Food Industry Marketing SS_2007

Supporting Statement for a Paperwork Reduction Act
Submission to OMB
FTC Study of Food Marketing to Children and Adolescents
The Federal Trade Commission (“FTC” or “Commission”) proposes to conduct an
analysis of food and beverage industry marketing to children and adolescents. This analysis will
examine advertising and promotional techniques and expenditures by industry members that
target the marketing of certain food and beverage products to this population. The Commission
will seek the information necessary to prepare this analysis through compulsory process under
Section 6(b) of the FTC Act, 15 U.S.C. § 46(b).
1. & 2.

Necessity for Information Collection and How the Data Will Be Used

The Commission is undertaking this analysis in response to a congressional request. The
Conference Report1 for the Commission’s FY 2006 appropriation legislation2 incorporated by
reference language from the Senate Report directing the FTC to submit a report to the Committee
regarding:
marketing activities and expenditures of the food industry targeted toward children and
adolescents. The report should include an analysis of commercial advertising time on
television, radio, and in print media; in-store marketing; direct payments for preferential
shelf placement; events; promotions on packaging; all Internet activities; and product
placements in television shows, movies, and video games.3
The FTC proposes to send information requests to forty-four (44) food and beverage
manufacturers, distributors, and marketers and quick service restaurant companies in the United
States. The companies that will receive these information requests are those marketing and
selling the categories of food and beverage products that appear to be advertised to children and
adolescents most frequently. The information requests will seek data and information regarding,
among other things: (a) the types of foods marketed to children and adolescents; (b) the types of
measured4 and unmeasured5 media techniques used to market food products to children and

1

H.R. Rep. No. 109-272 (2005).

2

Pub. L. No. 109-108.

3

S. Rep. No. 109-88 (2005) at 108.

4

“Measured media” include methods such as television, radio, print (magazine and
newspaper), and some forms of Internet advertising.
5

“Unmeasured media” include methods such as in-store marketing (including shelf
placement), events, package promotions, and product placement in entertainment media
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adolescents; (c) the amount spent to communicate marketing messages about food products to
children and adolescents in measured and unmeasured media; (d) the nature of the marketing
activities in unmeasured media used to market food products to children and adolescents; and (e)
any marketing policies, initiatives, or research in effect or undertaken by the companies relating
to the marketing of food and beverage products to children and adolescents.
The proposed Section 6(b) Orders will seek information about the categories of food
products, the specific brands, and the sub-brands or brand variants that the companies market to
children and adolescents. The Orders will specify eleven (11) food categories for which
companies will have to report marketing expenditures and activities, and will list the
corresponding Product Category Codes from Nielsen Media Research.6 In some cases, the FTC’s
food categories will be more limited than Nielsen’s Product Category Codes, and the agency will
make this clear in the Orders. The proposed Section 6(b) Orders will also request information on
whether the companies offer a line of food products bearing a nutritional icon, seal, or symbol, or
otherwise identified as “better for you,” healthier, more nutritious, lower calorie, or lower fat
than other products, and will seek information on how those product lines are marketed to
children and adolescents. This information will help the agency evaluate the variety of foods and
beverages that is marketed to children and adolescents.
The proposed Section 6(b) Orders will require the companies to provide their marketing
activities and expenditures during the calendar year 2006 in a number of measured and
unmeasured media categories. Specifically, the Orders require that data on expenditures and
activities be broken down into 20 media categories.7 The proposed Section 6(b) Orders will
require industry members to report expenditures in each of the measured and unmeasured media

(including television shows, movies, video games, and music recordings).
6

The specific categories for which the FTC will request data are: breakfast cereals;
snack foods; candy; dairy products, including milk and yogurt; baked goods; carbonated
beverages; fruit juice and non-carbonated beverages; prepared foods and meals; frozen and
chilled desserts; and quick service restaurant items. FTC staff has identified these as the
categories of food and beverage products that appear to be advertised to children and adolescents
most frequently. In addition, the FTC proposes to collect information from major marketers of
fruits and vegetables to ensure that data are gathered regarding efforts to promote consumption of
these foods among children and adolescents.
7

