Memorandum submitted by The Advertising
1. THE ADVERTISING
The Advertising Association (AA) is a federation
of 24 trade bodies representing the advertising and promotional
marketing industries including advertisers, agencies, media and
support services in the UK. It is the only body that speaks for
all sides of an industry worth over £16.5 billion in 2001.
Further information about the AA, its membership and remit can
be found at: www.adassoc.org.uk
The AA's remit concerns the mutual interests
of the business as a whole and can best be summarised as "to
promote and protect the rights, responsibilities and role of advertising"
in the UK.
Since its formation in 1926, the AA has been
pivotal in the development of standards and effective regulation.
It was instrumental in setting up the Advertising Standards Authority
(ASA) in 1962 and, in 1975, in enabling the foundation of the
Advertising Standards Board of Finance (ASBOF) to provide secure
and independent funding for the ASA at a time of severe legislative
threat from Government. The AA is a board member of ASBOF and
a member of the Committee of Advertising Practice (CAP), whose
Advertising and Sales Promotion Codes are independently administered
by the ASA.
The AA is the only industry body, along with
the Government, that has a right of consultation with the Chairman
of ASBOF in the appointment of the independent Chairman of the
ASA. The current Director-General of the AA is Chairman of CAP.
At the outset, the AA would like to impress
upon members of the Committee the importance of the advertising
sector within the broadcasting ecology. Advertiser funding is
critical to the current media landscape, without it, over 50 per
cent of TV and radio would disappear as advertising provides the
major revenue source for all commercial broadcasting. TV advertising
provides over £4.6 billion in revenue to the TV broadcasting
sector whilst radio advertising accounts for £595 million.
The advertising industry, as represented by
the AA, welcomes the opportunity to take part in the current debate
about future regulatory structures. There are many aspects to
this debate that affect the advertising sector. There are many
other organisations with whom the AA has ties, not least its 24
member organisations, that will seek to make representations to
the Committee. The AA represents the interests of all sectors
within the advertising business; advertisers, agencies, the media
and support services. The AA must therefore confine its comments
to those issues on which there is unified agreement. Hence this
submission concentrates on the debate about the possibility of
a move towards greater self-regulation for the broadcast advertising
sector. Commentary on a number of other issues is included in
2.1 The Rationale
In introducing this draft legislation, the Government
emphasised that the driving force behind the changes proposed
was the unprecedented change that has taken place within the media
environment over the past six years. The regulatory regime has
struggled to keep pace and adapt with this change and this struggle
will intensify as the pace of technological advances increases.
The Government wishes to create a new system
that is "light touch", streamlined, resilient and adaptable.
It wants to create a "future-proof" system based on
principles of deregulation and the avoidance of over-burdensome
or disproportionate regulation.
It is with the introduction of precisely these
goals in mind that the advertising industry has consistently advocated
a system of self-regulation for broadcast advertising content
over the past three years. In its submission to the Government
in advance of the publication of the White Paper, the AA put forward
the following arguments in favour of self-regulation for broadcast
simplification of regulatory structures
is required/overlap should be removed;
advertising content regulation can
be separated from economic infrastructure regulation;
advertising content regulation should
no longer be an addendum to programme regulation;
"convergence" (ie same
advertising content via different delivery platforms) means regulatory
structures can no longer treat media as discrete from each other;
self-regulation of broadcast advertising
content will offer the most flexible system made necessary by
convergence; statutory systems are less flexible;
the advertising business has established
an effective self-regulatory system for non-broadcast media (which
has been acknowledged by the Government) and could apply its lessons
to broadcast advertising.
Obviously the driving force behind change is
convergence and not dissatisfaction with the way in which the
current system operates. Whilst progress towards convergence is
not as advanced as many media commentators would have us believe,
it will continue to develop and to create anomalies that the present
system is ill-equipped to deal with.
The essence of a self-regulatory system is not
predicated on a desire to prevent the introduction of statutory
control but to ensure consumer confidence in advertising. This
confidence becomes ever more important in a converged world where
the inflexibility of a statutory system can lead to loop-holes
and outmoded regulation and thus consumer uncertainty and lack
of confidence. What a self-regulatory system offers, if correctly
established, is the maximum flexibility to deal with an ever-changing
media environment. Such a system would help to ensure that outdated
barriers to new advertising techniques are broken down as quickly
as possible and new regulatory answers are swiftly found for the
questions raised by technological progress.
