Lord Carter’s valedictory star turn as a member of HM Government was the DCMS/BIS “Digital Britain” Final Report. It got decidedly mixed reviews, but was there anything in it for UK Advertising Plc? Stephen Groom ventures gingerly beyond the Executive Summary.
Topic: Online advertising
Who: HM Govt Departments for Business Innovation and Skills ("BIS") and Culture, Media & Sport ("DCMS")
When: June 2009
Law stated as at: 30 June 2009
With a foreword by the relevant Ministry heads, Lord Mandelson (BIS) and Ben Bradshaw (DCMS) and an introduction by outgoing under Minister Lord Stephen Carter CBE kicking off with a reference to Captain Cook's 1768 voyage to Australia, the much awaited final "Digital Britain" Report (the "Report") was published by HM Government.
Tasked to come up with proposals to "enhance Britain's strengths in a crucial sector and harness new technologies to provide a fairer and more prosperous Britain for all", it is fair to say that the end result of the Digital Britain project met with mixed reactions.
Also, if UK advertisers and marketers had been expecting innovative thinking and a raft of exciting initiatives in recognition and encouragement of the significant role they play in the digital economy, then they were probably disappointed. They may not have been surprised, however, as no obvious champion of that sector features among the eleven members of the Steering Board of "industry experts" which the Report's writers had access to during the relatively short gestation process.
So what is in the Report for advertisers and marketers?
Bigger stick for telecoms misuse?
In a section entitled "Securing Home Networks" the Report bemoans the disparities in penalties that can be meted out under the Communications Act 2003 to those using communications systems to cause consumer harm.
A contrast is drawn between the seven figure fines that can be slapped by Ofcom on those who breach the Broadcasting Code for voting scams and the £50,000 maximum fine that can be imposed on marketers who persistently misuse telecommunications networks by making "silent calls" where cold calling auto-diallers get through but don't transfer quickly enough to contact centre staff.
This discrepancy is "no longer sustainable or desirable" the Report states, and the Government commits itself to consulting on the penalties Ofcom can impose and in particular on the level of fine it can levy in "persistent misuse" cases. No more specific proposals follow in the Report, but clearly direct marketers need to keep an eye on developments here.
Self regulation of online ads-who pays?
Another relevant issue raised here is the funding of advertising self regulation.
The Report mentions the advertising levy charged on media spend and passed on to the Advertising Standards Authority Board of Finance ("ASBOF") where it is applied to cover the cost of the ASA system. This may have worked well in the offline world, the Report says, and the same generally holds true for banner ads on-line.
The system appears not to be functioning well, however, for other forms of advertising. For example for on-line click through as the Report calls it, more and more advertisers place direct business with the aggregators "who have not to date adopted the vital collecting function of the agencies." Here the "vital function" referred to is the important role performed by media agencies in paying the advertising levy direct to ASBOF out of funds received by their clients in respect of media they have booked on their behalf.
The Report therefore urges all parties to work together to resolve this because in the vital areas of "advertising, consumer protection, online as well as offline, the alternative to effective self regulation cannot be no regulation and often by default this becomes statutory regulation. This would not be the Government's first preference."
The parties being encouraged to find a resolution here are the ASA, CAP and other online advertising stakeholders including advertisers and key service providers such as Google. The types of advertising the ASA is keen to bring within its remit here include marketing that appears on advertisers' own websites (currently not covered by the CAP Code). Negotiations to set up a workable levy system to fund the exponential increase in the ASA's workload that would follow such a change have been ongoing for many months but have so far proved fruitless.
Data security and assurance
In a section focusing on data security the issue of privacy and security of data on-line is cited by the Report as a serious and growing one.
New business models such as "targeted advertising" have taken this issue to the front of the public's mind, the Report goes on, and "if handled properly…could be important revenue earners." In this context EU Consumer Affairs Commissioner Megleva Kuneva is quoted as saying "Personal data is the new oil of the Internet and the new currency of the digital world."
The Information Commissioner's Office is said by the Report to be taking the initiative to address the principles that should apply to the use of personal data. The ICO is reported to be focusing on ways in which businesses and individuals can mitigate risks from the provision and use of online data. Support is voiced for ICO's plans to develop a new code of practice "Personal Information Online" for consultation later in 2009.
The challenge, the Report continues, is to demonstrate value to consumers while ensuring that there is no risk of abusing personal data, for example by developing mechanisms to ensure transparency. So far, the Report says, the industry has yet to bridge that gap.
Support for the IAB
In this context the Internet Advertising Bureau gets a hefty nod, referred to as holding "regular events that focus on a guide to behavioural advertising" although the bad grammar renders the exact nature of these activities and their benefit a little obscure.
The IAB's promotion of "good practice principles for providers who collect and use data for behavioural advertising" is also approvingly mentioned. The absence of upper case for "good practice principles" is odd, however, since this is a specific document published by the IAB in March 2009 and currently due to come into force on 4 September 2009 http://www.iabuk.net/en/1/behaviouraladvertisinggoodpractice.html
Perhaps this reflects a reluctance on the part of HM Govt to embrace fully the IAB initiative, given its fudge of the single key issue here. As pointed out by marketinglaw.co.uk, on the crucial "is it legally opt in or opt out?" question the Principles duck the point by requiring IAB members to "obtain informed consent when required by law".
But yet more praise is heaped on the IAB by way of a welcome for its consumer information portal about behavioural advertising. It turns out, however, that this is only a proposal at this point, so the welcoming words may have a double edge which includes a sharp nudge to get on with it.
Possibly overplayed concerns acknowledged
But there is more encouragement for digital advertisers and users of behavioural techniques in the Report's closing remarks in this section.
Upholding "the protection of privacy and the principle of transparency" …."will always remain a guiding principle", the Report says (although there seem to be too many principles here or not enough depending on how the Report-speak is read).
Having said this, the Report says that "we also need to ensure that apparent concerns are properly assessed and understood, and that artificial barriers do not spring up."
A suggestion here, perhaps, that worries over behavioural advertising's threat to privacy might be overplayed and should not be allowed to stand in the way of practices that observe the three pillars of "education, notice and choice."
These are acknowledged by the Report as key and underpin the "Self Regulatory Principles for Online Behavioural Advertising" that have recently been finalised in the USA by five leading advertising industry bodies (IAB (US), DMA, AAA, ANA and BBB). These follow an FTC-supported move by the "Network Advertising Initiative", a group of leading digital businesses including Microsoft's aQuantive division, Yahoo!, and Google http://www.marketwire.com/press-release/Network-Advertising-Initiative-1012271.html
Why this matters:
The little Digital Britain has to say about advertising is mostly positive. It gives encouragement to those ploughing the self-regulatory furrow. It also recognises that new digital targeting techniques have a role to play and that within ideally self-regulatory constraints, they do not necessarily present such a threat to data privacy as some have suggested.
There is also an implicit acceptance that though respect for the confidentiality and security must at all time be paramount when it comes to using personal data, its responsible leverage by data aggregators and digital advertisers looking to engage with markets on a highly targeted basis is a potentially "important revenue earner" and a legitimate business practice which a genuinely Digital Britain should encourage, not suppress by over-protective regulation.