasing internet penetration has opened up A, Advertisement to children in Brazil: tensions between regulation and self-regulation, 5th International Conference new channels for advertising directed at children. on Multidisciplinary Perspectives on Child and Teen Consumption, 2010. Google’s YouTube Kids has a particularly strong 3 Secretaria de Comunicação Social da Presidencia da following in Brazil: the country is YouTube’s Republica, “Pesquisa Brasileira de Mídia 2015”. Available at: http://www.secom.gov.br/atuacao/pesquisa/lista-de- fourth-largest market, and over one-third of the pesquisas-quantitativas-e-qualitativas-de-contratos-atuais/ pesquisa-brasileira-de-midia-pbm-2015.pdf country’s 100 most-viewed channels on the plat- 4 © The Economist Intelligence Unit Limited 2017 The impacts of banning advertising directed at children in Brazil form are devoted to child-directed content.i How- l Studies differentiate between partial and total ever, the majority of children do not understand bans. Partial bans are defined as (i) bans on ad- that “advergames” are placed on websites and vertising through some, but not all, media outlets apps by commercial companies for the purpose (television but not radio, for example) or (ii) bans of increasing sales, meaning that such advertising that are active only at certain times during the is not identifiable to children. day or week. For some products, there is a substi- tution effect whereby banning advertising l Internet advertising works differently from tele- through one channel results in an increase in ad- vision advertising: whereas television advertise- vertising through another channel. This has led ments are confined to 30-second spots, children’s some researchers to conclude that partial adver- exposure to internet ads is essentially limitless, al- tising bans are ineffective. lowing implicitly formed associations to become deeply ingrained. Internet advertising increasing- l Overall, the available scientific literature pre- ly uses behaviour-targeting, a technique that uses sents consistent multi-methodological evidence cookies to track internet use and targets individu- that advertising high-calorie foods and beverages als with products and services that match the to children increases consumption, and that com- type of sites that they visit, making advertising prehensive, effectively enforced, regulatory-driv- more intense and personalised. en bans on the advertisement of high-calorie food to minors have caused substantial reductions in the consumption of obesogenic meals. MESSAGE 3 Studies that measure the impact of bans on advertising to children show that such MESSAGE 4 bans are effective. Banning advertising to children in Brazil has positive economic outcomes for l Many countries around the world already ban society. child-directed advertising. In Quebec (Canada), Sweden and Norway advertising aimed at chil- l The Economist Intelligence Unit developed dren under the age of 12 is illegal. In the UK, cost-and-benefits estimates of a ban on advertis- Greece, Denmark and Belgium advertising direct- ing directed at children (0-12 years) using two sce- ed at children is restricted. The EU has framework narios: (a) What would happen if the advertising legislation in place that sets out minimum provi- industry were to lose its children’s market, and (b) sions on advertising to children for its 27 member What would happen if the industry were to switch states. In the US, the Federal Trade Commission from advertising to children to advertising to adults. studied the issue of advertising to children in the The results of both scenarios show positive out- 1970s but decided against regulation. Studies that comes from the enforcement of a total ban on measure the effects of bans show that they have child-directed advertising in Brazil—that is, the reduced exposure to child-directed advertising. benefits to Brazilian society of enforcing a ban would be greater than the costs of enforcing it. l There is substantial evidence that advertising unhealthy food and beverages to children im- l Benefits of a ban include a healthier popula- pacts both consumption habits and consumption tion and lower healthcare spending, while costs preferences. Additionally, many studies show that include a reduction in income for the advertising particular unhealthy foods are marketed differ- industry, lower income for some industries that sell ently to children than to adults and use toys, pop- products to children, and investment by govern- ular characters and other advertising techniques ment agencies and companies to ensure that to attract children. Advertising bans, and espe- firms are not advertising to children through any cially television bans during prime children’s-tele- media channel. Although these are only some of vision hours, have been shown to be effective in the possible outcomes of a ban, the loss of the en- curbing consumption. tire child-directed advertising industry would still result in net long-term economic benefits for the 5 © The Economist Intelligence Unit Limited 2017 The impacts of banning advertising directed at children in Brazil country’s population. A ban on advertising aimed — Financial figures from companies engaging in at children in Brazil is thus a highly cost-effective self-regulation which show both that self-regula- strategy in terms of significantly increasing the tion is effective and that profitability is not healthy life-expectancy of Brazil’s population. impacted. — Government-sourced regulatory impact as- MESSAGE 5 sessments that provide clearer details and data around how a ban might impact the economy The benefits of banning advertising to (including industry revenue, health spending, job children also include greater losses, enforcement costs and productivity). psychological and emotional well-being for children and families. — Data from industries that establish voluntary guidelines, showing that self-regulation efforts are l The more advertising that children are ex- effective in monitoring companies’ behaviour posed to, the more they pester their parents to and that there are enforcement mechanisms. buy the advertised products. 