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It's time to regulate the digital ad market


WFA Chief Executive Stephan Loerke

The World Federation of Advertisers (WFA) normally advocates for self-regulatory advertising standards as the best way of keeping our house in order. This is because our industry tends to be faster and more agile—and that’s essential in the rapidly-changing space that is media and advertising.


But in a hard-hitting interview. WFA Chief Executive Stephan Loerke says the self-regulatory approach alone is failing when it comes to the digital ad market.


WFA normally advocates for self-regulatory advertising standards as the best way of keeping our house in order. This is because our industry tends to be faster and more agile—and that’s essential in the rapidly-changing space that is media and advertising.


Although some critics may want more, we have put some pretty robust standards in place to ensure that kids see less marketing for certain foods and soft drinks and minors don’t see ads for alcohol. Compared to 2005, kids in Europe now see half the ads they used to for high fat, salt and sugar foods on TV. And independent data shows that a minor would have to visit a website 1,086 times before they would see an alcohol ad.


We’re also looking at how best to address very legitimate concerns around ads online. The WFA launched the Global Alliance for Responsible Media back in 2019 to push digital platforms and the broader ad industry to co-develop new standards, tools and accountability mechanisms to stop ad spend funding harmful content.


Over the past 60 years, the ad industry has shown it has a pretty decent track record of setting global standards and working closely with local advertising standards bodies that police and enforce them.


A responsibility to rebuild trust

But, frankly speaking, the self-regulatory approach alone is failing when it comes to the digital ad market. This frustrates our ability to be better marketers, it impacts the reputation of companies and, most importantly, it can end up causing damage to society. Addressing the challenges will require a different approach—a combination of our self-regulatory efforts with statutory rules—in order to build a digital ecosystem that works for everyone.


We have a joint responsibility to rebuild trust, and regulation has to be part of the scaffolding.


The EU Commission’s proposed solutions—the Digital Services Act and the Digital Markets Act—should help address consumer concerns about online advertising and create a more competitive digital advertising market. And we welcome them.


The Brussels Effect also means that once something has been shown to work in the EU, it has the potential to become a blueprint for other policymakers around the world. We have witnessed this in the fields of consumer safety, data privacy, environmental protection and antitrust.


Of course, not everyone in the advertising industry views the prospect of regulation in the same way. Some have predicted all sorts of gloomy scenarios about what might result. A lot of their messages are over the top and are designed for shock and awe.


Looking at the facts, it is easy to see why it is in advertisers’ and society’s interests to have a more tightly regulated digital advertising ecosystem.


A significant proportion of the public is not happy with the way the industry handles its data.

Sixty-nine percent of people say they would reconsider their relationship with a brand if it communicated in a way that they considered was too personal, even if their data was collected in a legally compliant manner.


And, inadvertently, advertisers are still too often funding an ecosystem that works against and not for society.


Smarter regulation, greater transparency

Last year, COVID-19 disinformation sites generated at least $25 million (21.4m euros) in ad revenue in 2020. European disinformation sites continue to earn around $75 million (64.1m euros) of advertising a year, much of it placed by well-known ad service providers.


Smarter regulation could help reassure people that the advertising business is actually working with their interests in mind. Greater transparency about why consumers are seeing ads and what data is being used about them would be to everyone’s benefit.


Better rules on content would also force platforms and publishers to take more responsibility for the content they distribute, reducing the impact on society and ensuring that brand messages are less likely to support harmful content peddled by unscrupulous actors.


Yes, some in our industry will criticize the measures the regulators are proposing. Some will argue that WFA is underestimating the unintended consequences of regulatory intervention. But right now, these rules are needed and they are essential steps to address some of the ugly truths of the digital economy.


We should work with policy-makers to improve these regulations, not just for the advertising industry but for people and society. It’s time to champion solutions that could result in more accountability and real transparency. It’s time to embrace the change that needs to happen.


This article was originally published in Ad Age on October 19

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