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The Challenge of Regulating Internet Advertising

Economic

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The Internet share of advertising expenditure (adspend) is growing every year. ZenithOptimedia reports that in 2012 Internet advertising in Asia-Pacific had 17.8% share of total adspend. The Internet was the third largest medium with television being the largest and newspapers second. But adspend is growing at about 13% pa so by 2014 it is predicted that Internet adspend will overtake newspapers and be firmly in second place behind television.

In the APEC/APAC countries of South Korea, Canada, Japan, Taiwan and Russia the Internet is already in second place. It is predicted that in Canada and Australia the Internet will be the largest media in terms of adspend in 2014.

Internet ads are effective according to recently released Ipsos research on online users. In the Asia-Pacific region;

– 48% had looked at/read an ad for a brand or product

– 43% had watched a commercial for a brand or product

– 29% had clicked on a banner/pop-up for a brand or product

All three figures are slightly higher than the world average.

This quite dramatic change in market share has been challenging to regulators. It was quickly addressed by advertising self-regulatory organisations (SROs) in many countries that merely applied their advertising codes to the new medium. The thrust of SROs is to self-regulate all advertising regardless of medium. As a result self-regulation tends to have strengthened in countries where SROs follow best practice self-regulation. This has been strengthened with the online industry in individual countries forming an Interactive Advertising Bureau (IAB) who in turn have developed Codes of Conduct.

Government regulation often tends to be media specific. Broadcast media are Government regulated in most countries, particularly television which has advertising caps and quite strict requirements about children’s programs and advertising. Because the Internet has no country borders such Government regulation for the Internet is impractical. However the Government does have an important role in setting the regulatory framework and the SROs have the role of implementation by way of codes and a complaints system. This is an example of best practice regulation.

 

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