As we approach the end of 2023, we share our thoughts on what 2024 might have in store for the advertising industry.
The Online Safety Act (OSA), passed in October 2023, introduces a new regulatory framework to make internet services safer for consumers in the UK, focusing on illegal user-generated content and user-generated content that is harmful to children on services likely to be accessed by them. In addition, the OSA has introduced new rules for larger "categorised" user-to-user and search services to combat paid-for fraudulent advertising, requiring them to put in place systems and processes to prevent these ads from appearing as well as systems to swiftly remove them. This means we should soon see fewer unlicensed financial promotions, fraudsters impersonating legitimate businesses, and ads for fake companies online.
To complement the OSA, the government also announced plans for legislation to tackle illegal online advertising harms like fake celebrity scams and pop-up malware from hackers, as part of its response to the Online Advertising Programme (OAP) .
Although the majority of the OSA will only take effect once secondary legislation is passed, Ofcom's guidance and codes of practice are not yet final and in some cases are yet to be published, and even though we are yet to see draft legislation under the OAP, 2024 will see the beginning of a higher standard of protection for consumers against fraudulent ads.
The ASA's Scam Alert System, which encompasses a reporting tool for scam ads appearing in paid-for spaces, is expected to grow in 2024. Although the system already partners with major digital advertising and social media platforms like Facebook and Google, the Internet Advertising Bureau UK now requires its certified members, of which there are approximately 90, to be signed up to the Scam Alert System. We expect that more ad platforms, networks and other companies participating in the system should result in stronger and more holistic protection for internet users.
Online choice architecture, ie the way in which online information is designed and presented to consumers, can improve user experiences, but it can also distort free choice, confuse and coerce. Common harmful practices include pressure selling, hidden charges, subscription traps and fake reviews, which could be particularly harmful to consumers affected by the cost-of-living crisis and to other vulnerable people. There is also a concern that online choice architecture such as default settings and bundled consent can undermine consumers' decision-making ability in relation to the processing of their personal data.
The Digital Markets, Competition and Consumers (DMCC) Bill, which we expect will be passed in 2024, is intended (among other things) to reform the law on unfair commercial practices (misleading actions, omissions and aggressive practices) as well as combat subscription traps. The government also plans to introduce secondary legislation under the Bill to combat fake online reviews. The Bill augments the work of the CMA (and ASA) which includes open letters to industry, investigations, papers, enforcement action and the Online Rip-Off Tip-Off campaign which raises consumer awareness of online choice architecture. We believe that 2024 could bring a greater understanding of online choice architecture among consumers by virtue of the CMA's programmes and general increased media literacy. This, in conjunction with the DMCC Bill, is likely to encourage companies to re-evaluate and revise their marketing techniques in 2024 to avoid future investigation and/or sanction.
The new legislation under the OAP is also intended to establish obligations on social media firms, search engines and other websites to have proportionate systems and processes to prevent under-18s seeing adverts for products and services illegal for them to buy. Age-restricted ads are already banned under the Advertising Codes, depending on how they have been placed and targeted, and the ASA also publishes rulings in relation to ads breaching these rules. Nonetheless, in line with government policies relating to youth tobacco and vaping restrictions and the introduction of measures to create a smoke-free generation, we may see more stringent new advertising rules and/or enforcement in relation to smoking but also other age-restricted products.
The ASA's 100 Children Report follow-up paper also suggests that more effective age-verification measures will be required from advertisers, agencies and platforms to ensure children are protected online. This is something which service providers will be required to put in place under the OSA with respect to primary priority content harmful to children. While this relates to user-generated content, and there are exemptions in relation to users acting in the course of a business, it's possible that once set up, age verification may be rolled out more widely in order to meet requirements across the regulatory board.
The explosion of AI presents vast opportunities in the advertising sector as in so many areas.
For example, generative AI can be used to design ads, but if advertisers choose to do this, they must ensure the ads comply with advertising rules, in particular, that any claims are accurate and capable of objective substantiation.
AI can also be used to enhance ad targeting, leading to the delivery of more personalised ad placement. However, the CMA's recently concluded investigation into Meta's collection and use of advertising data should serve as a warning to other advertisers. Use of personal data to target digital advertising continues to be a focus of regulatory scrutiny and this is only likely to increase.
We are also likely to see AI being used more at the monitoring and/or enforcement stage. For example, the ASA's Active Ad Monitoring system applies AI to monitor online advertising at scale. The ASA reports on its new approach using machine learning-based tools to enhance this system and capture more high-reach ads. It is likely that the evolution of AI will continue to improve monitoring systems like the ASA's and capture more (and more relevant) ads for scrutiny and potential enforcement.
With more efficient proactive monitoring schemes, we expect that this will translate to higher scale enforcement.
We also expect there will be more transparency from regulators and more cooperation with other members of the supply chain, which will improve the quality of enforcement. This follows the ASA's Intermediary and Platform Principles (IPP) pilot which explored the role of platforms and intermediaries in the online advertising supply chain in better supporting the ASA’s regulation in this area.
The OSA, the DMCC Bill and legislation introduced under the OAP will also enhance enforcement powers. In particular, new functions have been conferred on Ofcom under the OSA, including powers to issue fines of up to 10% of annual global turnover or £18m (whichever is higher) and powers to impose business disruption measures (such as service restriction orders and access restriction orders). The DMCC, once passed, will also confer powers on the CMA to enforce consumer laws directly (as well as through the courts) and to impose fines of up to 10% of global turnover for breaches of consumer law.
There could be an overhaul of the regulatory regime.
The advertising industry is evolving rapidly. Although many businesses engage in omnichannel marketing, there has been a shift away from broadcast advertising towards video and voice-based ads as we discuss here. The question is therefore whether the existing regulatory regime is suitable?
Three options were put forward under the OAP for the future of the regulatory framework of paid-for online advertising:
Beyond the scope of the OAP, any of these three options could be considered for the regulation of the advertising industry more generally.
2024 will not necessarily mark the end of some of the issues which have been at the forefront of CMA, ASA and (B)CAP activities this year.
Businesses will still make green claims to demonstrate their commitment to environmental sustainability and appeal to the expanding pool of eco-conscious consumers. Every organisation will look to showcase its green credentials, and make claims along the lines that their products are recycled, recyclable, biodegradable, carbon neutral, or net zero. CAP continues to update its advertising guidance on misleading environmental claims and social responsibility, while the ASA is hosting a training event in March 2024 to explore the regulation of green claims in advertising. The ASA has said that net zero claims will be a focus for 2024.
Influencer marketing will also continue to be in the regulatory headlights. In particular, 'finfluencers' are seeing considerable growth as money tips are proving popular and young people turn to social media for financial advice. The FCA has published guidance on finfluencing, and we may see even more engagement with this cohort.
Other areas of continued focus will include advertising of cryptoassets and high fat salt and sugar foods, advertising in public service broadcasting and issues engendered by digital advertising.
Rest assured, whatever the issues, we will continue to monitor the advertising landscape to help you with incoming and existing areas of compliance.
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