These are: television advertising; radio advertising; print advertising; movie
theater/video/video game advertising; company-sponsored Internet sites; other Internet
advertising; other digital advertising; in-store advertising and promotions; specialty item or
premium distribution; public entertainment events; product placements; character licensing and
cross-promotions; sponsorship of sports teams or individual athletes; packaging and labeling;
word-of-mouth marketing; viral marketing; celebrity endorsements; in-school marketing;
advertising in conjunction with philanthropic endeavors; and other expenditures.
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2

categories by food category, by brand (or variety for non-branded products), and, where such
advertising exists, by sub-brand or brand variant, and to identify expenditures for products that
are part of a nutritional product line. Expenditures will be reported separately for marketing
activities directed to children ages 2-11 and for those directed to adolescents ages 12-17. This
information will allow the agency to analyze how industry members allocate their promotional
expenditures among particular food and beverage products and particular media for each age
group.
Thus, the proposed Section 6(b) Orders seek comprehensive information about activities
and expenditures to promote food and beverages to children and adolescents. This information
will allow the agency to analyze how industry members allocate their promotional activities and
expenditures among various measured and unmeasured media types for different food products.
The categories are carefully defined to facilitate compliance with the requests, as are the criteria
for determining whether particular marketing activities and expenditures must be included in the
responses.
Total marketing expenditures for each food category, brand, and sub-brand or brand
variant will also be reported to permit the agency to analyze the percentage of marketing
expenditures for any product or in any media category that is directed to children or adolescents.
Similarly, the proposed Orders will ask the companies to identify any marketing expenditures
that are directed to individuals of a specific race, ethnicity, or gender.
The information presented in the report will not reveal company-specific data, except data
that are public. See 15 U.S.C. § 57b-2(d)(1)(B). The Commission anticipates providing
information on an anonymous or aggregated basis, in a manner sufficient to protect individual
companies’ confidential information, to provide a factual summary of food industry marketing
activities and expenditures targeted to children and adolescents. To the Commission’s
knowledge, most of the information to be included in this report is not publicly available from
other sources.
3.

Information Technology

Improved information technology may assist in gathering and producing this information.
Consistent with the aims of the Government Paperwork Elimination Act, 44 U.S.C. § 3504, the
FTC will request the submission of information through electronic means. Electronic
submissions of the expenditure data are needed to enable FTC staff to aggregate and analyze the
data using database software. In addition, the FTC is requesting the submission of two paper
copies. These will facilitate the reading of the individual submissions by the FTC staff and will
ensure that analysis will not be delayed by potential problems in the printing and copying of
electronic submissions.

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3

4.

Efforts to Identify Duplication

There is no reliable information available elsewhere that can be used to prepare this
report to Congress. Efforts to identify duplicate sources of information included a review of
trade journals, government publications, and other published sources.8
5.

Efforts to Minimize the Burden on Small Organizations

The requests to the 44 food and beverage industry members (including 39 producers,
distributors, and/or marketers and 5 restaurant chains) will not have a significant impact on a
substantial number of small entities. Wherever possible, the FTC has attempted to minimize the
time commitment necessary to respond to the information requests. The FTC will consider
proposals for use of information technology that may reduce the burden.
6.

Consequences to Federal Program and Policy Activities/Obstacles to Reducing Burden

If the information is not collected, the FTC will not have the data necessary to prepare the
report requested by Congress. The burden of the information collection has been reduced as
much as possible.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

The information requests are consistent with all the applicable guidelines contained in 5
U.S.C. § 1320.5(d)(2).

8

Last year, the Institute of Medicine, Committee on Food Marketing and the Diets
of Children and Youth, prepared a report titled “Food Marketing to Children and Youth: Threat
or Opportunity?” The Committee relied upon published sources and publicly available industry
and commercial marketing research. It noted in its report, however, at p. 1-14, the difficulty of
obtaining and using the relevant data:
The Committee faced several notable challenges to acquiring and using this commercial
marketing research. Businesses are increasingly using integrated marketing strategies to
ensure that young consumers are exposed to messages that will stimulate demand, build
brand loyalty, and encourage potential or existing customers to purchase new products.
. . . Many of these strategies are new, and are not well researched or evaluated.
Additionally, a large proportion of this research is conducted for paying clients and is
therefore considered to be proprietary information that is not publicly accessible or
available only for purchase at considerable cost to the committee and with prohibitive
constraints on public availability of the data.
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8.

