Unexpected costs due to the new obligations under the APEC Action Agenda will impact on budgets in 2015. Not only will advertising Self-Regulatory Organizations (SROs) have additional expenditure but also trade organizations such as advertiser groups, agency groups and media groups. Multi-national companies have particular responsibilities that will be an additional budgetary expenditure item.
Industry has been a strong advocate for reform of advertising regulation in the Asia-Pacific region. APEC has delivered with a comprehensive reform package. 2015 has been designated as the time for industry to implement the reform package – but that will cost money and resources.
As discussed previously the Action Agenda endorsed by the APEC Leaders’ Declaration is an outstanding document that sets the timetable for introducing best practice self-regulatory standards throughout the region. For those countries where there is little or no self-regulation there is a lot of work to be done. For those that are developing their self-regulatory regimes the same applies. Those countries that already have high standards of advertising regulation will be primarily responsible for resourcing and funding those who need assistance. This will be an unexpected budget item in 2015.
The reason the Leaders gave for endorsing the Action Agenda was “to promote alignment of advertising standards and reduce the cost of doing business across the region”.
Three days before the Leaders’ Declaration the Ministerial Statement of APEC Trade Ministers said their support in part was to “promote advertising”. The relevant paragraph said,
“We support efforts to foster more effective advertising regulation and standards to promote advertising, and endorse the APEC Action Agenda on Advertising Standards and encourage economies to undertake efforts to implement its recommendations in 2015.”
Clearly if the objectives of promoting advertising, alignment of advertising standards and reduction of the cost of doing business are achieved then the advertising industry will benefit considerably and the investment handsomely rewarded.
Although the Action Agenda allocates various tasks to different sectors as discussed below, there is no APEC or Government funding. The entire plan is to be self-funded.
A key task for developed SRO’s is training for developing and aspiring SROs. This is a continuation of the work so far at the Hanoi Dialogue and the Beijing Forum. A priority is mentoring which is best done on site on a one-to-one basis. If this is followed by a buddy system then developing SRO’s can progress very quickly. To achieve this then the developed SROs would need to fund and resource the initiative.
The Action Agenda states – “Develop and deliver mentoring and capacity building programs in 2015”. Thus developed SROs should budget in 2015 for staff being overseas assisting in the mentoring and capacity building program.
The Action Agenda spells out what is expected of industry associations –
“ to actively participate in advertising self-regulatory practice. While raising awareness and capacity of self-regulation, they should play their role in guiding and rectifying their members’ advertising practice.”
A feature of countries with developed SROs is a supporting network of industry associations. Usually the associations do actively raise awareness of self-regulation and build up capacity and knowledge within their membership of the requirements of responsible advertising. But in countries with developing SROs or no SROs there are usually few or no industry associations. Sometimes there is an advertiser group but agency groups and media groups are less common.
Thus industry associations in countries with developed SROs could become outward looking and assist in the development of sister organizations in countries where there is no association or there is an emergent association. This would be challenging, as it requires an outward looking focus and the willingness to allocate resources and funds in 2015 for the regional good.
The Action Agenda specifically mentions advertisers – “As the initiator, investor and drivers of brand advertising campaigns, advertisers should practice corporate social responsibility and actively promote responsible advertising. Brand owners and their representative organisations should, therefore, assume primary responsibility for advertising communications and industry self-regulatory practice.”
Multi-national advertisers almost without exception do practice responsible advertising and ethical corporate social responsibility. The key words in the statement are “actively promote responsible advertising”. We do not read this to mean actively promote within the company but generally. In other words to become involved in supporting SROs and “assume primary responsibility for advertising communications and industry self-regulatory practice.”
This is a common occurrence in sophisticated markets but being involved in developing markets as found in many APEC countries is more challenging. For instance emerging and new SROs require startup-funding, expertise and general industry support. A group of multinational advertisers have extraordinary influence to get multi-national agency groups and media involved. It is this sort of support that would satisfy the Action Agenda ‘request’.
Once more this requires action with an allocation of funds and resources in 2015.
Adam Brandenburger of Harvard University and Barry Nalebuff of Yale developed the concept of co-opetition. Various competitors combine in a common purpose with the goal of increasing the size of the business pie while still competing to carve it up. What the Action Agenda proposes is a co-opetition model.
The diverse industry players combine to ensure that countries in the Asia-Pacific region all have best practice advertising self-regulation. That requires effort, resources and funds. The reward is petty restrictions would be removed, advertising would be encouraged and the cost of business throughout the region would reduce. The advertising pie would subsequently increase with the opportunity for all players to have a larger slice.
The big BUT is that action is required in 2015.