In developing a possible new system of self-regulation,
it is imperative that the Government and industry work together
to maximise this flexibility and ensure the proper protection
of the freedom to advertise in a culturally and technologically
A copy of the AA's submission to Government
in advance of the White Paper, spelling out the AA's rationale
for a move to self-regulation, can be found at:
2.2 Co-Regulation or Self-Regulation?
The policy narrative accompanying the draft
Communications Bill refers to both co-regulation and self-regulation
and often appears to use the terms inter-changeably. This has
led to a great deal of confusion within the advertising sector
as to what, precisely, is being proposed for advertising content.
The system we are advocating is one within which
a self-regulatory body works in a co-regulatory relationship with
OFCOMsimilar to the way in which the OFT and ASA/CAP system
For the sake of clarity, the AA will use the term "self-regulation"
throughout this paper.
"Self-regulation" of advertising content
in the UK is exemplified by the regulatory structures and systems
already in place within the non-broadcast advertising sector.
In order to clarify therefore what is meant by "self-regulation"
Appendix 2 provides details of the current arrangements in non-broadcast
advertising as administered by the ASA. For further information
please refer to the ASA website at www.asa.org.uk
The operation of the ASA has been widely praised
"The Government strongly supports the self-regulatory
controls on advertising in the United Kingdom run by the Advertising
Standards Authority. These have gained world-wide recognition
as a good example of how self-regulation can work effectively
to address consumer problems." ("Modern Markets: Confident
Consumers" White Paper)
"The strengths and effectiveness of the
Advertising Standards Authority (ASA) system for self-regulation
of non-broadcast media, which is well-regarded both here and overseas,
give us confidence that a more co-regulatory approach than at
present could be effective." ("A New Future for Communications"
"We are keen to see further developments
. . . drawing upon the experience of the Advertising Standards
Authority in running a self-regulatory system." (Draft Communications
Bill: Policy Narrative)
It is our belief that a system for broadcast
advertising content could and should be based on the successful
model of the ASA. This tried and tested model has resulted in
extremely high levels of compliance within the non-broadcast sector.
It generates high levels of consumer and industry confidence and
has the support of the Government. The system was also singled
out by the Better Regulation Task Force as an exemplar of best
practice in their report on alternatives to State regulation (July
Given the extensive praise for the ASA system
and the support it has earned amongst all stakeholders in this
debate, it is therefore somewhat surprising that the model for
broadcast advertising regulation envisaged by the Government ignores
the core principles underlying the ASA/CAP model.
2.3 Core Principles
In order for industry to accept the responsibility
for a self-regulatory system within broadcast advertising content,
such a system would have to be based on certain core principles
as exemplified by the ASA model detailed in Appendix 2.
These principles can be summarised as comprising
a genuine transfer of authority from OFCOM to a new regulatory
body which would be financed by industry and maintain operational
responsibility for advertising content regulation with OFCOM retaining
last resort statutory powers of sanction. Such a transfer of authority
would need to be coupled with a transfer of responsibility for
advertising content from the broadcaster to the advertiser as
is the case in the ASA model.
In practice this would require that a new self-regulatory
body has total, independent responsibility in the following areas:
Code writing and review: Code ownership
must be transferred in toto. The right to review the codes and
amend as necessary must be transferred from OFCOMthere
can be no question of OFCOM imposing code amendments, although
endorsement of the codes by OFCOM could be useful.
Complaint Handling: Receipt, consideration
and adjudication on all complaints relating to advertising content
must be handled by the new self-regulatory body. Regulatory double-jeopardy
and consumer confusion are best avoided by having one complaint
handling mechanism and one system for adjudication.
Enforcement of rules: The current
system for non-broadcast advertising relies on enforcement via
industry members of CAP. This system has produced compliance rates
of over 95 per cent across nearly all sectors and has been widely
praised by Government. In the sphere of enforcement a clear delineation
must exist between the general enforcement powers of the self-regulatory
body and the last resort back-stop powers of OFCOM in order to
avoid merely creating an additional layer of regulation on broadcasters
and advertisers. Responsibility for advertising content should
reside with the advertiser with ultimate sanctions against broadcasters
being applied only when broadcasters consistently refuse to abide
by the decisions of the self-regulatory body.