Public Comments/Consultation Outside the Agency and Actions Taken

As required by 5 C.F.R. 1320.8(d), the Commission published a notice seeking public
comment on the proposed collections of information, see 71 Fed. Reg. 62109 (Oct. 23, 2006),
and is doing so again contemporaneously with this submission.
In response to the October 23rd Federal Register Notice, the FTC received 27 comments.9
Sixteen of the comments were filed by one organization, and did not specifically address the
proposed data collection.10 Eight of the comments expressly favored the proposed data
collection. These were submitted by: (1) the Public Health Institute (PHI) and, separately, the
Public Health Law Program (PHLP) of the PHI; (2) members of the Children’s Media Policy
Coalition of the Georgetown University Law Center Institute for Public Representation (CMPC
members);11 (3) Consumers Union; (4) the California Department of Health Services (CDHS);
and (5) three individual consumers, including one nutrition educator. The remaining three
comments did not oppose the data collection but made suggestions for enhancing the quality,
utility, and clarity of the information to be collected and for reducing the burden on the
companies. These came from the Mercatus Center at George Mason University, food and
beverage industry member Burger King Corporation (BKC), and the Grocery Manufacturers
Association and Food Products Association (GMA/FPA).
a.

General Support for the Data Collection

The Consumers Union comment stated that the proposed information collection is
essential to the FTC fulfilling its consumer protection mandate and to enabling the FTC to
provide key information for Congress and to meet the recommendation of the Institute of
Medicine of the National Academies (IOM) to report on the status of food and beverage
marketing to children. Consumers Union further noted that the information collection could
provide a basis for sound policy-making in the area of food and beverage marketing to children
and adolescents. The CDHS comment stated that the FTC’s report, which will be based on
information collected in response to the proposed Section 6(b) Orders, will guide the CDHS’s

9

The comments are available at
http://www.ftc.gov/os/comments/foodmktgtokids-pra/index.htm.
10

The sixteen comments were filed by the Loyola of Los Angeles Law Review and
consisted of sixteen articles published in the Law Review in conjunction with a symposium held
at Loyola Law School on October 21, 2005 on “Food Marketing to Children and the Law.” See
Comments by Loyola of Los Angeles Law Review (Nov. 16, 2006).
11

Specifically, a comment was submitted by the following members of the
Children’s Media Policy Coalition: Action Coalition for Media Education, Benton Foundation,
Children Now, National PTA, and the Office of Communication of the United Church of Christ,
Inc.
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5

own program planning, intervention and evaluation, and counter-advertising. CDHS stated that
the report would also level the playing field among industry competitors by requiring all
companies to disclose their marketing practices and, if necessary, would guide the development
of state or federal regulatory and enforcement actions for food marketing to children.
One individual consumer commented that the information collection process is essential
to making any determinations about what government action may be needed in the area of food
and beverage marketing to children.12 Another consumer similarly stated that the proposed
Section 6(b) Orders are necessary for the government to take appropriate action in the debate
regarding food marketing to children.13
b.

