Today in Context Collapse: Why legal advertising is legal in the United States of America.
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In last week’s newsletter, I talked a little bit about government regulation of advertising (in this case, legislation around algorithmically-targeted ads). Government regulation of advertising in the USA—occurring both through legislation and court decisions—tends to be more reactive than actively interventionist, which has led to some interesting innovations.
Matter of fact, I’d argue that the law firm advertisement and pharmaceutical advertising (another subject for another day) are largely unique American creations.
The floodgates of legal advertising in the United States opened in 1977 when the Supreme Court ruled on Bates v. State Bar of Arizona. I’ll let Wikipedia do the heavy lifting on what happened:
In holding that lawyer advertising was commercial speech entitled to protection under the First Amendment (incorporated against the States through the Fourteenth Amendment), the Court upset the tradition against advertising by lawyers, rejecting it as an antiquated rule of etiquette.
The Court emphasized the benefits of the information that flows to consumers through advertising, positing that lawyer advertising would make legal services more accessible to the general public and improve the overall administration of justice. The Court had previously held in Virginia State Pharmacy Board v. Virginia Citizens Consumer Council that advertising by pharmacists regarding the price of prescription drugs was commercial speech protected by the First Amendment.
So basically… run wild, law firms! Advertise all you want within the hard boundaries of don’t-lie and don’t-misrepresent-yourselves!
For lawyers, pharmacists and prescription drug manufacturers, the primary restraints on advertising were professional rather than legal—the challenge was less that print or television ads were illegal in themselves than that of their powerful trade associations viewing them as “unseemly” (which also gave larger law firms and pharmaceutical companies with preexisting name recognition an unfair advantage against smaller competitors, of course).
Anyway, the Bates decision quickly laid the groundwork for decades of legal advertising. As a result of the Bates case working its way through the courts—which involved a low-cost law clinic whose business model relied on rapid turnaround of routine legal services at high volume, advertised in local media—the American Bar Association revised their professional guidance to become much more sympathetic to the idea of advertising.
Then this happened. Let’s fall back on Wikipedia again, this time their article on legal advertising in the United States:
After the U.S. Supreme Court decision, law firm advertising activity increased significantly. Initially the majority of lawyer advertisements were directed at "car wreck" victims. Later, advertising attempted to recruit clients affected by medications that were recalled for safety reasons or had unanticipated or undisclosed side effects.
In the top 75 television markets nationwide, 2,000 lawyers advertise on television and spend close to $200 million collectively on advertising. Twenty percent of low-income households who have sought after legal counsel or advice have found their lawyer through the lawyer’s advertisements.
It is estimated that 75 percent of law firms advertise. Research has suggested that the smaller the firm the more likely they are to advertise. According to an article published in the Service Marketing Quarterly, 94% of Americans are familiar with lawyer television advertisements.
“The smaller the firm the more likely they are to advertise.”
Bringing this to our present-day situation in 2022 regarding regulation of advertising… The surveillance advertising bill is happening at the same time as incumbents in the digital advertising space like Google and Meta/Facebook are moving away from the cookie microtargeting model for their own, money-centric reasons. In terms of legislation or court action regarding digital advertising, that’s not the one to watch.
But legislation and court rulings regarding influencer marketing and sponsored/compensated posts on social media? The black boxes determining metrics and rates on digital ad exchanges? Pharmaceutical advertising in places where you can’t issue the traditional black box warning? Read the FDA’s guidance on pharmaceutical advertising—it’s a doozy!
Something to keep an eye on.
Amy Webb’s Future Today Institute put together a good roundup of what you missed at CES.
Loving this Wunderman deck on The Future 100. (via Benedict Evans)
Run, run, sweet Roomba. Escape the surly bonds of your hotel job.
How Starbucks became a virtual bank by making lots and lots and lots of money on Starbucks cards.