My Lords, I congratulate the noble Lord, Lord Gilbert of Panteg, and his committee on their wide-ranging report and on this debate. I declare an interest as chairman of the Advertising Standards Authority and, until last June, of the Competition and Markets Authority. I will touch on several aspects of the report that relate to those two bodies, as well as picking up one or two points from last month’s follow-on report, Regulating in a Digital World.
I am pleased that the report says:
“The UK enjoys high standards of regulation of advertising content through the self-regulation of the Advertising Standards Authority”.
I have had great respect for the work of the ASA, long before I had the privilege of becoming its chairman. That is why an early decision of Ofcom, under my chairmanship, was to delegate the regulation of broadcast advertising content to the ASA to create a one-stop shop for consumers and advertisers, with effect from 2005. This was a great simplification because, before Ofcom, broadcast advertising was regulated by three separate media regulators, sometimes contradicting each other. In 2011, the ASA’s remit was further extended to cover all online advertising, including ads on social media, companies’ own websites, apps and advergames.
The range of our work continues to develop as advertising morphs online. For example, we are at the forefront worldwide of regulating the newer forms, such as influencer, native and affiliate advertising, as well as how ads are targeted online and on social media platforms such as Facebook, YouTube, Instagram, Snapchat and Twitter. We place the burden on advertisers of age-restricted products to prove that they have done all they can to use sophisticated ad-targeting tools, which are becoming ever more refined, to direct their ads away from children. This includes using interests and browsing behaviour to identify the true, not the declared, age—a particular and special concern.
We are also looking to deploy new regulatory tools. For example, earlier this month we announced the results of deploying new monitoring technology in the form of child online avatars that simulate children’s browsing activity. As a direct result, we have taken action to ban ads from five gambling operators which were displayed on children’s websites, in clear breach of the advertising codes. These techniques mean that we are not wholly reliant on complaints from parents or children to hunt out and close down detrimental advertising—important though such complaints are to us. We work hard to ensure that our regulation works to provide equal protection online and offline—the first principle that the committee enunciated in its latest excellent report.
However, we are not complacent. While advertising content online is not the Wild West, our regulation of it needs to develop. The committee’s report identifies the many ways in which the rapidly rising volume of advertising is constantly changing, and that is reflected in our work. Regulation of companies’ own websites now accounts for more than half our case load, and that will only increase. It is for that reason that our new five-year strategy, launched last November in Manchester, is called More Impact Online. I will mention just two of its strands. One is to find better ways of working with the big online platforms to protect people from irresponsible ads, which is clearly a two-way process. We also need to find ways of deploying machine learning to improve our regulation and act more nimbly, as well as simplifying our regulation where possible without impacting its effectiveness.
The committee’s report specifically recommended that the ASA should ensure that it is clear online what is or is not advertising by creating a universal mandatory logo to signify content sponsored by a brand and next to any paid-for text or video. We absolutely share the objective, but have not been able to implement the specific recommendation for technical legal reasons. The unfair commercial practices directive, which underpins the consumer protection regulations, is a maximum harmonisation directive. This means that we can mandate a single logo only if we are fully satisfied that no other method of labelling or disclosure would meet the objective—which we cannot be—but we do strictly enforce the requirement that sponsored content must be clearly identifiable as such, and we are conducting research to ensure that we have the right standards in this area.
The committee also calls for the CMA to conduct a market study of the digital advertising market to investigate whether it is working fairly for businesses and consumers, and others have since echoed this call. So far the CMA has held back from this, very understandably in my view, given the potential major impact of a disorderly Brexit on its workload. If in due course the CMA does decide to launch a market study, the ASA will fully support this by making available its expertise and research. An additional impetus for this may come from the innovative development of competition analysis by the German competition authority, the Bundeskartellamt, putting data as well as price at the centre of the competition calculus. The Economist earlier this month carried a clear and accessible account of this. If this new mode of competition analysis carries sway—I have no doubt, from precedent, that it will be subject to a long-fought challenge through the courts—it could introduce a wholly new regulatory dynamic into online markets, including advertising.
There are growing calls for a new online regulator to tackle the many online harms that concern us all. The committee is the latest, with the sensible call in its new report for a digital authority. The Government’s internet safety strategy may well point a way forward. I will end with a plea and a pledge. My plea is: in putting in place further online regulation, let us avoid cutting across and weakening the regulation of advertising content, joined up across online and offline, which is the ASA system. Better, let us see if we can strengthen that regulatory system further. My pledge is: with any reformed regulatory landscape that may be put in place, the ASA will work co-operatively and effectively within it to ensure the best protections and outcomes for consumers, especially the vulnerable and young.