Utility of the Information Collection

In its October 23 Notice, the FTC stated that it would seek relevant information,
including empirical data, on the nature and extent of marketing activities and expenditures
targeted to children and adolescents. The FTC invited comments on whether the proposed
collections of information are necessary for the proper performance of the functions of the FTC,
including whether the information will have practical utility. The Mercatus Center commented
that, given the recent action by the Children’s Advertising Review Unit (CARU) to update its
self-regulatory guidelines as well as the Better Business Bureau’s (BBB) Children’s Food and
Beverage Advertising Initiative entered into by eleven major marketers of food and beverage
products to children, the data requested in the proposed Section 6(b) Orders may be outdated.
The Mercatus Center suggested that the FTC request copies of new marketing plans that would
reflect any changes resulting from the recent CARU and BBB initiatives. The FTC agrees that
any new corporate policies and initiatives will enable the agency to report on any planned
changes in the food and beverage industry’s practices in marketing to children, and will request
copies of such policies and initiatives in the proposed Section 6(b) Orders. However,
information on recent expenditures and activities will allow the agency to present a complete and
relatively current picture of marketing expenditures and activities targeted to children as well as
adolescents – which are not covered by the CARU and BBB initiatives, and will serve as a
benchmark for any future measurements of food and beverage marketing to children and
adolescents. As a result, the proposed information requests will also seek these data.
Consumers Union strongly supported the FTC’s proposal to request information on
advertising expenditures and activities in both measured and unmeasured media. Consumers
Union noted that use of unmeasured media is on the rise and that collection of these data will
allow the FTC to provide a full picture of the marketing of food products to children and
adolescents. The CDHS comment stated that the proposed information collection is necessary to
determine the degree to which self-regulatory programs and other voluntary marketing

12

See Comment by Fred Cantor (Nov. 30, 2006).

13

See Comment by Sheila Fleischhacker (Dec. 27, 2006).

Dated: April 2007

6

restrictions are being implemented.
The GMA/FPA stated that the need for data is limited when compared to the cost of
obtaining and compiling it, and noted that food and beverage television advertising to children
has substantially decreased over the last thirty years and is not likely a factor that contributes to
increasing childhood obesity levels. BKC suggested that the FTC limit the scope and substance
of the information requests and the report to focus on empirical data relating to advertising
expenditures and practices. BKC noted that Congress has not asked the agency to study the link
between advertising and obesity. The proposed Section 6(b) Orders and the FTC’s forthcoming
report will address marketing activities and expenditures by the food and beverage industry that
are targeted to children and adolescents; the Orders and report will not attempt to analyze any
purported causal connection between advertising and obesity, as this subject is outside the scope
of the report Congress requested. However, Congress expressly requested that the report address
expenditures and activities in both measured and unmeasured media categories, and the FTC
requires empirical data from industry members to do so.
c.

Accuracy of Estimated Burden of the Information Collection

In the October 23 Notice, the FTC invited comments on the accuracy of the agency’s
estimate of the burden of the proposed collection of information, including the validity of the
methodology and assumptions used. The GMA/FPA stated that, while the aggregate costs of
complying with the proposed data requests are difficult to predict, the FTC’s estimate is likely
too low, and some companies may not track marketing expenditures and activities in the
categories and the format the agency will request. The GMA/FPA stated that the cost of hiring
financial and legal assistants to prepare a response could alone equal $25,000 for smaller
companies and $50,000 for larger companies. The GMA/FPA suggested that the burden on
companies is likely to correlate more closely to the number of brands a company markets, than
the number of food categories in which it markets products.
The FTC cannot, however, determine in advance the number of brands for which each
company will be required to provide data; this will depend on how the companies market their
brands. Nor is it likely that each company will engage in an equal level of marketing for all
brands. The FTC believes its ranges for estimated costs, which are separated into single-category
and multiple-category company ranges, are sufficiently wide to account for differences in the
number of individual brands the companies market in each category and in the amount of
marketing the companies engage in for each brand.
d.

Suggestions for Improvements to Proposed Information Collection

The FTC invited comments in its October 23 Notice on ways to enhance the quality,
utility, and clarity of the information to be collected. Many of the comments the FTC received
offered suggestions for enhancing the FTC’s proposed collection of marketing data.

