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.