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The future of online advertising: Our five top tips for staying on the right side of the regulators

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By Hannah Duke, Rachel Griffith

25 Jul 2023 | 2 minute read

It's no secret that we spend more and more time online. The Advertising Standards Authority (ASA) and the Committee of Advertising Practice (CAP) is more alert than ever to the need to protect us from harm by clamping down on misleading online advertisements.

Recently, the ASA and CAP have focussed on influencer advertising, financial products and services ads and even cosmetic interventions. Climate change and the environment also continues to be a high priority project. Last year, the ASA and CAP enquired into waste claims such as "recyclable" and "biodegradable". In 2023, they're focussing on meat, dairy and plant-based substitute claims.

Advertising regulation is fast-moving and it's not always clear how to ensure you stay compliant. That's why we're offering you our five top tips to ensure you give your business the best possible chance to stay in the regulator's good books.

But before we do, here's a brief overview of the current system of advertising regulation in the UK:

(Re-)Introducing the CAP Codes

You're likely already familiar with the UK Advertising Codes, but in case it's useful, here's a quick introduction to get you reacquainted with these key regulations:

  • The Advertising Codes are written by CAP, which is the sister organisation of the ASA, the UK's independent regulator.
  • UK advertisers need to stick to the rules on advertising laid out in the Advertising Codes in order to stay on the right side of the ASA.
  • The Advertising Codes are made up of:
    • The UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code).
    • The UK Code of Broadcast Advertising (BCAP Code).

Non-broadcast marketing activities covered by the CAP Code include:

  • Non-broadcast advertisements (e.g. advertisements in newspapers, emails, SMS text messages and online advertisements).
  • Sales promotions.
  • Direct marketing communications.

All advertisers, agencies and media must abide by the CAP Code. If they don't, the ASA has the power to take steps to remove or have amended any ads that breach the CAP Code.

The CAP Code doesn't have the force of law but it does operate alongside the law and the Courts may make rulings on matters covered by the Code.

The CAP Code is extensive, but there are some key rules that all businesses should keep in mind when running advertisements:

  • All marketing communications should be legal, decent, honest and truthful (Rule 1.1).
  • Marketing communications need to be obviously identifiable as such (Rule 2.1).
  • Marketing communications must not materially mislead or be likely to do so (Rule 3.1).
  • Marketing communications must not contain anything that is likely to cause serious or widespread offence (Rule 4.1).

In 2022, the ASA saw a shift. The number of advertisements that were withdrawn or amended by the ASA was up 53% on 2021 figures but consumer complaints relating to advertisements decreased. This meant the regulator could focus its attention on pre-emptively advising businesses on how to avoid falling foul of the CAP Code instead of getting mired in casework. The ASA doesn’t wait to receive complaints, it proactively monitors ads across different sectors and media to ensure standards are being maintained.

Top tip: Don’t be a sitting ducks for complaints. Think about familiarising yourself with the key CAP Code rules and designing in CAP Code compliance by default.

The ASA is enhancing its oversight by using machine learning to better identify unlabelled and suspect advertisements and boost compliance with the CAP Code. For example, the ASA is using AI to identify crypto and NFT ads that trivialise investing in crypto, omit key risk warnings and exploit FOMO.

Top tip: You can’t hide suspect advertisements because your online footprint is more visible than ever. Machine learning is a powerful enforcement tool but it also raises privacy concerns. We’ll be keeping an eye on how the ASA seek to resolve the inherent tension between the need for access to data and data privacy in their monitoring and enforcement.

The ASA’s world-first Intermediary and Platform Principles (IPP) pilot extends the ASA’s role online and involves collaboration with partners including Amazon Ads, Google and TikTok to boost compliance with the CAP Code.

Under the pilot, participating companies voluntarily agree to provide information to the ASA to demonstrate how they operate in accordance with the IPPs with twin aims of promoting advertisers’ awareness of the CAP codes and helping the ASA secure compliance in cases when an advertiser refuses to amend or withdraw an ad that breaks the rules. While just at the pilot stage, the IPPs could play a more central role in the future of online advertising regulation.

Top tip: Be prepared for what could represent a significant shake-up in advertising enforcement online. Depending on the success of the IPP pilot, the UK Government may choose to use the IPPs as a model for advertising regulation. It’s worth thinking about whether you currently operate your business and its marketing activities in an IPP compliant way and how the particular needs of your business may impact on your ability to adhere to the IPPs.

Personalised advertisements present privacy challenges and risk. Organisations routinely gather personal data without meaningful consent, share this data with other organisations, enrich it with data in unexpected ways and sell the data to advertisers.

The potential for harm is real especially when sensitive data is collected and shared. For example, imagine if a business used cookies to collect personal data about an individual including data relating to their gambling addiction. In future, that individual’s data could be used to show them gambling ads on digital billboards as they walk down the street to tempt them back into the bookies, feeding their addiction.

The only way to resolve the tension between privacy and personalisation is by implementing ecosystem-wide strategic solutions that protect users’ data protection rights while still delivering benefits for business. We all have a role to play in driving this forwards.

Top tip: Think about the role your business can play in driving this forwards in the online advertising ecosystem. Our specialist data protection lawyers are on hand to assist you with hardwiring information rights into the way your business handles personal data both online and offline. They can help you to ensure you give your website and app users meaningful control and choice as to whether to be tracked and profiled and balance the need to be privacy positive with competition concerns.

The overarching theme of future online advertising regulation appears to be the need to combat the potential harm caused by online ads. We need to grow and innovate while maintaining high standards of data protection rights by:

  • Working together – e.g. Google has given the Competition and Markets Authority legally binding commitments around working with ICO on privacy impacts.
  • Strengthening the tools in our armoury – e.g. fines under the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 will be increased to UK GDPR levels (up to four per cent global turnover or £17.5 million, whichever is greater) to tackle significant harm caused by organisations who make nuisance calls and send texts without people’s consent.
  • Safeguarding and empowering people through privacy literacy.

Top tip: You can demonstrate the initiative that the ICO so highly regards by thinking about how to design more privacy rights into your business. Consider how your business interacts with consumers and shape your marketing and advertising accordingly, rather than waiting for the regulators to call you in.

The CAP Codes can be a minefield of information, but you don’t have to go it alone. Our specialist commercial and regulatory advisors are ready to support you and your business as you navigate your way through the world of online advertising, so you can focus on the things that really matter to you.

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