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The PHI comments encouraged the collection of in-school marketing data, data on pricing
strategies and consumer food purchases, and expenditures devoted to market research. PHI also
recommended that the FTC seek information on the companies’ product portfolios and on any
marketing resources devoted to developing, packaging, and promoting products that contribute to
a healthy lifestyle. The Mercatus Center suggested that the FTC research and report on the new
self-regulatory initiatives being undertaken by food and beverage industry members, including
the revised CARU guidelines and the Children’s Food and Beverage Advertising Initiative, as
well as company-specific initiatives. Consumers Union urged the FTC to seek information on
school-related marketing activities, request brand-specific information from companies, and
collect marketing data broken down by race and ethnicity.
The CMPC members requested that the FTC include major child-oriented media
companies in the information requests, in order to determine the percentage of advertising run in
their media that is directed to children and promotes food and beverage products or companies,
the reach of such advertising, and the revenue from such advertising. The CMPC members also
urged the FTC to seek information on all major and emerging types of food marketing directed at
children and teens, including in-school marketing activities, character licensing, celebrity
endorsements, Internet, cell phone and other technological advertising, and viral and word-ofmouth marketing. The CMPC members further requested that the FTC require companies to
provide information about any market research involving children, advertising exposure data, and
demographic data for target audiences.
The GMA/FPA comments recommended that the FTC’s information requests specify
categories and terminology used in the ordinary course of business by manufacturers and
advertisers, such as the Product Category Codes used by Nielsen Media Research. GMA/FPA
also asked that the FTC not request data on in-store marketing activities, event marketing,
character licensing, product packaging, or product placement, on the grounds that these types of
marketing are not likely to be targeted to children and adolescents, and because expenditures and
activities in these categories would be difficult to ascertain. GMA/FPA further requested that
FTC limit the information requests to a discrete time period, such as a single fiscal year.
BKC recommended that the FTC send information requests regarding: the types of food
and beverage products marketed to children (defined as “consumers under the age of 13”); the
amount of commercial time dedicated to advertising to children on television and radio; the types
of print media, in-store marketing, events, packaging promotions, Internet activities, and product
placements used to advertise to children; and the expenditures for television, radio, and print
media advertisements directed to children. The PHLP urged the FTC to make its reporting
requirements similar to those used in the FTC’s tobacco industry information requests.
The CDHS encouraged the FTC to seek information on: all of the categories of data
listed in the Senate Report; trends for unmeasured media promotion, such as product placement,
character licensing, special events, in-school activities, advergames, and promotions using music,
cell phones, and sport and entertainment venues; price promotions and price points; and
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promotional and educational strategies directed toward particular population segments based on
income-level, race/ethnicity, or age. CDHS also recommended that the FTC collect data by
specific name brands, including the nutrition or caloric level of the food being advertised for
comparison purposes, and that the FTC request the marketing portfolios for healthy foods as
compared to all foods marketed by the companies. Finally, CDHS suggested that the FTC collect
any qualitative research data studying children and youth, as well as scanner or other sales data
for food and beverage products marketed to children, including cross-promotions.
One individual consumer asked that the Commission request data on celebrity
endorsements, sweepstakes, product placements, and peer-to-peer advertising, as well as data
showing the placement times for television advertisements directed to children.14 Another
consumer recommended that the FTC seek information on audience thresholds companies use to
target particular age groups, and to request any market research the companies may have
undertaken for particular advertising campaigns directed to children.15 A third consumer
suggested that the FTC seek information on: the demographic data industry uses to target
marketing to particular ethnic or age groups; product profiles, to enable the FTC to analyze the
amount expended on the marketing of items of greater or lower nutritional value; the expertise of
any nutrition or health professionals who work or consult on marketing activities and the
expenditures related to the hiring of such professionals; quantitative and qualitative assessments
of marketing practices that emphasize physical activity in comparison to dietary choices; criteria
for any nutritional icons used; and money spent on lobbying Congress on the issue of food
marketing to children.16
Many of the proposals for improving the data collection are incorporated into the
proposed Section 6(b) Orders. The proposed Orders will require the companies to provide
samples of (or to describe, if providing samples is not practicable) the specific advertising and
promotional activities undertaken in each of the unmeasured media categories (including all
Internet advertising) for which qualifying expenditures are reported or for which there are
qualifying activities for which no expenditures are reported. Whereas marketing activities in
television, radio, and print media are relatively uniform, research by FTC staff indicates that
industry members employ a wide variety of marketing techniques in unmeasured media to
promote food and beverage products to children and adolescents. In addition, some activities,
such as product placements and viral and word-of-mouth marketing activities, may occur as
cross-promotions or in another context in which no actual costs are incurred. By collecting
samples and descriptions of these activities from industry members, the agency will be able to
provide Congress and the public with a complete picture of the types of marketing techniques the
industry is using to reach children and adolescents.

