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Why Self-Regulation Works

Economic

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Almost all developed countries have a sophisticated network of advertising Self-Regulatory structures. Many query how Self-Regulation can be effective when there is no punishment such as a fine. This is based on the assumption that a fine is required to ensure compliance and is a common factor in a Command and Control regulatory regime.

Creatives make ads and the role of a successful creative is to push boundaries. Creatives have done this since the beginning of time. The right to advertise is not an absolute right but is subject to fetters such as advertising codes which are much stricter that the law. This contrasts with other types of creatives such as visual artists and writers who are not subject to codes and therefore enjoy a greater freedom of expression. Even when they breach a law the Government regulator is often reluctant to act because of potential public backlash – so entrenched is the artists right of freedom of expression.

Advertising Self-Regulation works because it is in the self-interest of the advertising industry for it to do so.

– There is an economic imperative to operate a successful Self-Regulatory regime. The media rely on income from advertising to sustain their businesses. If consumers are misled or offended by a particular medium or consider it is publishing or broadcasting advertisements which are socially irresponsible then they will no longer support that medium. Circulation, viewership or listenership will fall as consumers lose trust in the medium. The inevitable consequence is a loss of advertising revenue as advertisers place their advertisements elsewhere. In order to sustain revenue in the longer term the media rely on a high level of trust by consumers.

It is therefore in their self-interest to have codes and a complaints system that genuinely protects consumers and reflects prevailing community standards. It is also why media, on a daily basis, will not accept advertisements that do not meet the standards set out in the self-regulatory codes.

– The same arguments apply to advertisers and advertising agencies for they also will lose revenue in the longer term if they mislead or offend consumers or act in a socially irresponsible manner.

– Advertising Self-Regulatory organizations and the wider Self-Regulatory systems make extensive use of persuasion. It is a key reason why they have very high compliance to its requests to withdraw advertisements found in breach of the Codes.

– Instead of a culture of resistance and regulatory cat-and-mouse the Self-Regulatory organizations and the wider Self-Regulatory regimes have established a culture of respect for not only the provisions of the Codes but also the spirit and intent of the Codes.

– If there were a Government Command and Control regulatory regime with a punishment system such as fines then it is likely to lose the goodwill of the industry players, foster a sub-culture of resistance and encourage regulatory cat and mouse. Exploitation of loopholes and vastly increased expenditure would develop. It would be self-defeating.

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