60% of Brazilian par- — Academic studies on the effects of bans on ents think that all types of messaging aimed at child-directed advertising in areas that are not children under 12 should be banned. well researched: for instance, the impact on ad- l Advertising is linked to materialism: research vertising toys and violence, and the effect on ad- over the past ten years has found a strong link be- vertising revenue. tween young people’s levels of materialism and their exposure to advertising, television watching MESSAGE 7 and internet use. The more time a child spends in Limited data exist around how new front of a screen, the more materialistic that child marketing platforms—including internet is likely to be. Unhappy children exposed to ad- advertisements, content-screening vertising become materialistic, and materialism contributes to low self-esteem and exacerbates services and social media—impact inequality effects. Children who are unhappy, consumption trends in children. have low self-esteem, are dissatisfied with their l New channels for messaging have opened lives or are in some way disenfranchised are par- doors to increasing access to advertising and tar- ticularly likely to fall prey to the appeals of adver- geting consumer preferences; however, only lim- tising and to come to believe that consumer ited data exist around how new marketing plat- goods will solve their problems. forms—including internet advertisements, content screening services and social media— MESSAGE 6 impact consumption trends in children. However, the existing data are scant at l The literature is beginning to suggest that the best. immersive nature of new advertising content is particularly appealing to young people and can l To calculate a more comprehensive impact be targeted towards their interests, and also that analysis that takes into account the parallel ap- the additional channels increase accessibility. proaches to enforcing a ban (industry-level regu- However, quantitative and monetisable data on lations, government regulations and self-regula- consumption of goods, advertising revenue and tion), better—and more—data are needed, sales are not yet available. including: — Advertising and industry data disaggregated by population group. 6 © The Economist Intelligence Unit Limited 2017 The impacts of banning advertising directed at children in Brazil MESSAGE 8 MESSAGE 9 User-content-driven platforms, and As more information is released to the especially social media and content- public and consumers become better streaming sites, are proving particularly educated about products and company difficult to regulate. practices, there will likely be increased support for a ban. l From Little Youtubers to counting and col- our-differentiation content that uses Skittles and l Among companies that subscribe to the prin- M&Ms to the “Instagram-famous”, companies ciple of building their business without advertising and individuals are engaging in advertising to to children, there is agreement that increased children. In such cases, the platforms themselves stakeholder interest in transparency will support are the stakeholders responsible for enforcing reg- their innovative marketing strategies and business ulations on child-directed advertising. Until it is models in the long-term. As more information is clearly in the interests of these platforms to devel- released to the public and consumers become op stronger enforcement mechanism designed to better educated about products and company monitor and remove content that contravenes practices, there will likely be increased support for regulations and industry standards, such advertis- a ban. ing will likely remain available to children. l The companies that have a strong commit- ment to protecting the welfare of children are tak- ing the lead with regard to child-directed adver- tising. Innovative business models also support principle-driven marketing. l Companies with more traditional business models and shareholder accountability are de- veloping responsible-marketing codes for chil- dren, even if their practices have yet to become subject to legal constraints. In Brazil, where the Constitution, the consumer defence code and the Conanda resolution create a legal framework for banning child-directed advertising, there will likely be legal and financial risks for those compa- nies that fail to adapt. 7 © The Economist Intelligence Unit Limited 2017 The impacts of banning advertising directed at children in Brazil Introduction In 2016 Instituto Alana, a non-profit civil society or- dren under 12 years old is abusive.) Fully imple- ganisation that seeks to guarantee conditions for menting these restrictions, however, is a continu- the full experience of childhood, through its Child ing challenge.4 Despite the legislation against Consumerism Programme commissioned The child-targeted advertising in Brazil, children are Economist Intelligence Unit to undertake an as- still exposed to commercials and advertising. An sessment of advertising to children in Brazil. In ad- analysis of food advertisements on cable televi- dition to measuring the economic impact of ban- sion directed at children in Brazil conducted in ning child-directed advertising, the study explores July 2015 by the Centro Universitário São Camilo non-monetisable results of a ban, including in- and the Universidade Presbiteriana Mackenzie creased mental well-being among children. The measured the content of commercials against study also begins to build the business case for the CONANDA resolution. The study noted that self-regulating advertising to children by high- most of the commercials (64%) used children’s lighting a number of companies that are employ- language and characters, 43% used songs sung in ing good practices and are experiencing positive children’s voices and over 20% linked food pur- business impacts. chases to the distribution of gifts, indicating that the resolution’s effectiveness in preventing Many countries around the world already ban child-directed advertising has been