The just released APEC Leaders Declaration contains the following –
“We endorse the APEC Action Agenda on Advertising Standards and Practice Development to promote alignment of advertising standards and reduce the cost of doing business across the region”
The APEC Action Agenda on Advertising Standards and Practice Development is an outstanding document that extols the benefits of best practice advertising self-regulation and has a timetable for future action. This will affect all 21 countries/economies in APEC. 2015 will be a busy year for industry if it is to take full advantage of the opportunity granted by the APEC.
This UPDATE examines the Action Agenda.
The APEC Leaders meeting has just concluded in Beijing. It was a gathering of the Heads of State of the 21 APEC economies. The main outcome of the meeting is the announcement of a start of the negotiations of a free trade agreement – called the Free Trade Area of the Asia-Pacific (FTAAP).
It is also recognized in the Declaration that there is a need “to accelerate “at the border” trade liberalization and facilitation efforts, improve the business environment “behind the border”, and enhance regional connectivity “across the border” to accumulate more building blocks for the realization of the FTAAP.”
Among the actions that needed to happen is the implementation of the Action Agenda on Advertising Standards and Practice Development.
The opening paragraph of the Action Agenda recognizes the economic importance of advertising and of best practice advertising regulation –
“As an important driving force in guiding consumption, expanding domestic demand and stimulating economic growth, advertising is a critical way of helping companies and industries across the APEC economies grow. Advertising enhances brand recognition, fosters competition, increases cross-border trade and provides for information and educational exchanges that build modern industrial economies. Regulatory and self-regulatory frameworks for advertising help achieve innovation, productivity and growth in all goods and services sold across and within APEC economies. The APEC Policy Support Unit (PSU) study of 2014 recognised the significant benefits of advertising.”
In the following paragraph is an endorsement of self-regulation –
“Advertising standards refer to codes of practice – set out by the advertising industry on the basis of international experience and adapted to locally and culturally specific realities. As such, these standards provide guidance on how best to protect and inform consumers and prevent anti-competitive practices and complement a sound regulatory system. A self-regulation system that applies advertising standards is an implementation of self-discipline and self-management under industry auspices and is an important complement to government regulation and enforcement”
The Action Agenda recommends to APEC members that advertising regulatory regimes reflect the following principles –
“1. Be legal, decent, honest and truthful.
2. Conform to the principles of fair competition, as generally accepted in business. Advertisers should respect intellectual property rights, and the legitimate rights of brand holders and advertising agencies.
3. Respect the cultural, legal, and economic context of each individual APEC economy.
4. Give special care in advertising practice directed towards or featuring children or young people. Advertisements targeting, or portraying, children shall not contain anything that will lead to physical and mental harm to them and shall not take advantage of their potential vulnerability or credulity.
5. Advertising should not undermine healthy and active lifestyles or healthy balanced diets.
6. Advertising should take particular care to ensure truthfulness and integrity in relation to environmental claims.
7. Respect and protect personal privacy consistent with the APEC Privacy Framework and Cross Border Privacy Rules.
8. Comply closely with regional laws and regulations, industry standards and ethics.
9. Facilitate, rather than impede, trade and investment in the region.”
The Action Agenda has a number of recommended specific actions.
- Governments are urged to “increase their support for efforts of advertising self-regulation” and to “actively explore specific ways to realize advertising self-regulation, should enhance communication and cooperation in terms of organizational structure, process design and performance management, and should endeavor to realize the significant industry role in self-regulation and extensive social influence of advertising self-regulatory practice.”
- Industry associations “are expected to actively participate in advertising self-regulatory practice. While raising awareness and capacity of self-regulation, they should play their role in guiding and rectifying their members’ advertising practice.”
- Advertisers are to play a leading role – “As the initiator, investor and drivers of brand advertising campaigns, advertisers should practice corporate social responsibility and actively promote responsible advertising. Brand owners and their representative organisations should, therefore, assume primary responsibility for advertising communications and industry self-regulatory practice.”
2015 will be a busy year with four different very large tasks.
“- Develop principles in 2015 for APEC economies to use in developing their advertising and self-regulatory regimes;
- Develop and deliver mentoring and capacity building programs in 2015 that aim to help economies adopt these principles;
- Develop an advertising regulatory checklist in 2015 that details key elements of a regulatory framework that facilitates trade and investment and protects consumers; and
- Build public awareness programs of available consumer policy tools, including self-regulatory organizations (SROs) for roll out in 2015-2017.”
Such an endorsement for best practice advertising self-regulation is unprecedented. The endorsement is even more remarkable when the nature of some of the political systems of APEC members is taken into account.
