THE FUTURE OF TELEVISION ADVERTISING REGULATION
ADMAP MAGAZINE

Brinsley Dresden, Lewis Silkin, outlines the implications of the UK Communications Bill and suggests that there are hidden dangers in what is being proposed

When the advertising industry first learned of the government's intention to overhaul the regulation of television advertising in the United Kingdom, its reaction was to heed the advice of Hillaire Belloc to little Jim, in his Cautionary Tales for Children, on the peculiar dangers posed by rampaging lions:

'Always keep a-hold of Nurse
For fear of finding something worse.'

In this case, faced with potential mauling by statutory regulation, the industry cried out for the tender mercies of self-regulation. With the Communications Bill due to become law during 2003, it seems that the industry may get what it wanted, up to a point at least. So, will advertisers come to recall that old Chinese proverb, 'Be careful what you wish for. Your wish might be granted'?

In modern parlance, there are a number of different 'stakeholders' in advertising regulation. Consumer groups want to see both consumer protection and vigorous, but fair, competition. Advertisers' objectives are sometimes competing and even contradictory. They want the maximum freedom to communicate and the minimum of regulation and constraint. But they also want certainty and the knowledge that once an advertisement has been approved for broadcast by the regulatory authorities, that approval will not be rescinded. Any such reversals of regulatory opinion can lead to wasted production and media spending, and damaging adverse publicity.

Alphabet soup - and regulatory conflict
The Bill envisages the new Office of Communications (OFCOM), taking over the functions of five existing regulators: the Independent Television Commission (ITC), the Broadcasting Standards Commission (BSC), the Radio Authority, the Radio Communications Agency and the Office of Telecommunications (OFTEL). The simple fact of merging these regulators and their overlapping functions touches on one of the arguments in favour of reform. Advertisers have been denied regulatory certainty by the conflicting 'horizontal' jurisdiction of the ITC and the BSC.

The problem has been particularly acute around issues of racism. Reed Employment ran a television campaign featuring a black recruitment consultant apparently mugging a young white executive. In fact, he surreptitiously places information about an attractive job prospect in the man's wallet. The ITC accepted the advertiser's explanation that the execution deliberately played tricks on viewers' racial stereotypes, and was intended to challenge those attitudes, not reinforce them. The BSC viewed this argument as sophistry, not sophistication. They condemned the commercial and it had to be withdrawn. A similar pattern was followed when the ITC rejected complaints about racism in the Typhoo tea commercials featuring the fictitious Indian tea planter, 'Tommy Two Thumbs Fresh'. Again, the BSC, unlike the ITC, was not persuaded by the advertiser's explanations, and the complaints were upheld.

As both the ITC and BSC are statutory bodies, these examples only support the case for removing advertising from the remit of the BSC, not for moving away from statutory regulation altogether. For that argument, proponents have pointed to the example of conflicts between the 'vertical' jurisdiction of the ITC and the Broadcast Advertising Clearance Centre (BACC). Under the current system, the ITC enforces compliance with the codes for advertising and sponsorship by making it a condition of holding a broadcasting licence. Broadcasters can be fined if they allow commercials that break the codes to be transmitted. In theory, they can even have their licences foreshortened. To avoid these sanctions, the broadcasters created a single clearing house, the BACC, to pre-vet virtually all television commercials.

Occasionally, however, the BACC and the ITC reach different conclusions. The BACC recently approved a commercial for the Microsoft's X-Box game console that showed a child rapidly transforming into an old man and crashing into his grave. The ITC criticised this decision and it has been seized upon by those who argue that this would not happen in a system of self-regulation. In their model, the advertising industry would take 'ownership' of the applicable codes and responsibility for enforcement. Although the funding and management of the self-regulatory body would be independent, compliance would be improved by including advertisers within the regulatory system, rather than imposing it upon them. It is a variation of Lyndon Johnson's theory that it is a better to have a man inside the tent pissing out, than outside the tent pissing in.

Self-regulation: a real solution?
These advocates for self-regulation cite with approval the example of the work of the Advertising Standards Approval (ASA) in relation to press, poster and print advertising. The ASA was singled out for praise by the government in the two white papers that proceeded the Bill, and the policy narrative that accompanies it. This is significant, given the possibility of OFCOM 'contracting out' its functions, as envisaged by the Bill. This could see a body like the ASA regulating broadcast advertising, with OFCOM performing a function analogous with that of the Office of Fair Trading (OFT) in providing legal sanctions against recalcitrant advertisers under the Control of Misleading Advertising Regulations.

The Bill also envisages OFCOM auditing the self-regulatory body from time to time to ensure that it functions properly and does not impose or maintain unnecessary regulatory burdens. All this adds up to what the Government likes to call 'co-regulation' rather than 'self-regulation'.

But are the criticisms of the current system of TV advertising regulation by the ITC and the BACC justified? Is the system operated by the ASA with ultimate backing by the OFT so much better? And will advertisers find their rights of commercial free speech enhanced or curtailed under the new proposals?

There is no justification for using the BACC as a stick with which to beat the current system of statutory regulation. It is perfectly proper and indeed desirable for the ITC and BACC to have the ability and the inclination to reach different conclusions from time to time. If the ITC reverses a BACC decision, that does not mean that the BACC was wrong, still less that there is systemic failure. If that were true, where would it leave the Court of Appeal, whose decisions are frequently reversed on appeal by the House of Lords?

