UK advertising rules extended To ‘Non-Paid-For’ Online Space from 1 March 2011

There is a change on the horizon that will significantly affect online advertising in the UK. From 1 March 2011 the CAP Code will also apply to advertising and other marketing communications in non-paid-for space.

For the first time UK marketing activities on an advertiser’s own website and across social media channels (such as Twitter, Facebook etc) will be subject to the CAP Code.

What is the CAP Code?

The UK Code of Non-Broadcast Advertising, Sales Promotion and Direct Marketing (currently the 12th Edition), known as the CAP Code, is a self-regulatory regime for non-broadcast advertising. The rules are fomulated by the Committee of Advertising Practice (CAP) and are enforced by the UK Advertising Standards Authority (ASA).

At its heart are 10 guiding precepts that seek to ensure that UK advertising is honest, decent, truthful and legal. While not legally binding, UK businesses, advertisers and media agencies should treat CAP Code compliance as a matter of marketing best practice. ASA’s sanctions are effective and can seriously harm an organisation’s reputation (see below).

There is also a close correlation between the CAP Code and UK consumer protection laws. In serious cases, breach of the CAP Code may also constitute breach of UK laws, such as the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and/or the Data Protection Act 1998.

ASA also oversees a parallel regime (known as the BCAP Code) in respect of ‘broadcast’ media (i.e. advertising over TV and radio programming licensed by Ofcom, the UK broadcast regulator). This is unaffected.

So what's changing?

Prior to 1 March 2011 the CAP Code applies to: (1) paid-for online advertising (e.g. paid-for links/pay per click) and (2) sales promotions (e.g. BOGOF, prize compteitions etc) wherever they appear online.

After 1 March 2011 the CAP Code will apply to marketing communications over all web ‘real estate’– critically in relation to ‘non-paid-for’ marketing communications. For example, advertising banners on an advertiser’s own website, marketing on a dedicated Facebook page and viral campaigns through Twitter will now be caught.

Why is it changing?

The development is a response to consumer and industry demand. CAP points out that around 3,500 complaints about business websites were turned away between 2008 and 2009 because they were not caught by the CAP Code. The change also reflects political pressure within the UK for there to be appropriate regulation of non-paid-for space given that children and young people spend significant amounts of time on social network platforms.

What are the tests to be caught by the extended digital remit?

Connected with a sale: For a communication to be caught it must be ‘directly connected with the sale or transfer of goods, services, opportuntiies and gifts’ or a direct solicitation for donations. There are enough tests within this phrase for lawyers to get excited about potential loopholes but ASA has already made clear that a communication does not need to contain a price, or solicit an immediate transaction, to be caught. In other words, unless an online marketing communication squarely falls within an exception (see below) marketers should prepare the communication in compliance with the CAP Code.

Additional assessment criteria: Even if the organisation does not intend to directly sell something, it should consider CAP’s additional criteria:

  • Is the communication the same as/similar to content appearing in paid-for online space?
  • Does the communication include an ‘invitation to purchase’ as defined in the CPRs (i.e. a commercial communication indicating the characteristics of a product and its price and thereby enabling someone to make a purchase)?

 If either of the above is true, the CAP Code is likely to apply.

In addition ASA’s remedies (such as adverse publicity arising from an ASA adjudication) have been extended. The following new sanctions will apply to the extended digital remit only:

  • enhanced name and shame policy providing details of an advertiser and the non-compliant communication on a dedicated part of the ASA website
  • removal of paid-for search advertisements that link to the page hosting the non-compliant communication (search engines have agreed to cooperate with ASA here)
  • ASA paid-for advertisements on internet search engines highlighting an advertiser’s continued non-compliance

 Will there be any exceptions?

Yes, the existing CAP Code exceptions will continue to apply, including:

  • Press releases and other public relations material
  • Editorial content
  • Corporate reports
  • Natural listings on a search engine or a price comparison site
  • Marketing communications in foreign media (although see below)

In addition, there are two new exceptions:

  • Investor relations: a communication to an organisation’s own shareholders, which might include an update about its goods and services
  • ‘Heritage advertising’: previous campaigns placed in a dedicated section of a website and/or identified as such

What should businesses be doing in readiness?

Businesses operating in the UK need to review their marketing compliance and vetting processes to ensure that their own websites and social network promotions contemplate this new development. In particular:

  • Roll-out of employee training and awareness programmes, particularly for marketing and acquisition teams
  • Campaign microsites/sub-sites will need to be actively managed
  • Expired/lapsed web campaigns should be promptly mothballed, or placed in a dedicated area and labelled as such
  • Web copy should be promptly updated if a campaign changes
  • Terms with affiliate programmes/affiliate management agencies should be reviewed to ensure that there are sufficient controls over online affiliates, and that advertising content fed into the affiliate programmes can be updated/removed by the advertiser (see below)

Commentary

Cost-effective complaints process: In the UK ‘unfair competition’ claims are usually limited to intellectual property infringement and passing off matters. Given this fact, together with the fact that the CPRs do not allow private citizens to bring a claim against an advertiser, the ASA’s extended remit may prove to be a popular basis of complaint for competitor businesses and consumers.

ASA activism: Given the fact that its new remit is broad and it will be well funded (derived from a 0.1 per cent levy on paid-for search engine advertisements), the first flurry of ASA adjudications are awaited with interest. ASA has a reputation for consumer protectionism and so its interpretation of the online remit might be extensive–especially where a communication borders on an exception.

Territoriality: Given the global nature of the web, what are the tests for assessing whether a communication falls in scope, especially given the ‘foreign media’ exception? CAP has stated that the location of servers on which the advertising content is hosted is not determinative. Nor is the nature of the top-level domain name–the CAP Code could cover marketing communications on a .com website, for example. It seems that the key criterion will be the extent to which the communication is targeted at UK consumers (e.g. an international site having a promotional section with GBP pricing is likely to be subject to the CAP Code). The bigger question therefore is the practicality of ASA enforcement. In cases where the advertiser has no UK legal presence ASA will have to rely on its international cooperation network (such as the European Advertising Standards Alliance) to progress a complaint in the ‘home’ jurisdiction. This in turn reveals two potential problems–firstly, these cooperation networks are not truly global and, secondly, their efficacy relies on comparable advertising rules (which are by no means assured).

UGC: This will be covered by the extended remit if it is incorporated within a marketing communication, e.g. a customer testimonial which is re-tweeted by an advertiser or a Facebook third party app, which automatically places details of an advert or promotion on a user’s status.

Affiliate marketing: Affiliate marketing is potentially impacted. The key question is how much direct liability the affiliate carries (as opposed to the brand owner). CAP’s official policy position is not yet settled, however for now it is probably best to assume that, in so far as an advertiser has control over the content (e.g. if the information on an affiliate site has been taken directly from the advertiser site), the advertiser may still be regarded as having the primary responsibility. In cases where the brand owner does not have control (e.g. if a ‘great deals’ aggregator site wrongly describes a standard offer as promotional), it is more likely that CAP/ASA would direct its attentions to the affiliate that created the problematic content and simply inform the brand owner. This issue is being progressed within CAP so watch this space for the official enforcement position