After three years of deliberation by the advertising industry, CAP (Committee of Advertising Practice) and the ASA (Advertising Standards Authority), have announced the extension of the "self-regulation"' remit to include online advertising, such as corporate websites, social media networks, advergames and user-generated content.
This controversial move has been introduced without any public consultation, and includes serious new sanctions for advertisers. Exemptions to the new regulation include "heritage advertising" and marketing communications promoting "causes and ideas". All other marketing promotions online will need to comply with the CAP Code.
There are several areas of concern, such as how the ASA will deal with the fine line between editorial and promotional material, and how the extended remit will be adequately funded.
Furthermore, how can sanctions be effectively enforced against companies with sites based overseas, or indeed against those thousands of smaller online advertisers who are blissfully unaware and ignorant of the CAP Code, and whose advertising can change in seconds in this fast-paced media environment?
All this comes into effect on 1 March 2011, which does not give businesses long to review their online promotions and marketing plans. Ironically, the changes to the CAP Code come literally days after printed versions of the revised CAP and BCAP Codes were sent out to purchasers, at a cost of £45 each, and only a few months after the closure of the public consultation, which excluded these latest provisions.
Online promotions are often more risqué than in other media, which is justified by the fact that much online material on corporate websites and social media networks is "pulled" by the consumer, rather than "pushed" by the advertiser.
Pulled materials ought to be treated differently to those that are pushed at consumers, such as pop-ups and banners. This is a recognised practice in the off-line environment, where advertisements in adult magazines, for example, are treated differently to those on a poster or press ad.
Without this differentiation, there is a serious danger that creativity will be stifled and a less enjoyable experience for consumers created. This is just one area of concern, with many others yet to be determined.
Can a fast food company, for example, legitimately produce a children’s advergame and still comply with the CAP Code, given the social responsibility clauses and the restrictions on food advertising?
Many advertisers may be surprised to learn they will pay a levy on sponsored search to fund this new extended remit. Google has provided some initial funding, to cover the first year or two of the new system, but the 0.1% levy on advertising spend collected by advertising agencies, from their clients, is intended to cover the additional cost of the extended system.
The risk to the ASA is that it will be unable to cope with the number of complaints, and the funds available will be inadequate in the long term to deal with this vast medium where reputable advertisers will comply, as they largely do already for reputational reasons alone, and where smaller traders and many rogue traders are likely to carry on as they always have.
Marina Palomba is a partner at Reed Smith specialising in advertising law and regulation and past Legal Director of the Institute of Practitioners in Advertising.