DMA Forum: DMA View on ... New levy on internet ads

The UK's self regulatory framework is constantly evolving and this year has been no different. However, while the announcement that Parliament has agreed to Ofcom's proposal to contract out the regulation of TV and radio to the Advertising Standards Authority (ASA) secured plenty of column inches in July this year, another equally significant development passed most people by.

From 1 August a levy on internet advertising has come into force. The levy is being collected by the Advertising Standards Board of Finance (ASBOF) which is responsible for raising the money which funds the UK's self-regulatory system. The fact that internet advertising has come under the ASBOF spotlight is a clear indication of its development. While the ASA has handled complaints about internet campaigns since 1995, only now does it feel that the sector is large enough and sufficiently established to help finance its regulation.

Advertisers must pay their way

"With internet advertising growing apace, it's important that this sector contributes to the ASA - not least because we are now handling a lot of complaints about internet ads," says Winston Fletcher, chairman of ASBOF.

"It's important the Government knows that the digital sector is contributing to and upholding good standards of advertising."

The ASA is indeed handling a growing number of complaints about internet advertising - an inevitable result of the growth in this sector. While 750 complaints about internet ads were resolved in 2001, this figure grew to 1,105 in 2002 and by a further 10 per cent last year. If you compare that to a gradual decline in the number of resolved complaints about direct mail campaigns - from a little more than 3,000 in 2001 to 2,710 in 2002 and 2,521 last year - it's clear that it was time for the internet to start paying its way.

"It's great that digital media has reached a level of maturity where the main players in the market can start to pay a percentage of what they spend to regulate the media," comments Charles Ping, head of CRM at The Guardian and deputy chairman of the DMA.

The levy exacted on internet ads works in exactly the same way as press and poster advertising, with 0.1 per cent of the media cost paid to ASBOF.

"It excludes the cost of producing the ad and is only levied on the amount the advertiser pays the media owner," explains Fletcher. The levy is collected through marketing agencies, and ISBA, the IPA and the DMA have agreed that their members will collect the internet levy on behalf of the advertisers.

This should provide an injection of funds for ASBOF which will help the agency monitor not just internet advertising but other digital channels, such as e-mail and SMS, which have also experienced a surge of complaints.

Last year the ASA resolved 455 complaints concerning e-mail campaigns, compared to a mere 65 in 2002, while SMS complaints increased from 65 to 393 over the same period.

As yet, neither the commercial e-mail nor SMS markets are considered large enough to support an ASBOF levy. "We have discussed it but for the foreseeable future they will be excluded," says Fletcher.

One potential advantage of a future e-mail levy could be regulating the tide of spam which is threatening to stymie commercial e-mail by creating a white list of legitimate e-mailers who had paid their levy. Robert Dirskovski, head of interactive media at the DMA, comments that about 25 per cent of bulk e-mail currently goes undelivered. "ISPs are seeking to stem the flow of spam and, in there attempts, are preventing legitimate permission-based e-mails being delivered," he says. "Any initiative that helps the problem of delivery would be embraced extremely warmly by the industry."

Tracking e-mailer spammers

Research by the DTI identified about 600 companies that are hacking into antiquated servers in countries such as China, South Korea and Brazil, to launch spam. The seriousness with which this is being taken is underlined by a Spam Enforcement Workshop, hosted by the DTI, which takes place later this month and brings together the OFT and FTC (Federal Trade Commission) in the US.

True spammers operate outside of any e-mail legislation, but could be stopped in their path by enforcing the anti-fraud legislation that already exists in every major economy. "Spam isn't just data theft, it's usually about the promotion of illegal or offensive products and there are already laws against that," says Dirskovski who will be attending the Workshop.

"Tracking down these rogue companies and bringing them to account is probably the biggest challenge this industry currently faces."


2001 2002 2003

Direct mail 3,111 2,710 2,521

Internet 750 1,015 1,100

Email 0 17 455

Text 6 5 393


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