14

See Comment by Jill Pakulski (Oct. 30, 2006).

15

See Comment by Fred Cantor (Nov. 30, 2006).

16

See Comment by Sheila Fleischhacker (Dec. 27, 2006).

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The proposed Section 6(b) Orders also will seek information about any company policies
pertaining to the marketing of food and beverage products to children and adolescents, including
any policies or programs undertaken or implemented by the companies to improve the nutritional
profiles of the foods they market to children or to encourage healthy eating and lifestyle choices
by children and adolescents. In addition, the Orders will request copies of any market research
sponsored or undertaken by the companies to measure the appeal of certain food products or
marketing activities to children and adolescents.
Thus, the companies will be able to show any changes in their future marketing plans and
policies that might not be reflected in their reports of past marketing expenditures and activities.
The information will also allow the agency’s report to address any anticipated changes in the
marketing of food and beverage products to children and adolescents, and will permit the agency
to evaluate whether companies have implemented any of the recommendations contained in the
April 2006 Report on a Joint Workshop of the Federal Trade Commission and the Department of
Health and Human Services.17 Information on market research sponsored or undertaken by the
companies will enable the agency to evaluate the companies’ process for selecting food products
or marketing techniques to reach children and adolescents.
The FTC has concluded that in order to produce a report that is both comprehensive and
of manageable scope, the proposed Section 6(b) Orders should focus primarily on the issues
outlined in the Senate Report. The Commission has structured the proposed Orders so as to
achieve those twin goals.
e.

Suggestions for Minimizing the Burden of the Information Collection

In the October 23 Notice, the FTC invited comments on ways to minimize the burden of
the collection of information on those who are to respond, including through the use of
appropriate automated, electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic submission of responses. In
response, the Mercatus Center stated that information on advertising in measured media is
collected by various market research companies, and that it might be less costly to compel
production of this information from such companies. However, the FTC seeks information on
expenditures and activities in both measured and unmeasured media categories, and industry
members are in the best position to provide responsive data. The data gathered by market
research companies is too limited to provide an adequate substitute. The Mercatus Center
commented that market research companies may be in a better position to provide information on
17

See Federal Trade Commission & Department of Health and Human Services,
Perspectives on Marketing, Self-Regulation, & Childhood Obesity: A Report on a Joint
Workshop of the Federal Trade Commission & the Department of Health and Human Services
48-54 (Apr. 2006) (Joint Workshop Report), available at
http://www.ftc.gov/os/2006/05/PerspectivesOnMarketingSelf-Regulation&ChildhoodObesityFT
CandHHSReportonJointWorkshop.pdf.
Dated: April 2007

