UK consultation launched-the future of paid-for online advertising

On 9 March 2022, the UK government launched a consultation on its Online Advertising Programme (OAP), which will involve a review of the regulatory framework of paid-for online advertising across industries, including financial services.

Its aim? Broadly, "to tackle the evident lack of transparency and accountability across the whole supply chain". The review is intended to set out the current regulatory regime governing paid-for online advertising, and highlight priority areas of concern, with suggestions for reform.
Here are our 5 takeaways from the consultation -

1. Scope, Part 1: the definition of 'paid-for online advertising'

The OAP's review will focus on all forms of 'paid-for online advertising'. Interestingly, the elements of this concept are defined very broadly in comparison to definitions we have seen regulators use in the past (including the FCA and the ASA):

• Paid-for advertising: "when the placement is determined by systems/processes (human or automated) that are agreed between the parties entering into the contract relating to the advertising, and/or when the provider of the services receives any monetary or non-monetary considerations for that advertisement". This will capture social media influencers, as well as platforms paid to host editorial content.
• Online advertising: "the use of online services to deliver paid-for marketing content". It is unclear whether this will include podcasts delivered through online apps.

2. Scope, Part 2: the 'online advertising ecosystem'

The OAP's line of review will capture all players in the digital advertising supply chain. Therefore, in addition to advertisers (i.e. the businesses which direct the content of an advert – this includes financial services firms marketing their brands, products and services), the following will also be in scope (amongst others):

• Consumers: those who currently consumer media on online platforms, as well as those who could consume online platform media in the future as potential consumers.
• Intermediaries: third party agents which connect buyers and sellers (i.e. through programmatic trading), facilitate transactions and leverage data to provide buyers with targeting options for online advertising (includes ad tech).
• Online platforms: ad-funded platforms seeking to attract consumers by offering their core services for free – includes social media sites and search engines.

3. Scope, Part 3: the harms

The OAP will consider the harms experienced by consumers, as well as advertisers and the industries in which they operate. The government proposes to divide the harms into two: (a) the content of adverts and (b) the targeting or placement of adverts. Notably for our clients, the proposed taxonomy of harms will include:

• adverts which seek to defraud, such as "breaches of the Financial Promotions regime";
• misleading adverts, including those making false claims;
• paid-for influencer marketing that is not clearly identified as such;
• adverts which target vulnerable audiences directly or by proxy; and
• adverts served to unintended or inappropriate audiences in a way that harms the advertiser or brand.

4. Tie-in to incoming regulatory measures

The OAP will work hand-in-hand with incoming regulatory measures, the key ones being:

• The Online Safety Bill (OSB): The incoming OSB will introduce statutory requirements on services that enable users to share content and interact with each other, as well as for search services to protect their users from harm.
  
  In addition to other obligations, the government announced on 9 March 2022 that intermediaries, platforms and similar online operators will have a standalone duty under the OSB to put in place proportionate systems and processes to prevent the publication and/or hosting of fraudulent paid-for advertising on their service, and remove such posts when made aware of them. Ofcom will set out further details on what platforms will need to do to fulfil their duty – this may include scanning for scam adverts before they are uploaded; having identity-checking measures for those who wish to publish advertisements; and ensuring that financial promotions are either made or approved by a firm that is authorised by the FCA.
• The Digital Regulation Cooperation Forum (the Forum): In 2020, the Forum was created to support regulatory coordination in digital areas; it is currently made up of the CMA, the ICO, Ofcom and the FCA. A priority area for the Forum is to identify opportunities for join-up in regulatory approaches across certain areas, including online harms.
• The ASA's Online Platform and Network Standards (OPNS): The ASA is developing the OPNS, which are intended to create obligations on intermediaries to help ensure that the CAP Code in place for advertisers is being effectively applied – this is key, as currently there is little to no regulation relevant to digital advertising that is applicable to such entities.

5. Options for reform

The consultation invites views on a number of options being considered by the government for reform of the regulatory architecture of online advertising. The main options include –

• Self-regulatory approach: Maintain the status quo, by relying on existing regulation and the ASA's OPNS proposal. The effectiveness of this option will be dependent on the form of the finalised OPNS, which is still in development.
• A statutory regulator backstop: The self-regulatory approach, plus a newly-appointed statutory regulator which provides stronger powers of enforcement where needed. Depending on the permutation this option would take, the OAP would need to be clear on how such a regulator would work alongside the FCA in respect of financial services firms.
• A full-statutory approach: A regulatory revamp, involving the appointment of a statutory regulator to introduce and enforce new measures.

Next steps

The consultation will be open until 1 June 2022 – the government is inviting responses from all members of the public in the UK(including private individuals, advertisers, platforms and intermediaries). Responses can be submitted using the online consultation system or by sending a hard copy response at the address listed here.

Author: Emily Lemaire