EcDev Journal

Advertising Ethics in Local Economic Development

Posted on Sunday June 18, 2017
Ed

Is It Is Time For A Set Of Advertising Ethics In Economic Development?

By Edward Burghard

Professional ethics are as important to sustainable success as personal ethics.  The establishment of an accepted code of ethics coupled with vigilant self-policing helps secure the reputation and trustworthiness of both the profession and its practicing members. 

The concept of ethics can be simply described as doing the right thing.  But, sometimes the “right thing” may not be obvious and sometimes doing the right thing requires you make a hard choice. 

A professional code of ethics provides guidance when the right thing may not be obvious, and establishes a commonly accepted performance standard.  Unchecked, unethical behavior severely tarnishes the reputation of all participating members as well as the profession making the job of economic development harder if not impossible.

The International Economic Development Council (IEDC) has authored a general 12-point code of ethics [http://www.iedconline.org/web-pages/inside-iedc/iedc-code-of-ethics/] to help set an appropriate standard and provide guidance to professionals in the industry.  The IEDC even offers a course on ethics to help deepen the understanding of application in real world circumstances.

However, the IEDC code of ethics only indirectly addresses the unique challenges of advertising and promotion in economic development.  Consideration needs to be given to adopting an additional Advertising specific code of ethics to ensure you are better prepared to protect not only your personal reputation or the reputation of the profession, but also the reputation of your community.

As you think about the need to adopt a specific Advertising Code of Ethics, consider the following:

  •  A 2008 U.S. national study conducted by DCI indicates 71% of the time a short list of location options to take into due diligence is created without the Company ever reaching out to an economic development professional.  That means 71% of the time a community or state’s image determines if it is included or excluded from the short list.  Advertising (in all forms) contributes to the creation of that image.  Inappropriate advertising (particularly predatory) can damage the image of a location.  Ultimately this behavior is regulated in a court of law (laws addressing defamation of character).  But many industry associations opt to minimize the need for legal recourse by issuing and adhering to guidance in the form of an Advertising Ethics Statement to help self-policing the behavior of their professional members.

 

  • Advertising influences the world’s perception of Canadian communities and provinces.  Unethical advertising may decrease the chances of a Canadian based location being considered despite the fact it may be a good fit for the foreign national company looking to serve the North American market.  Increasingly, our communities and provinces are competing with the U.S. and Mexico.  To the degree Canada loses an opportunity to compete (even if it loses just one location option from the consideration set), it risks damaging the economy by giving other countries a potential advantage.

 

  • Unethical behavior has a way of snowballing and failure to address it is rarely different than condoning it.  The reputation of the economic development profession can be at risk because of unethical advertising.  This is another key reason other professions adopt and enforce an Advertising Ethics Statement.

So, if you were to write a specific Advertising Code of Ethics, what would it contain?  Here is what I would put in it.  This is adapted from the American Advertising Federation Code of Ethics.

ECONOMIC DEVELOPMENT PROFESSION ADVERTISING CODE OF ETHICS

Truth

Advertising shall tell the truth, and shall reveal significant facts, the omission of which would mislead the public.

Substantiation

Advertising claims shall be substantiated by evidence in possession of the advertiser and advertising agency, prior to making such claims.

Comparisons

Advertising shall refrain from making false, misleading, or unsubstantiated statements or claims about a competitive location.

Bait Advertising

Advertising shall not offer location options unless such offer constitutes a bona fide effort to enter into negotiation for the specific location and is not a device to switch investors to another location that is available.

Incentives

Advertising of incentives shall be explicit, with sufficient information to apprise investors of their principal terms and limitations or, when space or time restrictions preclude such disclosures, the advertisement should clearly reveal where the full text of the incentive can be examined before start of negotiation.

Cost of Doing Business Claims

Advertising shall avoid cost of doing business claims that are false or misleading, or reduced cost claims which do not offer provable savings.

Testimonials

Advertising containing testimonials shall be limited to those of competent witnesses who are reflecting a real and honest opinion or experience.

Taste And Decency

Advertising shall be free of statements, illustrations or implications offensive to good taste or public decency, or that characterize another location in a demeaning manner.

Real World Examples

Let’s look at couple situations you might find yourself in to see how the Advertising Code of Ethics is applied.  To get full value from these examples, consider using them as starters for a small group discussion with your economic development colleagues.

 

  • Let’s look at truth.  What does it really mean to be truthful?  Are we talking about the relative or absolute truth?  For perspective, relative truth is based on opinion.  When you say a “charming community”, charming is in the eye of the beholder.  If you say our town has a public green space, it is an absolute truth because it is not a matter of opinion, but rather a matter of fact.  But, what if you say your community has a beautiful river view property ready for immediate development and you omit the fact it is located in a flood plain that would make insurance challenging to secure?  Omitting the fact the property is in a flood plain knowing that is an important consideration in site selection would be a clear violation of the code.  When in doubt, use this definition of truth for guidance: “The actual state of things, a completely accurate account of the relevant facts”.