The opportunity offered to industry is immense but quick action is needed. This will require planning, programs and funding. It is an opportunity that must be grasped.
A central theme at the APEC Advertising Standards Forum and Mentoring Workshop to be held this week in Beijing on 8/9 August is best practice advertising regulation. The driver for best practice regulation in Europe, North America, Australia and New Zealand has been consumer protection. This approach was also taken with some Asian countries with mixed results – indeed in some countries the concept of consumer protection was novel.
APEC has taken a completely different approach – that of enhancing trade and economic growth. Indeed the strap-line for APEC is “Advancing Free Trade for Asia-Pacific Prosperity”.
The APEC report “Voluntary Standards and Regulatory Approaches in Advertising in APEC Economies” recognized that -
- Adspend was a driver of economic growth
- Advertising regulation that is not best practice is a barrier to trade
- There are shortcomings in the regulation of advertising in several APEC economies
- That self-regulation has an important role in best practice advertising regulation.
It is for these reasons that APEC has taken an interest in promoting the Beijing Forum and Workshop. Industry has joined in by providing the necessary funds for the event.
If the goal of best practice regulation throughout APEC is to be achieved it will require a long-term sustained program. The form and content of the program is yet to be developed but the Forum and Workshop should provide a start.
Will Gilroy, Director of Communications of the World Federation of Advertisers (WFA), recently wrote an excellent article on the APEC approach to advertising regulation. Will is based in the WFA Singapore office. This article is reproduced in full with his kind permission.
“For the first time in its twenty-five year history, Asia-Pacific Economic Cooperation (APEC) looks to promote coherent advertising standards across the 21 Pacific Rim member economies in order to promote trade.
In June 2004, when the EU grew from fifteen to twenty-five member states, the European Commission challenged the European advertising industry to create ‘a better system of advertising self-regulation for a bigger Europe.’ The primary incentive of the Commission was to be able to afford acceding citizens to the European Union from countries as diverse as Cyprus, Hungary and Latvia the same consumer protection that they were given in Germany, UK and France.
This led to a flurry of activity from the industry coordinated by the European Advertising Standards Alliance. Industry self-regulatory infrastructures were quickly established from Lisbon to Nicosia and Tallinn to Ljubljana on the basis of the EASA Charter Ten Best Practice Principles, an agreed checklist of core components which make for effective industry-led advertising standards.
Today, nearly every member state of the EU has a Self-Regulatory Organisation (SRO) in place which monitors, polices and enforces advertising codes of conduct and provides consumers and industry with an independent body which can process complaints and competitor disputes. It has been a remarkable achievement in such a short space of time and is testament to the European advertising industry’s ability to take its responsibilities seriously.
Ten years on, the global industry has a greater responsibility still. In 2012, APEC launched the Advertising Regulatory Capacity Building Mentoring (ARCAM) programme in order to identify best practice in advertising standards and identify ways in which they might be able to seek greater regulatory convergence across APEC economies.
The rationale was very different to that of the European Union. Rather than looking at the world through the prism of consumer protection, APEC is an organisation charged with promoting trade and there is growing acknowledgment within that advertising regulation that does not meet best practice constitutes a barrier to trade and is likely to reduce competitiveness and economic output. Conversely, increasing coherence of advertising standards across APEC markets would reduce the cost of doing business as well as non-tariff barriers to trade.
APEC also recognises that there are currently significant shortcomings in many APEC markets, particularly in the emerging markets of East and South East Asia. Foreign companies entering the market are often faced with swathes of red tape and a myriad of idiosyncrasies and legal uncertainties. Entering Vietnam, Indonesia or China can prove a daunting prospect for US or European companies not used to the local ropes.
But the economic prize is too great. Six of the top ten contributors to global ad spend growth (USA, China, Indonesia, Japan, Korea and Russia) between 2013 and 2016 will be APEC economies. APEC accounts for approximately 54% of the world’s gross domestic product and about 44% of world trade. APEC countries represent 40% of the world’s population.
By creating clear industry standards and more transparent processes for the approval and airing of advertising content and giving industry a greater stake in policing itself, APEC would make it less costly for local companies to bring product to market and simpler for foreign companies to ensure compliance with local standards. All this would likely lead to increased trade and competition and higher advertising spend, which APEC knows to be intrinsically correlated to economic growth.
On top of this, it would be laying the framework for the EU’s noble ambition and afford greater protection to APEC consumers. Realistically, the APEC process is not going to increase consumer rights in US, Canada or Australia where they are already well enshrined – but it might just provide a blueprint for a system which over time improves consumer protections in China and Vietnam, for instance, while properly weighing the interests of companies and their ability to drive economic growth – which is ultimately the most sustainable form of consumer welfare in an emerging economy.