limited.5 child advertising. In Quebec (Canada), Sweden and Norway advertising to children under the Some companies and trade associations have age of 12 is illegal. In the UK, Greece, Denmark decided to face the potential risks—both legal and Belgium advertising to children is restricted. and financial—of continuing to advertise to chil- The EU has framework legislation in place that sets dren rather than redirecting their marketing strate- out minimum provisions on advertising to children gies towards adults. For example, in late 2016 the for its 27 member states. In the US, the Federal Ministério Público Federal (Federal Public Prosecu- Trade Commission studied the issue of advertising tor- MPF) initiated a civil lawsuit against Google, to children in the 1970s but decided against regu- the parent company of YouTube, for failing to lation. abide by regulations that cover advertising to chil- dren under 12. This is not the first time that the com- In Brazil, advertising directed at children (under 12 pany has received a warning from the Brazilian years of age) is illegal under the constitution, the Consumer Defence Code, the Child and Adoles- cent Statute and CONANDA Resolution 163 (2014) 4 World Cancer Research Fund International, “NOURISHING Framework: Restrict food advertising and other forms of (see Box 1). (CONANDA is the National Council for commercial promotion”. Available at: http://www.wcrf.org/ sites/default/files/R_Restrict-advertising.pdf the Rights of Children and Adolescents, an agen- 5 Britto, Soraya da Rocha et al., “Analysis of food cy attached to Brazil’s Department of Human advertisements on cable television directed to children based on the food guide for the Brazilian population and Rights; its Resolution 163 states that any market current legislation”, October 2016. Available at: http://www. scielo.br/scielo.php?script=sci_ communication, including advertising, to chil- arttext&pid=S1415-52732016000500721 8 © The Economist Intelligence Unit Limited 2017 The impacts of banning advertising directed at children in Brazil Advertising to children in Brazil Box 1 Brazil bans advertising directed at children (un- Furthermore, in April 2014 CONANDA issued its der 12 years of age) through its constitution, the Resolution 163, which states that any market Consumer Defence Code, the Child and Ado- communication, including advertising, to chil- lescent Statute and CONANDA’s Resolution 163 dren under 12 years old is abusive. It specifies of 2014. (CONANDA is the National Council for the characteristics of such advertisements, the Rights of Children and Adolescents, an which include an excess of colours, childish lan- agency attached to Brazil’s Department of Hu- guage and the presence of child celebrities. man Rights.) Moreover, advertising of unhealthy The normative document also asserts that any products such as tobacco and alcohol is pro- attempt to persuade children under 12 years of hibited under law 9294 (1996). This is a combina- age to purchase products or services is abusive. tion ban stemming from several measures: the Resolution 163 defines “market communica- constitution, the Child and Adolescent Statute tion” as all forms of commercial communica- and, notably, Article 37, Paragraph 2 of the tion activity to publicise products, services, Consumer Defence Code, which states that brands or companies, via any physical space or any advertising that “takes advantage of chil- media support. Violations are investigated by dren´s lack of judgment and experience” is the public authorities. The practical effect of abusive. This article is part of a normative list for the resolution is to make illegal direct advertis- children’s rights provided by article 227 of the ing to children under 12, in conformity with the federal constitution and the Child and Adoles- Federal Constitution’s Child and Adolescent cent Statute. Statute. authorities for advertising to children. However, However, The Economist Intelligence Unit recog- Google (which alleges there is no specific ban nises that the impact of enforcing the ban on against child-directed advertising in Brazil) has ig- child-directed advertising extends beyond the nored previous warnings because conviction un- monetisable effects. As part of this study, we have der this kind of civil lawsuit attracts no monetary collated and synthesised research on the environ- fine.6 mental, societal and psychological impacts of ending all advertising to children. A summary of In this context, The Economist Intelligence con- these impacts is presented in the paper, with the ducted a study of the impacts of enforcing the intention that, if additional research on these ef- ban on child-directed advertising in Brazil. The im- fects is undertaken and more direct links can be pacts of banning advertising directed at children drawn between enforcing the ban on child-di- in Brazil establishes an initial methodology and rected advertising and these impacts, they can calculations for measuring the impacts of enforc- be built into the analysis calculations. ing the ban. The methodology, found in Part III of this study, was refined by a panel of experts con- Finally, this study begins to build the business case vened in September 2016. It focuses on the costs for the self-regulation of child-directed advertis- and benefits related to a ban on child-directed ing at company level. Industry-wide initiatives, advertising that can be monetised—that is, that government regulations (including CONANDA’s can be valued economically (for example, a fall Resolution 163) and other stakeholders—includ- in advertising sales). ing shareholders, investors, employees, consum- ers and non-profit/advocacy groups—are provid- ing impetus to restrict advertising to children. 6 Gonzalez, Juan Fernandez, “Brazil sues Google for YouTube ad violation”, September 22nd 2016. Available at: http:// Additionally, academic literature has increasingly www.rapidtvnews.com/2016092244390/brazil-sues-google- for-youtube-ad-violation.html#axzz4aZy65C4M highlighted how marketing to children takes ad- 9 © The Economist Intelligence Unit Limited 2017