The Advertising Standards AUTHORITY (ASA) will have significantly extended responsibilities for online marketing from 1 March 2011. The ASA has been granted new powers to adjudicate on marketing communications used on businesses’ own websites and on other non-paid-for online space under their control, such as social networking sites. The new remit will apply to all sectors, all businesses and all organisations, irrespective of size.
Therefore, from 1 March 2011, the rules in the UK Code of Non-Broadcast Advertising, Sales Promotion and Direct Marketing (the CAP Code), including those relating to misleading advertising, social responsibility and the protection of children, will apply to all online marketing communications in the UK, whether paid or unpaid. The CAP Code is currently restricted to adverts in paid-for space, online sales promotions and prize promotions.
Why the extension?
Over the past few years, online services and e-commerce in the UK and elsewhere have grown exponentially, with businesses increasingly using the internet as a tool to advertise their products and services. With that growth, there has been a corresponding increase in the number of complaints from the public to the ASA regarding online marketing. A significant proportion of those complaints relate to advertisers’ own websites, which the ASA currently has no jurisdiction to investigate. The extension will mean that all non-broadcast advertising will be regulated in the same way. All online marketing communications (paid or unpaid) will be subject to the same scrutiny as advertising claims made in traditional print media.
Details of the new remit
In addition to its current remit, the CAP Code will now apply to:
‘Advertisements and other marketing communications by or from companies, organisations or sole traders on their own websites, or in other non-paid-for space online under their control, that are directly connected with the supply or transfer of goods, services, opportunities and gifts, or which consist of direct solicitations or donations as part of their own fundraising activities.’
The phrase ‘directly connected with the supply or transfer of goods, services, opportunities and gifts’ applies the new remit to all marketing communications that are intended to sell something. The ASA recognises that there are many ways in which a communication can seek to sell something and may not necessarily include a price, overtly seek a financial transaction or otherwise refer to transactional facility.
The phrase ‘non-paid-for-space online under [the advertiser’s] control’ is primarily aimed at adverts and other marketing communications on advertiser-controlled social networking site pages. This is an acknowledgement of the increasing power and reach of social networking sites, and the role that they play in public policy debates. Guidance from the ASA makes it clear that these areas are not exclusive – there could be other types of non-paid-for online space that will fall into its remit.
The CAP Code will now also cover ‘advergames’ (games used to promote a product or organisation) on a business’ own website or on non-paid-for online space. Advergames on paid-for online space are already covered by the CAP Code.
Finally, the CAP Code will also apply, in some circumstances, to online user-generated content (UGC) created by individuals. If the UGC (whether unsolicited or solicited by the website owner) is adopted and incorporated into the website owner’s marketing materials, it will be regarded as a marketing communication. Therefore, particular care should be taken when using customer testimonials.
What is excluded?
The current exclusions under the CAP Code that cover political and editorial content remain in force. These existing exclusions include press releases and other public relations material, editorial content, political adverts, corporate reports, natural listings on a search engine or a price comparison site, marketing communications in foreign media, and claims in marketing communications relating to practitioners’ expertise. From March 2011, investor relations communications will now also be explicitly excluded from the ASA’s remit. The use of heritage advertising (ie a past advertising campaign) will also be excluded, provided it is not part of a business’ current promotional strategy and is placed in an appropriate historical context.
sanctions for breach
Although the ASA cannot impose fines, it has various powers to sanction communications that fall foul of the CAP Code. The following sanctions have been added to the ASA’s existing powers to enable it to effectively enforce its extended remit:
- Removing, with the co-operation of the search engine, adverts that link to the page hosting the non-compliant marketing material. This will cover both paid-for search adverts that link to a page with non-compliant marketing on the advertiser’s website, or other non-paid-for online space under the advertiser’s control. This could include viral marketing, as well as traditional online adverts.
- Naming and shaming. Websites that fail to comply with the new rules could be placed in a rogues’ gallery on the ASA website, to which public attention may be drawn.
- The ASA may place adverts on search engines that highlight a business’ continued non-compliance with the CAP Code and may place a link through to the rogues’ gallery on the ASA website.
What happens now?
The industry has agreed to apply the standard 0.1% levy on paid-for adverts appearing on internet search engines through media and search agencies. This is an extension of the existing funding mechanism in other media that pays for the ASA and will be initially supplemented with seed capital from Google.
Businesses not currently subject to the CAP Code will have time to familiarise themselves with the new requirements before 1 March 2011. Website owners and agencies should consider signing up to CAP Services on the ASA’s website to receive guidance and training to ensure that they are compliant with the new rules before 1 March 2011.
Scope and Key
Principles of the CAP Code
Following the extension, the CAP Code will apply to:
- magazine and newspaper adverts;
- posters on legitimate poster sites;
- leaflets and brochures;
- cinema commercials;
- direct mail;
- door drops and circulars;
- paid-for adverts on the internet;
- commercial e-mail and SMS text message adverts;
- adverts on CD ROMs, DVD and video, and faxes;
- sales and prize promotions; and
- adverts and other marketing communications by or from companies, organisations or sole traders on their own websites, or in other non-paid-for online space under their control, which are directly connected with the supply or transfer of goods, services, opportunities and gifts, or which consist of direct solicitations of donations as a part of their own fundraising activities (from 1 March 2011).
The key principles of the CAP Code are that marketing communications should:
- be ‘legal, decent, honest and truthful’;
- not be misleading – all claims must be accurate, unambiguous and capable of being substantiated;
- be prepared with a sense of responsibility to consumers and society;
- respect the principles of fair competition generally accepted by business; and
- not bring advertising into disrepute.
final reminder
Don’t forget that the CAP Code overlaps with legislation with which advertisers must comply. In particular, businesses must comply with both the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs). In summary, the CPRs introduce a general duty not to trade unfairly, and seek to ensure that traders act honestly and fairly towards their customers. The BPRs prohibit businesses from advertising products in a way that mislead traders and set out conditions under which comparative advertising, to consumers and businesses, is permitted.
By Andrew Shindler, partner, and Emma van Haaster, associate, SJ Berwin LLP.
E-mail: andrew.shindler@sjberwin.com;
