Policing the new laws of online marketing

Will the extension of the ASA’s powers to all online content that can be categorised as advertising make regulations easier to follow, or leave the watchdog chasing shadows in an ungovernable environment?

Click here to find out why some brands push the boundaries of ad regulation
Click here to see where regulations could be tightened next
Click here to Read the views of experts on the regulator’s expanding reach
Click here to learn more about the bodies responsible for ad regulation

Since 2008, the Advertising Standards Authority has received around 4,500 complaints that it could not deal with because they related to company websites that were outside its remit.

But next year the watchdog’s powers will extend to all online content that can be categorised as advertising, rather than just ads and sales promotions – such as pop-ups, banners, paid search, emails and virals – in paid-for space that the ASA’s remit currently covers.

The new remit, which will come into force on 1 March 2011, is defined as being anything “directly connected with the supply or transfer of goods or services” or, in the case of charities, solicitations of funds. This definition includes content on company websites and social networks such as Facebook and Twitter.

The rules of the game have not changed entirely, though. The CAP Code – the document drawn up by the Committee of Advertising Practice to define what is acceptable in a non-broadcast ad (see The Regulatory Regime, below) – will apply in the same way as in the offline arena.

Before the changes take effect, marketers will need to develop an understanding of what constitutes foul play. That will be a challenge for even the best prepared of organisations, as the ASA always judges an ad’s compliance with the rules on a case-by-case basis. And with March 2011 signalling a new era of regulation, there will be no case history to which to refer.

According to ASA chief executive Guy Parker, one question will determine whether a piece of online communication will come under the regulator’s scrutiny: “Is it to sell goods or services? If the answer is yes, it is much more likely that we will think it is advertising or some other form of marketing communication, and will think that it falls within this new remit.”

The old rules do not apply in peer-to-peer environments such as Facebook and Twitter

David Cushman, 90:10

How brands adapt will depend on how they already play the game. Ian Barber, director of communications at industry body the Advertising Association (AA), speculates that the vast majority of online material is already compliant. Those brands whose online content already applies the basic standards set out in the CAP Code – those of legal, decent, honest and truthful communications – ought to be on firm ground.

But while airline easyJet has come under fire several times for taking shots at rival Ryanair in its advertising, its UK general manager Paul Simmons says his brand does not “have anything to fear from ASA regulation”. He claims that the extension of online ad regulation poses no potential difficulties or conflicts for his marketing strategy, for which he does not “foresee any change”.

Online world
Not all brands see the change as being so seamless, however, and their reasons are not necessarily down to a resistance to further regulation (see Risk/Reward: Regulation and the Threat of Negative Publicity, below). There are numerous practicalities to consider, especially when promotions and messages are many and varied in the online world, and are often drawn from or distributed by several sources.

Adam Perrin, head of brand at bookmaker Paddy Power, acknowledges: “Anything that protects the public must be a good thing.” But he adds that the web is a more complex and difficult area to regulate than offline advertising channels, and there will be hurdles to overcome in terms of being able to monitor all of the brand’s online associations.

“The biggest impact will be our joint responsibility for how third-party websites such as affiliates present offers from ourselves to our targeted audiences,” Perrin explains. “We work with hundreds of websites, offering a variety of betting incentives, money-back specials and exclusive odds, so the challenge for us will be to police it all effectively.”

Some observers also suggest that the internet’s nature of widespread participation actively resists the kind of controls that are about to be placed on it. David Cushman, managing director of social business consultancy 90:10, claims that regulating social networks and social media will be impossible, even though these will be covered by the regulations.

“I have no objection to the usual rules applying to broadcast-style ads online – ones that are effectively delivered without request to the consumer, no matter how targeted,” he says. “But the old rules do not apply in peer-to-peer environments such as Facebook and Twitter.”

These sites should be left to regulate themselves, he argues. By the nature of these networks, content that is offensive or unreliable will automatically be filtered out as individuals choose not to forward it to friends, he says. The speed with which false rumours have spread through social media in the past might contradict this assertion, but in any case, he says, the ASA lacks the resources to identify and punish all violations. 

“The rules may limit the amount of dishonest marketing from scrupulous rule-following professionals, but I doubt it will make any odds to those who indulge in practices such as auto-following people on Twitter or sending spam auto-messages.”