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advertising time and exposure, but the proposed Section 6(b) Orders do not ask companies to
provide this information.
The FTC’s proposed Section 6(b) Orders seek information on expenditures and activities
in both measured and unmeasured media categories. The GMA/FPA stated that the FTC should
seek data only on measured media expenditures and activities in order to minimize the burden on
industry members. Although GMA/FPA states that measured media activities account for the
majority of marketing expenditures targeted to children and adolescents, other commenting
parties made conflicting observations,18 and the FTC staff’s research found that industry
members are currently engaged in a wide variety of unmeasured media activities to promote food
and beverage products to children and adolescents. Moreover, Congress expressly requested that
the report address expenditures and activities in both measured and unmeasured media
categories, and a substantial number of the media categories for which information is sought in
the proposed Section 6(b) Orders are taken directly from the Senate Report.
GMA/FPA further requested that, if information is sought on unmeasured media, the FTC
should ask for best estimates of aggregated expenditures (rounded to the nearest multiple of $10
or $50 million), along with illustrations of the activities. The FTC will seek illustrations of
unmeasured media activities in the proposed information requests. However, limiting reporting
of expenditures to multiples of $10 or $50 million would not provide a sufficiently accurate or
complete picture of the amount of unmeasured media activity in which the companies are
engaged. Many Internet-based promotions, for example, are likely to cost the companies
relatively little money and would not be captured if the reporting limit were set that high. The
FTC proposes seeking data on expenditures rounded to the nearest $1,000.
The GMA/FPA also asked that the FTC provide a clear definition for marketing directed
to children and adolescents. The proposed Section 6(b) Orders provide a detailed list of criteria
for marketing expenditures and activities that companies must report. The FTC will examine
reported data and determine which expenditures and activities are targeted to children and
adolescents, and will report on these in the aggregate.
BKC commented that the information requests should be limited to marketing undertaken
by companies at the centralized, corporate level, and should not include marketing that occurs at
the regional, local, or individual franchise level. The FTC believes that limiting the requests in
this fashion could result in the omission of valuable marketing data. If a company expends
money on or approves activities in advertising or other promotional activities that are segmented
by region, locality, or individual franchise, then the proposed Section 6(b) Orders would require
the company to report these expenditures and activities; the company would not, however, be
required to gather data not already in its possession on expenditures and activities independently
undertaken by individual franchises.

18

See, e.g., Comments by Consumers Union (Dec. 18, 2006), at 2.

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The CDHS recommended that data be collected online and that, whenever possible, the
FTC should use existing industry information consistent with conventional commercial
measures. The CDHS stated that any costs to industry members in responding to the information
requests were fair and reasonable given that the IOM recently reported that the food, beverage,
and restaurant industries have approximately $900 billion in annual sales and spend more than
$10 billion per year in marketing their products to children and youth. CDHS also pointed to the
cost to the public and the U.S. health care system due to the consequences of physical inactivity,
obesity, and overweight, which were approximately $28 billion in California alone in 2005.
Again, the proposed Section 6(b) Orders will seek information consistent with commercially
measured media, but will also seek information on non-commercially measured media
expenditures and activities, as requested by Congress.
f.

Other Requests Contained in Comments

The CDHS requested that information collected from the companies be made public and
that data collection continue following the publishing of the FTC’s report. The Mercatus Center
also requested that the FTC create a publicly available database of any of the information
collected that is not confidential or does not constitute trade secrets, so that other researchers
could replicate the FTC’s findings. The agency anticipates, however, that much of the
information collected will be protected by law from public disclosure,19 and anticipates reporting
on marketing expenditures and activities in the aggregate.
One consumer asked the FTC to provide information on the selection process criteria for
the targeted companies.20 These criteria will be outlined in the FTC’s final report. The PHLP
requested that the FTC make reporting an ongoing requirement for food and beverage industry
members. The FTC plans to complete the current report before considering proposals for future
research. The agency is committed to ongoing monitoring of this subject area, however, and
anticipates that it will continue to address issues raised by food marketing to children.
The Mercatus Center’s comment suggested that the FTC evaluate a number of additional
issues: the extent to which children and adolescents are exposed to and process advertisements
targeted toward them; other factors that might cause a rise in obesity, such as physical inactivity
and sedentary activities; and the possible beneficial aspects of advertising, such as educational
effects. These issues, however, are beyond the scope of the report requested by Congress, and
the FTC will not address them in the current report. The goal of the proposed information

19

Section 6(f) of the FTC Act, 15 U.S.C. 46(f), bars the Commission from publicly
disclosing trade secrets or confidential commercial or financial information it receives from
persons pursuant to, among other methods, special orders authorized by Section 6(b) of the FTC
Act. Such information also would be exempt from disclosure under the Freedom of Information
Act. 5 U.S.C. 552(b)(4).
20

See Comment by Sheila Fleischhacker (Dec. 27, 2006).

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collection is to conduct a comprehensive review of food industry marketing activities and
expenditures targeted to children and adolescents. The FTC expects that focusing its efforts in
this manner will facilitate production of a high quality study that thoroughly responds to
Congress’s request.
9.

