Funding dispute threatens online self-regulation
18/03/2009
The creation of a robust self-regulatory framework for online advertising faces derailment as plans are stalled by a row over how it should be funded.
The launch of the self-regulation system for digital media, which has been demanded by UK government, is crucial to ward off the threat of outside regulation of the £3bn online advertising industry.
The self-regulation system has been in development over the past two years by cross-industry policy group Digital Media Group (DMG) to address areas not covered under the existing Advertising Standards Authority CAP Code, such as advertising on company's own websites.
A statement from Andy Burnham MP, Secretary of State for Culture, Media & Sport to new media age, said, "This as an issue of public concern. The Digital Media Group continues to work on a practical and effective way forward which addresses these concerns and [I] look forward to it securing the necessary agreements across industry to resolve any outstanding issues."
The body claims to have reached an agreement on the framework but the implementation process has ground to a halt due to lack of funding and a row over who's responsible for footing the bill.
The CAP code is funded by a 0.1% levy paid by advertisers to collection body Asbof, which is collected by media agencies. While this levy includes online display it does not extend to search. For 2007-08 online display contributed to a 7% year on year increase in Asbof revenues.
Ad bodies believe search revenues should shoulder the cost for extending the CAP code as the sector accounts for 58.3% of online advertising spend.
Mike Hughes, president of ad body ISBA, said, "The internet is the Achilles heel of the self-regulation system. We need the major players in online media to step up and take the full responsibility of a major player, to collect funding by levy to fund the self-regulatory system."
The DMG proposals cover the remit, funding and method of enforcement of this system. They're set to be submitted to the ASA for implementation but an impasse has been reached over funding.
Nick Stringer, head of regulatory affairs at the IAB, said, "This is about extending the remit from paid to non-paid advertising."
Ian Twinn, director of public affairs at ISBA, said Google needs to take responsibility. "You need to collect money from the narrowest point and online this is Google," he said.
"Google UK has said it agrees with the principles but we're not engaged with it on a global level on whether it will take responsibility."
Google agency leader Dominic Allon told new media age the search giant did not believe it held responsibility for collecting the advertiser levy for self-regulation. He claimed £60,000 had already been paid out from search through the Asbof levy paid by media agencies.
Allon said Google shouldn't be forced to collect the levy from advertisers that deal directly with the search giant. "We feel search engines reflect existing media channels that are exempt from the levy, such as press classifieds directories," he said. "It's impractical for us to collect 0.1% from our long tail of advertisers."
But IPA head of digital Nigel Gwilliam said, "Historically online media owners have failed to meet their responsibilities. Despite this we're confident they'll see sense and will commit to levy collection."
Google's Allon said the industry should consider a third way of supporting the development of the next stage of online self-regulation by introducing a pilot over the next 12-18 months. "A pilot could bring in a levy from agencies and allow CAP to scale to the volume of complaints, no one knows exactly how much funds are required," said Allon.
behind the headlines
Advertising in the UK is self-regulated by the Advertising Standards Authority (ASA), through the Committee of Advertising Practice (CAP) code. Although the basic tenets of this apply online, digital does have aspects that fall outside the code. One of the biggest of these is advertising on company's own websites, which the code views as editorial. So at the start of 2007 the Digital Media Group was formed, a cross-industry body, to devise measures to extend the CAP code to cover digital media
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