Practical problems may also hinder the policing of companies’ own websites. While the ability to publish, update or remove communications in the time it takes to refresh a web page is likely to make it easier and cheaper for an advertiser to comply with a ruling, it might also present problems for the ASA in proving that there was a violation of the CAP Code in the first place.

Here today, gone tomorrow
ASA chief executive Parker says when a complaint is made about an online ad, the complainant will be responsible for taking a screen-grab as evidence that the ad did indeed appear on the site. But he admits: “What is there today is gone tomorrow, and that can be a problem in pinning down what a company might have actually claimed.”

One way of addressing this will be to monitor sites where non-compliance is a persistent problem. The ASA already carries out such spot checks of offline advertising, and Parker says: “We target our monitoring at specific problems and we would do that in this new space too.”

Once the ASA makes a judgement on an ad, it will have a number of options for how to deal with it. The CAP already issues “ad alerts” advising media companies not to sell space to persistent offenders, but these will have little effect where a company advertises on its own site. The ASA has therefore secured agreements with search engines to remove search advertising that links to websites in breach of the CAP Code.

The ASA will also use search advertising to publicise repeated violations, Parker says. “We have the option to run our own paid search campaign, advertising the non-compliance of the advertiser and bidding against keywords relevant to the offender.”

These sanctions are only likely to apply to companies that repeatedly ignore warnings. As with most referees, the ASA’s usual approach is to have a quiet word before reaching for the book.

However, many smaller companies in particular will need to familiarise themselves with the ASA’s new remit if they do not want their first acquaintance with the regulations to be a request to withdraw an ad.

To ensure that small businesses are aware of the changes and understand them, the ASA will run trade ads in January and February 2011, and a consumer campaign in March and April, highlighting its new responsibilities.

Both strands of the campaign will depend largely on space donated by the industry.

Trade bodies such as advertising clients’ association the Incorporated Society of British Advertisers (ISBA), a member of both the AA and the CAP, will also be embarking on an awareness drive.

ISBA director of public affairs Ian Twinn says the body will focus on giving small businesses enough information on how best to respond to the extension of the ASA’s remit. He adds that the amount of resources these businesses will be required to dedicate to this will vary. For example, if user-generated content is a big part of a company’s selling message, then it will need to ensure that it is equipped to make this content comply with the regulations.

Barber at the AA insists that the changes so far have been largely understood. “We are not experiencing any significant concerns around lack of clarity. The ASA and ourselves, through our Digital Remit Working Group, have done an awful lot of work to explore the grey areas and have discovered they are not that grey when you get into them.”

The decision to expand the ASA’s remit was one taken by the advertising industry itself, with the ASA and CAP merely acting on instructions, says Parker. Over the past two years, debate has rumbled about the best way to ensure standards are maintained in the online space in order to prevent UK and EU legislators from stepping in.

Marketers in the most politically sensitive of areas can attest to the business benefits of taking a hard line on advertising standards before being prompted from outside. The alcohol industry is subject to some of the fiercest criticism from campaigners, yet 98.9% of ads in this category comply with regulations, according to the ASA. Many such companies maintain a policy of internal regulation that is stricter than the CAP Code.

Diageo GB CSR and communications manager Rebecca Perry says: “The Diageo marketing code is very close in wording and in meaning to the CAP Code, but our code goes further in some areas. Irresponsible marketing is very much against our interests. We do not want to be an industry that people think acts against public health or society’s interests because that harms our reputation, damages our brands and invites action against us.”

Mark Hunter, chief executive of drinks firm Molson Coors UK and president of ISBA, says the company operates to similarly demanding internal guidelines. “At the heart of what we do is ensuring the category has a long-term future. Responsible marketing has to be a big part of that. An irresponsible shortcut takes you nowhere for the medium to long term.”

Such a high rate of existing compliance might indicate that the rules are not tight enough. But the AA’s Barber says the decision to tighten online advertising controls was prompted by the need to close a loophole for online that was perceived as “unreasonable and silly”. Effectively, brands online were playing without a referee, and the spectators have not been impressed. Barber states: “That was not acceptable to the industry and it was not acceptable to society.”

Whether the ASA can keep its new game under control remains to be seen. It relies not only on the regulator enforcing its authority, but also on marketers being ahead of the curve in keeping their brand communications – online and offline – out of the regulatory spotlight.

In 2009, Ryanair reached a voluntary agreement with regulators to make its advertising and pricing – particularly on its website – more transparent. That came after a referral by the ASA to the Office of Fair Trading resulted in criticism from the body, which enforces statute law on consumer protection and competition.