Indeed, a reality check is needed. APEC represents 21 countries, very few of which have a great deal in common. For those who bemoan the lack of EU consensus and homogeneity, the reality of having to drive an APEC agenda on a daily basis would likely paralyse them with shock. Nor do the member countries hand over decision-making or sovereignty in the same way that EU member states do. APEC represents a light-touch, aspirational vision, created in part as a reaction to the advent of other global trading blocs around the world.
But that is not to say that greater convergence of advertising standards between APEC countries is a pipe dream. In November 2012, the Australian Advertising Standards Bureau (ASB) hosted a Dialogue on Best Practice in Advertising Standards in Hanoi at which WFA keynoted with P&G on the importance of advertising to the economy. This coincided with the Vietnamese government’s own review of the Vietnamese Ad Law in which they foresee the potential development of industry-led codes of conduct and an independent ‘Advertising Appraisal Council.’
Two years later, the Chinese Advertiser Association (again alongside the Australians on account of ASB’s tireless work) will be hosting a two day workshop in Beijing on August 8th and 9th 2014 alongside other global industry partners including WFA, EASA and the International Chamber of Commerce.
A great deal of the focus will be given to fostering a better understanding of global best practice in advertising standards and how they can be customised to a Chinese reality. Crucially, this has the support from Chinese government and Chinese industry during the year that China hosts APEC.
With APEC’s initiative, it is hard not to see growing momentum and appetite for industry involvement in setting clear and transparent standards and processes in countries such as Vietnam, Indonesia and China.
Not least as these governments witness how the more evolved industry-led set-ups in India, the Philippines and Singapore can incentivise foreign direct investment.
Time will tell if the fruits of our labours can be properly reaped. It will not happen overnight. A great responsibility falls on industry to make the case for governments to revisit their advertising frameworks so that they can deliver systems which better serve consumers, businesses and the broader economy. But the first steps have been taken.”
The Forum and Workshop in Beijing this week is a huge step forward in the development of best practice advertising regulation in the Asia-Pacific region. There is no one method of best practice – just some essential principles. The methods and strategies used to implement the principles are decisions for each individual economy/country.
Europe provides a useful precedent but a replication of the model for APEC countries/economies is not appropriate. The European model tends to be top down with a sacrifice of sovereignty by individual countries – This is quite unsuitable for the Asia-Pacific region.
The region needs to develop its own model with an emphasis on harmonization for the purpose of facilitating trade and economic growth. A first step is the need to build capacity throughout the region. Once that is underway then harmonization could be contemplated.
We wish the Beijing Forum and Workshop well in its discussions
Foundation for Advertising Research
Adjunct Professor of Advertising Regulation
University of the Sunshine Coast, Queensland
A best practice advertising Forum will be held in Beijing on 8-9 August. The Forum is for those involved in advertising regulation in APEC economies and is a follow-up to the successful Hanoi Dialogue. The Forum is under the auspices of APEC and is being organised by the Advertising Standards Bureau (ASB) with the support of an international committee,
The First Day sessions include
- International communication on global and national policy developments
- Setting and maintaining advertising standards – the International Code and best practice in adapting it to local econ
- Sharing of company best practice cases on ad self-regulation
- Working together to achieve fair competition and sound business environment – Compliance and the role of Governments – (Interactive communication)
The second day is a Capacity Building Technical Workshop with the workshops being led by people currently running self-regulatory organizations. This will be a most valuable for those involved in intending, emerging and experienced advertising regulatory organizations.
Topics covered include
- Funding the system and running a secretariat
- Dealing with ICT developments
- Effective industry and consumer awareness
- The complaints process
- Truth, accuracy and decency – a practical exercise with a mock jury
This Forum is a most important event for those involved in advertising regulation in the APEC region. For further information please contact Sandy Rose at SRose@adstandards.com.au
APEC has published its report on ‘Voluntary Standards and Regulatory Approaches in Advertising in APEC Economies’. It is a most important document and lays the basis for future development of best practice advertising regulation.
The report notes the wide variation in standards in the APEC economies. –
“The paper also finds that the capability for advertising self-regulation among economies differs. Although sixteen economies practice self-regulation, five are either without self-regulation or are in the process of implementing some form of self-regulation. In economies where self-regulatory organizations (SROs) exist, there are differences on their level of adherence to what the paper took as international best practice benchmarks.”
The report has three recommendations to give the highest marginal benefit –
“1) Efficient compliance and monitoring;
2) Effective consumer and industry awareness; and
3) Efficient and resourced administration.”
The 69-page report can be found on this link