Copy clearance and advice: It is
envisaged by both industry and Government that these would continue
to be handled by existing self-regulatory structures such as the
Broadcast Advertising Clearance Centre (BACC) and the Radio Advertising
Clearance Centre (RACC).
Such a system would genuinely "build on
and draw upon the experience of the Advertising Standards Authority"
as per the policy narrative issued with the draft legislation.
Anything less than this is likely to be perceived by industry
as merely constituting an additional layer of regulation and an
attempt by Government to transfer regulatory costs without a corresponding
transfer of authority. Unfortunately a system based on these core
principles and functions as found within the ASA system, would
not be possible under the policies outlined and reflected in the
3. THE PROCESS
The Government has implied criticism of the
advertising industry for not putting forward detailed proposals
for a co-regulatory structure for broadcast advertising. The advertising
industry welcomes the opportunity to present proposals for a more
co-regulatory structure for advertising content regulation. However,
such proposals must be based on a mutually agreed framework of
core principles and until such time as those principles can be
agreed and are reflected within the Communications Bill, detailed
proposals are unlikely to be forthcoming from the industry.
The process, as we see it, should be as follows:
1. Agreement on the core principles and
division of responsibilities as outlined in this paper.
2. Amendments to the draft Communications
Bill to ensure that these core principles are reflected there
and that no legislative barrier exists to the future establishment
of a system based on these principles.
3. Agreement on proposals for such a systemsuch
proposals to come from industry and be agreed by OFCOM and the
Prior to the publication of the draft Communications
Bill, industry believed that agreement on these core principles
had been reached and awaited publication of the Bill for confirmation.
Unfortunately, whilst there is welcome reference to "co-regulation"
and extensive praise for the ASA system within the policy narrative,
the policy outlined by the Government and reflected in the Bill
itself provides a number of serious obstacles to the creation
of a system that would reflect these principles and thus be acceptable
4. THE GOVERNMENT'S
The policy narrative accompanying the draft
Bill has this to say on the issue of advertising regulation:
"Following discussions with broadcasters
and regulators, we have decided to retain provision that the regulator
may directly consider complaints from the public about broadcast
content ("standards complaints"), rather than, as proposed
in the White Paper, have to address their complaint first to the
broadcaster. While many comments or complaints are best addressed
to the broadcaster, and the broadcaster should be directly accountable
to its audience for maintaining standards, it is important that
people should also feel able to complain to the regulator, especially
about breaches of standards which appear serious and which might
be detrimental to the public at large. It is equally important
that the regulator is able to deal with the complaint promptly.
OFCOM's ability to consider complaints directly
extends not just to complaints about editorial programming but
also to advertising complaints, which may require immediate action,
for example in relation to misleading claims."
"We expect standards to be applied to broadcast
advertisements that are consistent with the standards for other
forms of content and which ensure that audiences are effectively
protected from serious detriment. We also need to be confident
that commercial promotions do not in any way affect the integrity
of programmes whether through product placement, inappropriate
sponsorship or any kind of blurring of the boundaries between
ads and editorial content.
OFCOM will therefore be able to apply consistent
over-arching content standards to all forms of broadcasting including
advertising and it is to be given principal responsibility for
regulating broadcast advertising. Within this context, there may
nevertheless be the opportunity for a greater degree of industry
co-regulation, based on the development of industry practices
that conform to and contribute to the advertising standards that
are laid down by OFCOM. Progress has been made with the standards
application and pre-vetting work of the two industry run advertising
clearance centres, BACC for TV and RACC for radio.
We are keen to see further developments building
on this and drawing upon the experience of the Advertising Standards
Authority in running a self-regulatory system. The formal delegation
of OFCOM's powers to set advertising standards is not envisaged
partly because of limitations imposed under relevant EC directives,
but this will not impede the further development of industry co-regulation.
The White Paper set out a challenge to the advertising industry
and to broadcasters to set out proposals for more effective co-regulatory
arrangements. We have yet to see specific proposals. Although
this eventuality is not covered expressly in the wording of the
Bill, the draft legislation allows OFCOM wide flexibility in the
methods it uses for meeting its stated objectives. These methods
would include further industry co-regulation in the event that
suitable proposals come forward."
What this means in practice is that OFCOM would
retain the right to consider complaints about advertising content
even if a new self-regulatory structure was to be established.
