Friday 24 November 2017

Steve Dempsey: Advertising industry worried about EU rules

Steve Dempsey

Steve Dempsey

When an industry body issues a report on the value of its economic and social contribution, it's normally looking for something. This week it was the advertising industry that was trumpeting its worth and angling for some form of recognition or regulatory fillip.

Deloitte's EU-wide study, commissioned by the World Federation of Advertisers, found that advertising contributed six million jobs and 4.6pc of GDP to the EU. In economic terms, the study estimated that every euro spent on advertising adds an additional seven euros to GDP. This means that the €92bn directly spent on advertising in 2014 in the EU resulted in a contribution of €643bn to EU GDP.

The Value of Advertising study also found that advertising supports competitiveness and innovation by empowering consumers to chose the best goods and services. Plus the industry employs almost six million people, either directly and indirectly, in the EU. That's almost 3pc of all EU employment.

Bravo advertising. Where would we be without you? So now, what do you want?

Well, the World Federation of Advertisers is concerned about the impact of new EU regulations that may harm the ad industry and the wider economy.

"One of the reasons why we've come up with the research now is that there's often a perception that ad restrictions have no cost to society," said Stephan Loerke, chief executive of the World Federation of Advertisers. "We want to alert policymakers to the fact that ad restrictions, when they're adopted, do have an impact on GDP, on innovation, on jobs and on growth. Therefore, they need to be carefully considered before they are adopted."

One area of concern is the Audio Visual Media Services directive which covers regulation, protection of minors, product placement, hate speech, and more.

"We are concerned about the tonality of a number of amendments that are being put forward with respect to advertising freedoms," Loerke said. "We're seeing a number of proposals to restrict considerably advertising to children, food advertising and alcohol advertising in a manner we feel is disproportionate and is not going to help achieve its objectives."

The ad industry is also eyeing the EU's proposed ePrivacy directives nervously. These deal with confidentiality of information, spam and data. But it's the proposed approach to cookies that Loerke singles out. The regulations will see users asked for their preferences on third party cookies when they install a browser, rather than when they're browsing the web. This coupled with the provision that publishers can block access to content where cookies are rejected could generate a bombardment of pop ups. So, aside from issuing a report on how important advertising is to the European economy, the European ad industry wants a moratorium on further ad-related restrictions to gauge the impact of any new rules.

So are the proposed new regulations so potentially devastating?

Well, the European Commission is after some basics. It wants the confidentiality of users' online behaviour and devices to be guaranteed. It wants all electronic communications to be confidential and it wants spam, direct marketing and the processing of communications content and metadata to be allowed only with prior consent.

None of that sounds too drastic, right? But in an uncertain ad ecosystem that's global and constantly evolving, it's understandable that European advertisers would be worried that new regulations could hamstring them.

But consumers are worried too. A recent Eurobarometer survey found that 92pc of respondents felt it was important or very important that their personal information can only be accessed with their permission. And Loerke accepts that users are worried about how their data is used and shared online. "There's a very legitimate concern from people to own their data and decide who they share it with," he said. "But on the other hand you have a marketing ecosystem which relies on data to become more relevant.

"So the question for the industry, and society at large, is how you balance those competing interests. We think data collection and data storage needs to be done on the basis of an informed choice by the consumer. It can only be about building trust in the longer term."

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