Payments and Gifts to Respondents
There is no provision for payments or gifts to respondents.

10. & 11.

Assurances of Confidentiality/Matters of a Sensitive Nature

In connection with the information requests, the Commission will receive information of
a confidential nature. Under Section 6(f) of the FTC Act, such information will be protected
from disclosure while it remains confidential commercial information. 15 U.S.C. 46(f). In order
to protect the confidential financial information it receives, the Commission will aggregate the
information before incorporating it into the report to Congress.
12.

Estimated Annual Hours and Labor Cost Burden
Annual Hours Burden: 6,000 hours (rounded to the nearest thousand)
Annual Cost Burden: $1,568,000 (rounded to the nearest thousand)

FTC staff’s estimate of the hours burden is based on the time required to respond to each
information request. The Commission intends to issue the information requests to 44 parent
companies of food and beverage and quick service restaurant advertisers. Because these
companies vary in size, in the number of products they market to children and adolescents, and in
the extent and variety of their marketing and advertising, the FTC staff has provided a range of
the estimated hours burden.
Based upon its knowledge of the industries, the staff estimates, on average, that the time
required to gather, organize, format, and produce such responses will range between 80-120
hours per information request for companies that market a single category of product to children
and adolescents. The FTC staff estimates that companies that market multiple categories of
products to children and adolescents would spend between 120-300 hours to respond to an
information request. The total estimated burden per company is based on the following
assumptions:
Identify, obtain, and organize product information,
prepare response:

15-35 hours

Identify, obtain, and organize information on marketing
expenditures, prepare response:

15-75 hours

Dated: April 2007

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Identify, obtain, and organize information on and
samples of marketing activities, prepare response:

40-160 hours

Identify, obtain, and organize information regarding
marketing policies and research, prepare response:

10-30 hours

Total

80-300 hours

The Commission intends to send 27 information requests to parent companies that market
a single category of product to children and adolescents. As a result, staff estimates a total
burden for these companies of approximately 2700 hours (27 companies x 100 average burden
hours per company). The Commission intends to send 17 information requests to parent
companies that market multiple categories of products to children and adolescents. As a result,
staff estimates a total burden for these companies of approximately 3570 hours (17 companies x
210 average burden hours per company). Thus, the staff’s estimate of the total burden is
approximately 6270 hours. These estimates include any time spent by separately incorporated
subsidiaries and other entities affiliated with the ultimate parent company that has received the
information request.
It is difficult to calculate with precision the labor costs associated with this data
production, as they entail varying compensation levels of management and/or support staff
among companies of different sizes. Financial, legal, marketing, and clerical personnel may be
involved in the information collection process. The FTC staff has assumed that professional
personnel and outside legal counsel will handle most of the tasks involved in gathering and
producing responsive information, and has applied an average hourly wage of $250/hour for their
labor. Thus, the staff estimates that the total labor costs for the information requests will be
approximately $1,567,500 (($250 x 2700 hours for companies that market a single category) +
($250 x 3570 hours for companies that market multiple categories)).
13.

Estimated Annual Capital or Other Non-Labor Costs

FTC staff estimates that the capital or other non-labor costs associated with the
information requests will be minimal. Although the information requests may necessitate that
industry members maintain the requested information provided to the Commission, they should
already have in place the means to compile and maintain business records.
14.

Estimate of Cost to the Federal Government

The FTC staff estimates that the cost to the FTC Bureau of Consumer Protection of
collecting this information is approximately $1,071,625. This estimate reflects approximately
one para-legal and six attorney work years, inclusive of benefits, devoted to collecting,
processing, and analyzing the requested information, together with contract and travel money.
Dated: April 2007

14

15.

Program Changes or Adjustments
Not applicable. This is a new collection of information.

16.

Plans for Tabulation and Publication of Information

The information provided by the respondents will be used to prepare a report that will be
publicly released. The collection of the information will begin after the completion of the OMB
review process. The estimated date for the completion of the report is March 2008.
17. & 18.

Failure to Display the OMB Expiration Date/Exceptions to Certifications

Not applicable.

Dated: April 2007

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