My Lords, I add my congratulations to the noble Lord, Lord Gilbert, and the committee for this very clear and timely report, which raises a number of very important issues. I will touch on three of them.
First, the report describes how the traditional relationship between content providers and advertisers has been broken by digital advertising. Traditionally, advertising was targeted based on the media or content being viewed by the reader. Both provider and advertiser knew each other’s identity and had a direct contractual relationship with each other. Digital advertising, however, is principally targeted based on the data that has been obtained about the end reader, which may be completely unrelated to the media being viewed. That means it should be possible to present adverts that are more relevant to the specific consumer; although, as I think we have all experienced, that is not always the case. It also means that the advertiser may have no knowledge at all of the context their advert may be seen in, and the content provider often has no knowledge and little control over what is being advertised to the reader of their content.
The report sets out the risk of advertising misplacement that arises from this, where an advert may be viewed in an undesirable context—the report gives the example of a Sky advert being placed beside white supremacist content. While this is undoubtedly a problem, I see this as more of an issue for the advertiser. I am more concerned about a different effect—the other side of the coin, if you like—which the report touches on briefly: how this new approach to advertising can affect the news media itself. Because the advert is effectively separated from the content, it has become a simple numbers game: the more hits on your content, the more advertising revenue can be generated. It does not matter what that advertising is, it is following the user, not the content. Accordingly, content providers are incentivised only to maximise hits, regardless of the quality of the content.
This happens in two principal ways. The first is clickbait with multiple click points, which the noble Lord, Lord Gilbert, mentioned. We have all seen the classic top 20-type lists, where each item in the list needs a new click and therefore creates a new advertising opportunity. Secondly, and more importantly, we see the impact in increased sensationalism and ultimately, potentially, in fake news. It is a simple fact that a sensational story generates more traffic, and I fear that digital advertising can, and therefore probably does, encourage sensationalism and perhaps even fake news. This effect is further magnified by the way that media is now consumed online: mostly on an individual story basis rather than as a whole publication, in whatever medium that may be. I fear there is a real risk that the quality of our media is being negatively affected simply by the way that digital advertising works.
The second issue I want to address is the rise of what I call stealth advertising: advertising that is not clear that it is in fact advertising. The rise of the so-called social influencer blurs the lines between advertising in the traditional sense and the provision of content. It is often not at all clear when an influencer is being paid or sponsored to sell a product and where the line is or should be drawn.
A good example of this, which I have previously raised in a different context, is the targeting of vaping at children. The internet and social media are awash with videos of attractive, fashionable young people doing tricks with vapes or reviewing flavours and gadgets. The latest major entrant in this market, Juul, has been able to run an incredibly successful campaign of social media influencing, which appears to me to be very clearly targeted at children and young people. Another version of stealth advertising that is becoming an increasing problem, but which is not mentioned in the report, is the issue of fake reviews, where businesses pay people to post fake glowing reviews of their business, products or services on review sites. While not advertising per se, it amounts to the same thing.
It is extremely difficult to regulate stealth advertising, especially given the international nature of the internet. I agree with the committee’s recommendation that the ASA should create a mandatory logo to signify sponsored content—although I heard the point made by my noble friend Lord Currie in that regard. I think that the ASA needs to look at this area much more closely, as the rules seem to be consistently flouted.
My final point relates specifically to Google. The report is admirably clear in its description of the power and concentrated market position of Google in digital advertising, and I add my wholehearted agreement to the recommendation that the CMA should investigate this market. But the issue with Google is not just one of market dominance. To me, there is also a very clear conflict of interest between its role as the dominant search engine and its multiple roles across the whole of the digital advertising spectrum. Small businesses can be made or broken by where they appear in the Google search rankings. Yet the rankings are subject to opaque and often changing algorithms, and it can be hard for a small business to manage this or expensive to pay to be in the top “Ad”-branded sponsored searches. Whether or not it actually happens, it seems to me that there is a clear incentive for Google to prioritise in its search results content that provides the greatest opportunity for revenue—where a click-through from a search creates an advert opportunity from which Google can earn revenue. I urge the CMA, should it follow the recommendation of this excellent report, to include that aspect in its study.