 

  • Now let’s look quickly at rankings.  We all know rankings are a function of what is actually being evaluated.  What if your community is ranked low in the incidence of violent crime, but high in the frequency of robbery and theft?  Is it ethical to claim your community is safe?  What if there are two rankings looking at essentially the same thing but reporting different results because of sampling methods?  Is it ethical to present the positive results and ignore the negative results?  In this case the substantiation of the claim could be questioned.  You should either find/execute a more definitive study to support the claim, or simply not make the claim since it can’t confidently be supported.

 

  • Testimonials often represent an ethical challenge.  Is it ethical to use testimonials from CEOs that have received significant concessions to encourage expansion without disclosing the fact?  The Guidelines would suggest you use testimonial from somebody without the inherent bias, or you disclose the potential for bias.

 

  • Surveys are another land mine of potential ethical issues.  Most people do not read about the methodology of surveys being quoted in promotion.  Consequently, they rarely have a sense for how to put the results in context.  What is a survey shows your community as the numerical best, but there is no statistically significant difference in the scores of the top five communities?  It is ethical to make the claim that your community is the best?  Or, is the claim misleading because you omit sharing that the difference is not statistically significant?  Similarly, if the survey is based on a subset of the population (e.g. the affluent) and not representative of the general population, is it ethical to share the results without clearly stating the population bias?  Failure to disclose “relevant facts” necessary for the accurate interpretation of survey data is a breach of ethics.

 

  • Promotion on cost of doing business is sometimes an ethical challenge.  Often a comparison is made based on a specific tax without commenting on the overall tax burden or labor cost.  Is having the lowest corporate income tax a legitimate claim if the provincial sales tax more than offsets the difference or if leasing facility costs or energy costs are high?  Is it ethical to focus on only one aspect of operating cost to gain attention and expect the capital investor to do the thorough cost comparison?  Or, are you engaging in misleading promotion?

 

  • The very nature of economic incentives often presents an ethical challenge.  Should you give up tax revenue today that could be put to use to improve the community for the potential to earn greater tax revenue in the future?  Is the use of multipliers actually reliable in calculating the return on investment for a specific incentive offer?  Will the incentive actually result in local hiring or will it simply encourage bringing in new residents who will require incremental public services (a near-term cost)?  Are the claw back provisions (assuming they exist) genuine with an intent to enforce or simply political?  Will the incentive actually change a company’s choices or are you underwriting a choice the company would make anyway?  This 2017 Upjohn report [http://www.pewtrusts.org/en/research-and-analysis/analysis/2017/03/08/upjohn-report-offers-new-findings-on-business-incentives] on the use of incentives by U.S. states and cities provides important perspective on the role of incentives in economic development.

 

These are just a few examples of the many challenges that can and do come up in Place Promotion that would benefit from having a specific code of Ethics to provide decision-making guidance.

Considerations

Recognize the shortcomings of your community and have an action plan you can talk about to address them.  Every community has positives and negatives.  Prospective capital investors and skilled labor looking to relocate will eventually uncover your community’s faults.  Accept that they exist and know how the shortcomings are being addressed.  By committing to proactively address these shortcomings, you can neutralize them as negative points of difference and focus more time on discussing your community’s competitive strengths.

Your community’s reputation is under constant threat of damage.  You need to be aware of what a Google search will uncover about your community and create an action plan to address any negatives.  A positive reputation is priceless, but requires nurturing to be sustained.  When major misperceptions arise, you need to proactively address them.  If you don’t your community’s reputation can be lost.  Once lost, it is both expense and time consuming to regain.

Actions speak louder than words.  Your advertising must be authentic with what your community truly is and how its residents behave.  The walk and talk need to be synchronized.  People expect spin and are cynical of advertising claims.  Misrepresentation isn’t simply unethical, it can quickly spin out of control and leave you with a public relations nightmare to manage.

What’s Next?

Ultimately, the choice of operating against an Advertising Code of Ethics is your choice.  You don’t need the industry to author and ratify one.  You can either write your own or adopt the set I have provided.  The real important thing is to look at your Place Promotion through the lens of ethics.  If you find yourself defending a claim or promotional practice too frequently or too vigorously, there is a good chance an ethical question is at play.  In those cases, take two steps back and revisit whatever set of guiding principles you are using to help with those decisions.  If you do, you will be doing yourself, your community and your profession proud.

About The Author

Ed Burghard is the watchdog for Brand America and the American Dream.  He started the Strengthening Brand America Project with a purpose of teaching economic development professionals how to effectively use place branding as a strategy to enrich the lives of residents in their community.  Ed spent 35 years sharpening his branding skills at Procter & Gamble, one of the world’s greatest branding companies.  His career included an assignment in the company’s Toronto, Ontario office.  Ed also led the development of the Ohio brand during which time the state won Site selection Magazine’s Governors Cup Award (2006, 2007, 2008, 2009 and 2011).  You can get free place branding advice from Ed by visiting www.strengtheningbrandamerica.com.