Online Ad Legislation: Too Much or Not Enough?

What additional legislation and regulation governing online advertising is necessary? Is there enough? Too much? Are the current laws applicable to traditional advertising sufficient?

A slew of events that occurred this week prompted me to ponder these questions. First, a San Francisco court ruled classified site Roommates.com may be in violation of the Fair Housing Act. The site allows its users to specify roommate preferences based on gender, race, religion, and sexual orientation.

The defense cited a 1996 ruling granting immunity to sites that transmit unlawful material supplied by others. The ruling found that law wasn’t applicable in this case, as the site created and provides the menus inviting this information. In other words, the site is liable for what its users and advertisers say.

Next, I served as a judge on the Direct Marketing Association’s (DMA’s) Echo awards the other day. Considering the very first e-mail campaign in a huge pile of submissions, my eyes flew to the bottom of the message to verify CAN-SPAM compliance (first thing I always check, before even considering creative or strategy). The sender’s opt-out notice was a far cry from the “clear and conspicuous” required by both federal law and the DMA. Into the reject pile went that entry — with the full assent of my fellow jurors.

Finally, the Center for Digital Democracy (CDD) asked the FTC to require food and drink advertisers to report all their digital marketing and market research aimed at kids and adolescents. They further want digital marketers and the impact of their efforts on children’s nutrition and health to be monitored.

The CDD’s call should be heard by all online advertisers, not just those peddling sugary substances to minors. Effectively, it’s a call to further legitimize online advertising. The CDD is asking regulators to realize Web penetration is near ubiquitous and is increasingly the channel through which marketing messages are fed to everyone, not just kids.

This call for regulation acknowledges self-regulation isn’t always sufficient. Sure, bodies such as the Children’s Advertising Review Unit (CARU) scrutinize all marketing to minors, including online media, as part of a strategic alliance with the major advertising trade associations through the National Advertising Review Council (including the AAAA, AAF, ANA and CBBB). Yet cooperation is fully voluntary.

When major junk food advertisers made a pledge of more responsibility in their advertising to children last November, their commitment to extending their promise to the Web was minimal, at best.

Not a Minor Issue

Are current regulations adequate to protect consumer interests online while permitting informative, effective campaigns? The question ranges far beyond just children’s interests. Consider alcohol, tobacco, drugs, automobiles, gambling, adult entertainment, finances, housing, and employment. All these sectors are subject to regulations governing how they can advertise products and services. The Web brings special considerations into the equation.

Many of these issues have already been outlined by the FTC. If you’re not already familiar with it, see its Advertising and Marketing on the Internet: Rules of the Road. Were you aware, for example, that “third parties — such as advertising agencies or website designers and catalog marketers — also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims”?

Advertising and marketing legal disclosures are another Web-specific issue the FTC has issued guidelines on. It takes into account, for example, that disclosures can’t always appear on the same page as an ad or a product and discusses acceptable ways of linking to such relevant, required information, including guidelines for “clear and conspicuous.” It issues valuable caveats such as, “[advertisers] should also assume that consumers don’t read an entire Web site, just as they don’t read every word on a printed page.” The guidelines even go into specifics for audio and video messages and the ways in which legally mandated information might appear differently in a wide variety of browsers and monitors.

Law and Legitimacy

Much as it’s affected the old-world model of copyright legislation, the Internet has stretched the concept of advertising and marketing into new, uncharted territory. Too much regulation is a bad thing, of course, but too little fails to acknowledge the legitimacy of a channel making rapid gains on traditional print and broadcast models.

Where do we need more online advertising regulation? Is there any industry sector that’s already too regulated? I’m eager to hear your thoughts on the issue.

Meet Rebecca at the ClickZ Specifics: Advertising in Social Media seminar on May 21 in New York and at Search Engine Strategies on June 12-13 in Toronto.