As explained above, the credibility and authority of any industry
funded self-regulatory body would rely on its decisions being
sovereign and the duty to consider complaints being delegated
entirely to that bodyas is currently the case with the
ASA model. Not only this, but it is plain that within a system
designed to reduce regulatory overlap and produce streamlined
and effective regulation, it makes little sense to create from
the outset a process by which regulatory double-jeopardy is entrenched
in the structure. This would be precisely the outcome if a new
self-regulatory body was not given sole authority to consider
With regard to the codes, the advertising industry
is unconvinced that European legislation requires OFCOM to retain
control over code ownership and the setting of standards. The
over-arching standards for regulation on advertising content are
spelt out within the legislation itself. Within the confines of
those standards, any new self-regulatory body must be given the
authority to draw up detailed codes.
One of the main arguments for the establishment
of a self-regulatory body is the requirement for flexibility in
a rapidly changing media environment. New forms and techniques
of advertising are being created daily. A self-regulatory mechanism
with sole authority over codes can be flexible enough to ensure
that such codes both reflect the standards outlined in legislation
and keep pace with rapid evolution in advertising techniques.
The advertising industry's desire for a new
structure for advertising content regulation is in no way based
on dissatisfaction with the existing system. We believe that a
self-regulatory body, working in a co-regulatory relationship
with OFCOM as a back-stop regulator, is simply better equipped
to deal with rapid change and technological advances. In our opinion,
the future evolution of the broadcasting sector means that a statutory
system for advertising content regulation will become increasingly
unworkable. A self-regulatory system, correctly established and
based on the lessons learnt within the non-broadcast system is
"future-proof". Flexible and adaptable, such a system
could ensure continued high levels of consumer protection. Regulatory
uncertainty is avoided as a self-regulatory body can act quickly
to amend codes and take the necessary action to reflect changes
in advertising practice.
The Government has praised the system in operation
within the non-broadcast media time and again. It has stated that
what it refers to as a "co-regulatory" system in broadcast
should be based upon the ASA model and yet the system it appears
to envisage bears little resemblance to the ASA/CAP model and
ignores the fundamental principles underlying the ASA/CAP structures.
Indeed, as far as industry is concerned, the only similarity between
the ASA system and the system envisaged by Government for broadcast
media appears to be that industry is required to pay for both.
If agreement cannot be reached on the core principles
and basic tenets of a new system for broadcast advertising content
regulation then industry will not take up the "challenge"
represented by the Bill to develop further proposals in this area.
The opportunity to develop a flexible, efficient and "technology-neutral"
system for regulating advertising content will have been lost
to the detriment of all.
The AA and the advertising industry would therefore
be grateful for the support of the Joint Committee for the recommendations
outlined in Appendix 3.
Whilst the BBC occupies a unique place within
the broadcasting ecology of the UK, mainly as a result of it's
funding arrangements, it is nonetheless a major competitive player
within the sector. With this in mind, the AA is at a loss to understand
why the Government appears so unwilling to ensure that the BBC
is properly and transparently regulated in an equivalent way to
those commercial broadcasters with whom it increasingly competes.
The AA supports the recommendations of many
of its member organisations, including ISBA, that the regulation
of the BBC be brought entirely within the remit of OFCOM to create
a level playing field within the broadcasting sector.
2. THE CONSUMER
The advertising industry is not opposed to arrangements
necessary to ensure that the voice of the consumer and customer
are heard within OFCOMafter all, in many ways advertisers
are as much customers of the broadcasting sector as the viewers
and listeners. The Advertising Association has however, from the
outset, queried the necessity of such arrangements taking the
form of a Consumer Panel as outlined in the legislation. Our concern
in part arises from the propensity for such bodies to be hi-jacked
for the purposes of pursuing the particular agendas of consumerist
bodies rather than representing the views of real consumers.
There has been little consideration thus far
of the resource implications of a Consumer Panel, as currently
outlined, with an almost limitless remit. OFCOM itself, which
has the support of industry, will be an expensive undertaking
and require enormous resource input from industry. To create a
Panel with a remit covering every area of OFCOM's remit will not
only require considerable additional resources but would dilute
and diffuse the focus, and thus potentially the effectiveness,
of the Panel.
The advertising sector urges the Committee to
support a return to the remit for the Panel envisaged in the White
Paper covering issues relating to network and service provision
and excluding content matters.
