If the industry can’t regulate itself, then the government will step in

Buried deep within last week’s Digital Britain report, away from the broadband tax and the battle against online piracy, was an item of immense importance to interactive marketing. In it the Government recognised the efforts being made by the industry to regulate itself, and the role of self-regulation in general.

Although a system of self-regulation has worked successfully for offline advertising for many years, such a recognition is not the foregone conclusion it might at first appear.

The threat of government legislation to regulate the internet has been in the background for some years, and became more likely after Ofcom’s decision to ban offline advertising of foods high in fat, sugar and salt (HFSS) to children in 2006. The fact that some in the digital marketing industry, and among the HFSS brands, saw the fact that the ban did not extend to online media as a lucrative loophole served to alert many in government to a problem. At the same time, those lobbying on the industry’s behalf were concerned about the lack of internet knowledge among some MPs, and there were worries that, as politicians, their default response when faced with something they didn’t understand would be to try to regulate it.

This position, that the internet cannot be left to govern itself, has been routinely laughed off by the net community, which saw it as just so much more evidence that the politicians “didn’t get it”. The web-heads believed, rightly, that any attempt to regulate the internet would simply result in those inclined to bad behaviour finding ways around the rules, and lead to the sort of arms race that now characterises the battle between the music industry and illegal file-sharers. But the web community’s scorn didn’t stop the politicians believing they were right. Only this year, the former Culture Secretary Andy Burnham said that he thought the internet could now be regulated.

The industry response to the threat of legislation has been to say that self-regulation works because brands won’t do things that would damage their standing in the eyes of customers. Unfortunately, this hasn’t always been the case.

Once again, regulation of food advertising to children highlighted the problem. When the Committee on Advertising Practice extended the Ofcom rules to cover non-broadcast media, the fact that the rules defined manufacturers’ own websites as editorial rather than advertising meant their owners could put what they like on them. This loophole led to a number of manufacturers using their sites for games designed to promote HFSS foods to children, which although not against the rules was clearly not within their spirit. Most of the manufacturers subsequently bowed to consumer pressure and removed the games, but it took a long time.

Then this year, concern came to focus on behavioural targeting, the set of technologies that allow people’s online behaviour to be tracked across websites, advertising networks or the entire internet in order to make inferences about their interests and serve them more targeted advertising.

Privacy concerns over these approaches attracted interest in both Westminster and Brussels, and led to major efforts by the Internet Advertising Bureau to create good practice guidelines to show governments and regulators that the industry could police itself in this area.

Speaking at an NMA conference about behavioural targeting earlier this year, the IAB’s head of regulatory affairs Nick Stringer stressed that getting these guidelines right was important not just for the increasingly important area of behavioural targeting, but also for the principle of industry self-regulation as a whole.

In fact, the IAB has been very successful. The Digital Britain report not only acknowledges the roles of self-regulation, it welcomes the IAB’s efforts to educate the public around behavioural targeting, and notes the potential value of the approach as a revenue earner.

However, it would be wrong to be complacent about the Government’s endorsement of self-regulation. The Digital Britain report itself makes clear the fact that while the Government wants the industry to sort out the remaining problems around self-regulation, such as how it should be funded, it is watching to make sure this happens and will intervene if necessary. There is also still the EU’s attitude to consider. Speaking to the NMA before the recent European elections, IAB Europe president Alain Heureux warned of the possibility of a candidate playing on the electorate’s online privacy fears and campaigning on a data protection ticket. While this didn’t happen, there are many in Brussels who regard behavioural targeting, for example, with deep suspicion.

But one of the biggest threats to industry self-regulation is the industry itself. Technology moves on, and there might be something about to emerge that once more raises voters’ fears and politicians’ suspicions. And, of course, a few high-profile instances of bad behaviour could quickly reverse all the gains made to date.