Given the speed with which online ads and promotions can be published, updated or withdrawn, it remains to be seen whether the ASA will end up chasing shadows of companies similarly intent on giving the regulator the run-around.

EasyJet UK general manager Paul Simmons maintains that the brand mostly complies with the rules, and is not concerned about its website being within the regulator’s reach. “Despite the odd run-in with the ASA, we always design our advertising messaging with the intent of being compliant with regulation, whatever the medium.”

However, Adam Perrin, head of brand at bookmaker Paddy Power, admits there are benefits to taking risks with advertising. “Positioning a brand on the very edge of regulation can be an effective advertising tool, and one we have deployed at Paddy Power,” he says. “But advertisers would be pretty negligent if they blew a budget on a campaign that will never see the light of day due to nothing more than ignorance.”

David Cushman, managing director, social business consultancy 90:10

It would be very difficult to apply hard and fast definitions of “honest, legal and decent” in the online environment, where niche interest and cultures prevail. One group’s unacceptable is another group’s excitement. What the ASA finds acceptable in the use of sex in advertising will be at odds with some religious groups, which have self-formed on Facebook or elsewhere. But in moving away from a lowest common denominator publishing model, where one rule had to fit all, we are now in niche publishing, where the rules of the group hold sway and can be seen to hold sway.

Ian Twinn, director of public affairs, advertisers’ trade body ISBA

The beauty of self-regulation is its flexibility to meet changing needs. We do not look for ways to extend regulation but we can act when necessary. The online extension was a result of us identifying a clear gap in consumer protection. Commercial messages on company websites have not been seen as advertising by advertisers, but they have been by the public.

Jo Swinson MP, co-founder of the Campaign for Body Confidence

The ASA’s codes of conduct say that advertisers must have a sense of social responsibility, and I think that is absolutely right. Advertising is everywhere nowadays, and the messages it sends can be very powerful.  When it comes to digital manipulation of images of people, advertisers need to make sure they are being honest about the effects of their product, and they are keeping in mind the harmful effects that idealised images can have on people’s self-esteem and wellbeing.

Mark Hunter, chief executive, Molson Coors UK

The extension of the CAP codes to cover the online space is a good thing. There was not enough of a framework in place, so I think the team that worked on that got to a pretty good, pragmatic place. It was long overdue and it allows us to test which organisations are really prepared to step up and do the right thing, as opposed to those that want to push the limits and maybe step over them.

The regulatory regime: who’s who and what’s what?

The ASA

The main body responsible for regulation of advertising in the UK. Independent of both government and the industry, its job is to enforce rules drawn up by the Committee of Advertising Practice (CAP) on what is acceptable within marketing communications.

The CAP rules

The CAP consists of advertising trade bodies, such as the Advertising Association and ISBA, that represent clients, agencies, media owners and other interested parties across the industry.

Two sets of CAP rules exist, with the most recent editions published on 1 September. The CAP Code governs all non-broadcast advertising, including – from 1 March 2011 – any content on websites or social media that is defined as being anything “directly connected with the supply or transfer of goods or services”.

The BCAP Code covers broadcast advertising only. It is administered partly by the ASA and partly by Ofcom.

Ofcom

The communications industry regulator is responsible for specific elements of the BCAP Code for broadcast advertising. It covers political ads, sponsorship and content linked to premium-rate phone lines. It also regulates gambling, dating and message board material where these are broadcast as advertising.

The sanctions

Adjudications relating to alleged violations of the CAP and BCAP codes are made after publication or broadcast. If an ad is found to be in breach, the ASA will normally rule that the ad should not be shown again in its current form. For non-broadcast ads, it is the responsibility of the advertiser to withdraw or change the material; in broadcast the onus is on the broadcaster.

Several possible sanctions are available in cases of failure to comply with a ruling. The CAP may issue an “ad alert” advising media companies to withhold advertising space, while CAP members may also withdraw trading privileges to certain advertisers. Online, companies may soon have search advertising removed. Persistent offenders can be forced to have their ads vetted before publication for a period of two years.

The ASA can ultimately refer advertisers to the Office of Fair Trading, which can prosecute alleged offenders under consumer protection and competition laws. Broadcasters can be referred to Ofcom, which has the power to levy fines and revoke broadcasting licences.

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