The "California Cows are Happy" advertising campaign is a product of a well-regarded ad agency, Deutsch Inc. Deutsch probably makes millions from this on-going campaign and its staff would likely prefer to wash their hands of any wrong-doing, arguing that the firm is merely an agent for the client that's ultimately in charge. However, it is-- in fact-- more than any other party involved in the campaign, the most despicable and unethical of all. After all, Deutsch is the mastermind and true creator of this campaign. Ethics are generally taught in advertising courses; perhaps Deutsch's employees thought the part about "truth in advertising" unimportant. That... and it's easy for the firm to hide behind a law that lets it get away with such poor behavior.
The campaign is funded by California dairy "farmers" and is an initiative of the California Milk Advisory Board. The board is -- as the website notes-- an "instrumentality" of the California Department of Food and Agriculture. "Instrumentality" is an interesting word choice because "instrumentality" means (among other things): a subsidiary branch, as of a government, by means of which functions or policies are carried out.
So, it makes you wonder, does the State of California pay for any of this fairly large-scale and surely expensive campaign-- a campaign that's based on profiting from the death of animals? At the least, you can be fairly certain that small, ma-and-pa dairy "farming" families across California contribute very little to the board. Instead, the large "factory farms" most likely fund the bulk of the board's activities.
This link takes you directly to the "About Us" page on the board's "Real Milk" website (which I address here in more depth).