The proposals for a Panel of this kind appear
to take very little account of the existence of many tried and
tested mechanisms currently in existence to ensure that the views
of consumers, in particular in relation to content issues, are
heard by those who actually provide services directly to themthe
broadcasters themselves. The AA will be working with broadcasters
over the coming months to ensure that these arrangements are better
understood within Government.
Finally, the draft Communications Bill will
allow the Consumer Panel to decide whom else (in addition to OFCOM)
it can advise (Clause 96 (2)). The current phraseology of this
clause could enable the Panel to decide to advise, for example,
the Advertising Standards Authority. This would appear to be extending
the remit of the Panel beyond the remit of OFCOM and as such is
Advertising Regulation in the Non-Broadcast Sector
The Advertising Standards Authority (ASA)
Independent of both the advertising industry and
the Government, the work of the ASA is funded by a small levy
on display advertising and direct mail expenditure. A separate
bodyThe Advertising Standards Board of Finance (ASBOF),
collects this levy. The ASA's remit has been defined as being
to protect the public by ensuring that the rules contained in
the British Codes of Advertising and Sales Promotion are followed
by everyone who prepares and publishes advertisements. The ASA
receives and considers complaints about non-broadcast advertisements,
judging them against the Codes, and carries out research into
Code compliance. It can request that offending advertisements
are withdrawn and has the ultimate sanction of making referrals
to the Office of Fair Trading (OFT) or the Trading Standards
Authority. The ASA Council, the ultimate decision making body
of the ASA, is made up of a majority of lay people acting not
as representatives of any organisation or sector but as experts
in their fields and as consumers in their own right.
The Committee of Advertising Practice (CAP)
The Committee of Advertising Practice (CAP)
is the industry body responsible for writing, revising and enforcing
the British Codes of Advertising and Sales Promotion. These Codes
are regularly reviewed and all interested parties are invited
to take part in consultation during the review process. Constituent
members include representatives of all sectors of the advertising
industry, ensuring the industry-wide support necessary for effective
self-regulation. In addition to writing and reviewing the Codes,
CAP members are responsible for enforcing the Codes' provisions
amongst their own members. Finally, CAP provides a free and confidential
guidance service for advertisers, their agencies, the media and
others to ensure that advertisements are prepared in accordance
with the Codes.
The AA and the advertising industry seek the
Committee's support for the following recommendations:
Government should agree with industry
on the core principles that would form the basis of any self-regulatory
system for advertising content;
These core principles should be based
upon a genuine transfer of authority for advertising content regulation
from OFCOM to a new self-regulatory body;
The regulation of advertising content
in broadcast media should take place within a system modelled
on the ASA/CAP system within which:
A self-regulatory body would have
operational responsibility for:
Code writing and review within the
over-arching standards objectives set within the Communications
Receipt, consideration and adjudication
of all complaints;
Enforcing rules and decisions NB:
responsibility for advertising content rests with the advertiser
against whom sanctions are applied;
Copy advice and pre-clearance;
OFCOM retains back stop powers similar
to those operated by the OFT in the non-broadcast sector whereby
OFCOM steps in as a last resort and only when the established
meansie: the self-regulatory systemhave been exhausted.
The draft Communications Bill should
be amended to enable a transfer of authority to a self-regulatory
structure to take place at an appropriate time;
Clauses 212-218 must be amended to
enable OFCOM to delegate responsibility for setting detailed standards
codes to a self-regulatory body within the confines of the standards
objectives detailed in clause 212;
Clauses 212-218 must be amended to
enable OFCOM to transfer responsibility for consideration of,
and adjudication on, complaints to a self-regulatory body;
Further amendments may be necessary
to ensure that licensees are not subjected to additional, as opposed
to alternative, regulation for advertising content when and if
a self-regulatory body was to be established.
1 Further details of the ASA/CAP system can be found
in Appendix 2 and at www.asa.org.uk Back
The ASA's remit includes advertisements in newspapers, magazines,
brochures, leaflets, circulars, mailings, fax transmissions, catalogues,
follow-up literature and other electronic and printed material;
posters and other promotional media in pubic places; cinema and
video commercials; advertisements in non-broadcast electronic
media; view-data services; marketing databases containing consumers'
personal information; sales promotions; advertisement promotions;
advertisements and promotions covered by the Cigarette Code. Back