Nick Stringer’s argument to the Debating Group forum.

Tuesday, 13 May 2008

The IAB’s head of regulation, Nick Stringer, argued for the motion; “legislation cannot secure high standards in commercial communications online” at an Advertising Association debate. Below is a summary of his argument.

The Internet is changing our lives. Access to the Internet – primarily because of broadband penetration - has become an invaluable communication tool for almost everyone, whether in business, at school or college, in the home and on the move.

For work, learning or entertainment it is radically changing the way we do things, enhancing consumer choice, as well as challenging our cultures, such as enabling more flexible work patterns and transforming consumers into producers.

Much of the online content we view is free and this is because the vast majority of this content is funded by advertising.

It is a very fast moving and dynamic environment, whereby business models change almost by the day and college kids can build a business from their garages into multi-million pound ventures almost overnight.

To this extent, we cannot expect legislation or indeed formal regulation to keep pace with changing technology, consumer behaviours or business models. We can no longer apply the traditional ‘command and control’ regulatory approach in today’s online environment.

In the online world, we advocate a self-regulatory approach as the most effective way to protect consumers but also balance this with a need to encourage investment in innovative new services.

Many people often talk about self-regulation: what exactly do we mean? One of the most widely regarded systems in the UK, if not Europe, is the self-regulatory framework for online advertising.

All non-broadcast forms of advertising (so that includes display or search advertising as well as print) are regulated by an industry body called the Committee of Advertising Practice – CAP – and a Code which sets out the rules and regulations for advertising online to ensure that it is legal, decent, honest and truthful.

The Code is also specific on a number of areas, such as advertising to children, food and soft drinks, environmental claims, and alcohol.

This system is administered and enforced by the independent Advertising Standards Authority (ASA). The ASA has a wide-range of sanctions to ensure that breaches of the Code are dealt with quickly and effectively. For example, the ASA can ‘name and shame’, prohibit a campaign from winning any awards, and – as a last resort - refer an advertiser to the Office of Fair Trading.

This enforcement process involves no long and drawn out legal process and produces faster outcomes than any statutory regime. As a result, the self-regulatory system can move more quickly in response to emerging concerns.

How – as an industry – we respond to emerging concerns is absolutely critical to preserve the integrity and credibility of the self-regulatory framework.

The Internet is the UK’s fastest growing advertising medium with a 38 per cent growth in 2007 (compared – for example - with 2.3 per cent for television). It has grown by £2bn in just three years and it will overtake television as the UK’s largest advertising medium during 2009.

So now – more than ever given the growth and reach of online advertising – we therefore need to ensure that we ‘future proof’ the system to protect consumers and address any public policy concerns relating to emerging ways to advertise online.

The IAB has been working with the Advertising Association to do just this. The once clear distinction between advertising in ‘paid-for’ and ‘non-paid for’ space is increasingly blurring and this is the type of issue that industry is currently addressing. We think industry experts – rather than regulators or policy-makers - are best placed to do this.

However, legislation has a role to play in protecting consumers using the Internet. In simple terms, the Internet is a new means of publication and therefore there is a myriad of legislation in place – such as the Trade Descriptions Act, Distance Selling Regulations or – as of 26 May – the Unfair Commercial Practices Directive.

However, self-regulation supplements the law, filling in the gaps where the law does not/cannot reach and ensuring that – particularly in the online world – regulation achieves high standards but also maintains pace with technology, consumer behaviour, changing business models and new advertising techniques.

• For further details please contact Nick Stringer