Sometimes, BACC decisions have been more in tune with the freedom to advertise than those of the ITC, and even those of the ASA. In May 2001, the ITC upheld a single complaint about a commercial for Sandals resort holidays. It does not require a great deal of imagination to picture the commercial, featuring the usual images of cavorting and attractive young couples. Viewers were invited to email or call a freephone number for details. Only on receipt of the brochure did the complainant discover that Sandals holidays are for heterosexual couples only. Not for singles, and not for homosexual couples. Given her ignorance of this fact, it is tempting to speculate why this viewer wanted a holiday, as she had clearly been living on a tropical island for many years already.

The viewer had spent little or no money and only a minimal amount of time and effort to reach this state of enlightenment. Despite that fact, and regardless of the absence of singles or homosexual couples from the commercial, the ITC decided the commercial was misleading. Further transmission had to cease. Worse still for the advertiser, future advertising had to clarify the exclusion. Sometimes, Nurse can be very strict indeed.

The Sandals example can be seized upon to justify a move to a system of self- regulation whereby a clearance decision, once granted, would not be revoked. But even the ASA Council occasionally upholds complaints against advertisements that have been pre-cleared by the Committee of Advertising Practice (CAP) Copy Advice team. And that is just as it should be. Otherwise, the CAP team would effectively usurp the authority of the Council whenever it cleared an advertisement. In one example, UDV (part of Diageo) had complaints upheld about advertising for Smirnoff Ice, which the Council considered to be offensive, socially irresponsible and to imply that the product could improve sexual performance. Having taken clearance advice the CAP team, UDV must have thought it strange for the Council to uphold the complaints but simultaneously welcome their assurance that they would consult the CAP team in future.

A lighter touch?
The BACC has also consistently displayed an inclination to apply a light touch where the ASA has resorted to a heavy hand. Last September, the ASA upheld a complaint concerning M?ben's use of an umlaut over in its name. M?ben said that the device was part of a branding exercise designed to link it with its sister brands, Dolphin Bathrooms and Sharps Bedrooms. The complainant, who apparently was a member of the public and not a competitor, felt that the umlaut misleadingly implied that M?ben is a German company. M?ben replied that German is the language of several countries other than Germany and that any customer would realise prior to purchasing a kitchen that they were not dealing with a German company. In the months that have elapsed since this adjudication, M?ben has also been running a television campaign, umlaut and all. There is a strong argument that while the M?ben umlaut may be pretentious and in a strict sense misleading, it does not do any harm to consumer interests. In the modern Europe, Rolls-Royces are made by BMW, Peugeots are made in Britain, and VWs are made in the Czech Republic. So why do consumers need to be guarded against the mistaken belief that their British kitchen cabinets are actually German?

Even if that argument is not persuasive and the ASA decision was correct, the M?ben example demonstrates that TV advertisers cannot assume that self-regulation would result in more freedom than experienced hitherto under statutory regulation by the BACC and the ITC.

Despite these concerns, there is a good case for a unitary advertising regulator in view of increasing industry convergence. Advertising campaigns frequently employ a mixture of traditional above and below-the-line advertising with new forms of digital advertising. There is also an assumption that a self-regulatory system will be able to adapt more quickly and flexibly to European and global marketplace integration than one of statutory regulation. But the assumption that an independent and well-funded self-regulatory body will deliver the combination of free speech and commercial certainty craved by advertisers is far from certain.

Continuing uncertainty
In fact, as things stand, very little is certain about the new regulatory system. The government has been fulsome in its praise of the ASA and has indicated that it provides a model of self-regulation, which could be extended to the broadcast sector. And yet there are significant differences between the government's proposal and the self-regulatory system operated by the CAP in tandem with the ASA. There are two major issues of fundamental importance to the true nature of the proposed regulatory regime.

First, who will write the applicable codes of advertising and sponsorship? Who will have the power to make amendments? Under the CAP system, these responsibilities fall to the advertising industry itself. CAP publishes the British Codes of Advertising and Sales Promotion, but different sections of the advertising industry can have their say through the trade associations that go to make up CAP, such as the Incorporated Society of British Advertisers, the Direct Marketing Association, the Institute of Practitioners in Advertising and several others.

As currently drafted, however, it is not at all clear that the government envisages OFCOM ceding this function to a self-regulatory body. True, the Bill itself talks about contracting-out various functions, but the policy narrative issued with it places some rather troublesome flesh on the bones. It states that 'The formal delegation of OFCOM's powers to set advertising standards is not envisaged partly because of limitations imposed under the relevant EC directives, but this will not impede the further development of industry co-regulation.' Exactly what these troublesome directives may be is not specified. History suggests that the CAP and the ASA have managed to adapt perfectly satisfactorily to the requirements of EC directives in the past, so what is different now? And if that is only part of the explanation for OFCOM's retention of these powers, what is the other part?

Second, who will deal with complaints about advertising and be responsible for enforcement? Again, the ASA model places these responsibilities on the advertising industry itself. Compliance is high because of widespread 'buy-in' backed up with appropriate and ratcheted sanctions. Once again, however, the Bill talks of OFCOM having the duty to deal with complaints. It seems that the BACC may well retain the function of providing pre-clearance advice to advertisers, and OFCOM will take over from the ITC in providing the codes and handling the complaints. If so, the current 'double-jeopardy' created by the vertical jurisdiction of the BACC and the ITC will remain.

A working party that comprised of representatives of advertisers, agencies and broadcasters is currently working on a proposed model of regulation for OFCOM. In fact, several representative trade bodies have already issued very clear statements about the principles that the industry believes are required to underpin co-regulation. The problem seems to be that whereas the advertising industry has heard the government's praise for the ASA and concluded that co-regulation is a close relative of self-regulation, co-regulation means something rather different for the government: we regulate you through a statutory body, but you pay for us to do it.