Online advertising: the next regulatory turf war?

Few policy areas fit neatly within the remit of one regulatory authority or government department. Online advertising is no different. Earlier this year, we evaluated proposals by DCMS and the UK’s competition regulator to regulate digital marketing. Building on this jigsaw of stakeholders, we examine the latest strategies developed by another critical policymaking actor - the Advertising Standards Authority – and its recent efforts to defend what was historically its territory.

The Advertising Standards Authority is the UK’s regulator of advertising, founded in 1962. In the years following, as advertising stretched into new mediums of transmission, its remit has adapted accordingly. Since 1995, the ASA has covered advertisements in ‘non-broadcast electronic media’ – an increasingly sizable task. But in the midst of growing scrutiny from central government, and new powers bestowed on regulators like Ofcom, the Information Commissioner’s Office, and the Competition and Markets Authority, the regulator is having to defend its turf; in a recent presentation by Guy Parker, CEO of the ASA, he was quick to justify the ASA’s achievements and remind listeners that it was “vital that we remain at the heart of regulating online advertising”. So, what has the regulator been doing in this space over 2020, and what can we expect next?

The More Impact Online strategy

In 2019, the ASA commenced its four year ‘More Impact Online’ strategy, which sought to rebalance away from reactive complaints casework and towards tech-assisted and proactive monitoring and enforcement. In practice, this has culminated in a significant build of in-house data science capability within the regulatory body, and an array of resultant technological programmes.

One strand of work that this has facilitated is avatar monitoring. In addition to what is known as ‘CCTV monitoring’ of websites frequented by certain segments of the population, the ASA has developed a more tailored approach: six avatars, three of which mimic the browsing behaviours of children of various ages. These avatars make hundreds of thousands of visits to websites, and capture and review the ads that are served specifically to them. This allows the ASA to understand how tailored advertising works in practice – and be alerted if this breaches regulations about advertising to young and/or vulnerable people. So far, action has been taken on various unhealthy food operators and six gambling operators, and this avatar monitoring programme is due to be expanded even further in the years to come.

This new technological expertise has also resulted in the ASA developing a Scam Ad Alert system. Trialled for three months at the beginning of the year, the system identifies ‘scam ads’, communicates key information about these to advertising networks, and therefore allows them to respond quickly to remove them and prevent similar ads from appearing. Although much of this initial identification work has been done manually by humans up to now, the ASA is developing an automated mechanism to perform the same function going forward.

Online gatekeeper standards

In addition to implementing the More Impact Online strategy, the ASA has identified three other strands of work regarding online advertising.

The first regards online gatekeepers. Guy Parker told a conference in November 2020 that the regulator would work with online platforms and networks “holding them to greater account for the part they play helping to deliver socially responsible advertising”. He said that although the Department for Digital, Culture, Media & Sport (DCMS) has an ongoing programme that is interrogating where gaps in online advertising regulation exist and how they should best be legislated for, this will take a long time. We can expect a new call for evidence as part of DCMS’ ongoing programme of work shortly, but this will be a slow burner.

As such, standards will be critical in filling the regulatory lacuna in the interim period – and this is where the ASA comes in. The regulator is developing new self-regulatory standards via the CAP Code for pre- and post-publication ad review controls that gatekeepers should deploy.

Advertisements on Video Sharing Platforms

In addition to this, the ASA has been quick to assert its role in the sphere of video sharing platforms, in spite of Ofcom seeming to take the lead thus far. At the beginning of November, the Video Sharing Platform (VSP) Regulation came into force, granting Ofcom new powers to protect users on UK-based VSPs from incitement to hate or illegal content, as well as to ensure protections for children. The new regime places responsibility on the platforms themselves for what they host on their service, including advertisements. However, Guy Parker stated clearly that the ASA “expected” this to be a process of a co-regulation, and that this would be clarified “fairly soon”. In a nod to this possibility, Ofcom committed in October to consult on designating the ASA as a co-regulator for enforcing the requirements placed on VSPs for advertising. But this remains to be confirmed.

Notably, only a handful of VSPs are UK-based, and although Ofcom expects the likes of Twitch and Vimeo to fall under its jurisdiction, many of the others (like YouTube and Facebook) are headquartered in Ireland and therefore do not. Consequently, the ASA is collaborating with Irish media regulators and the European Advertising Standards Alliance in that area to, as Guy Parker put it, “make sure that we play a meaningful and useful role”.

In many ways this scramble to prove to be a ‘useful’ regulator in the space would only be a short-term win, as the UK’s regulation of video sharing platforms in this way is unlikely to be permanent. Ofcom has itself acknowledged that this will only be in place until the Government’s proposed new online harms regime comes into force.

Online Harms

The UK’s Online Harms Regulation has already been a long-time brewing. Earlier this year, the UK Government published its white paper on the topic as a first step, which committed to building a “new regulatory framework for online safety [which] will make clear companies’ responsibilities to keep UK users, particularly children safer online with the most robust action to counter illegal content and activity”. A whole section of the white paper’s description of key challenges was dedicated to the concerns arising from online advertising, so it will certainly fall within scope of the regulation once it arrives.

However, questions remain about when we might expect to see this finally hit the statute books and, yet again, who would take the lead on this.

In regard to timing, there seems to be consensus that this will be a matter of years rather than months. Guy Parker rightly identified that, although there is cross-party support for this file, it has been kicked down the road in the wake of Brexit and Covid-19 disruptions. This has been a source of increasing frustration for many parliamentarians, with the Chair of the Lords’ Democracy and Digital Technologies Committee Lord Puttnam suggesting that the final legislation may not come into effect until as late as 2024, which would be “seven years from conception – in the technology world that’s two lifetimes”.

When it comes to who, the Government has indicated it is leaning towards appointing Ofcom as the relevant regulatory body. Despite the ASA Chief Executive’s assurances that they do not fear co-regulation in this specific area, this was quickly followed by the caveat that “if any changes are made to the online advertising regulatory ecosystem, we want them to strengthen the ASA system and obviously not undermine it. The reason for that is that we think we’re already doing a lot of good”. In other words, a not so thinly veiled bid to ensure Ofcom does not obscure the ASA entirely.

‘Proof will be in the pudding’

There is no doubt that the ASA’s accumulated expertise will play an important role in the regulation of online advertising going forward. But, in the words of the regulator’s executive, “the proof will be in the pudding” when it comes to the final regulatory framework that emerges. Guy Parker remarked that “we’ve made clear [to DCMS and BEIS] what we think is important and how we see the ASA system continuing to sit at the heart of online advertising regulation”, but he awaits DCMS’ final verdict on online advertising oversight before he can say if he’s been listened to. The political scramble for authority and influence over this burgeoning area is clearly far from settled.