A French law introduced in 1993 to instill transparency into media buying, the 'Loi Sapin', has been extended to digital advertising and media. The effect of the law is that an intermediary cannot work for the seller and the buyer at the same time.
The law requires that any purchase of advertising space made by a media agency or any other 'intermediary' is made under a specific written agreement that specifies the services provided and the payment terms. The intermediary must act strictly on behalf of the advertiser and not on its own behalf. Any discounts the intermediary has been offered by the media owner must appear on the invoice to the advertiser, and those can be kept by the intermediary only with the advertiser's agreement. In addition, the invoice relating to the purchase of advertising space must be provided directly by the seller to the buyer even if the said purchase is not directly paid by the advertiser to the publisher.
Similar rules apply to agencies offering media planning advice; they must not receive any payments or benefits from the media owner and must disclose any financial ties with media owners and the amount of the relevant shareholdings in their terms and conditions.
The Loi Sapin has been criticised for being outdated and a number of discussions have taken place between the legislature and the stakeholders to determine how its constraints should be implemented in the digital space. Changes to the Loi Sapin came into force on 6 August 2015 as follows:
- the phrase "on any medium whatsoever" is added to article 20, paragraph 1 after the sentence "any purchase of advertising space", thus officially extending the application of the law to cover online transactions; and
- the reporting obligation applicable to sellers of ad spaces, requiring them to report their activities directly to the advertiser within one month following the broadcasting of the advertising, is extended to the digital space. However, the details of this obligation have yet to be specified.
What does this mean for the adtech industry?
Although in theory the extension of the Loi Sapin to digital media is already in effect, many grey areas regarding its application remain, and the vagueness of the adopted text indicates that the French legislature is still undecided.
This uncertainty is preventing the full growth of programmatic buying in the market: advertisers are concerned about the cost of media transparency; publishers and intermediaries are concerned about the risk of not being able to fulfil their obligations.
We look forward to the publication of the application decree about how the new law will be applied to the digital space.