As President Obama visited Ireland and England this week enroute to the G8 meeting in France, much was said about the “special relationship” between the United States and England. Coincidentally, I happened to be in our London office participating in one of the firm’s Consumer Goods and Brands Group Breakfast Seminar Series. The topic was the Advertising Standard Authority’s new jurisdiction over digital advertising (website, mobile, etc.). The ASA is Great Britain’s self-regulatory body akin to the National Advertising Division in the United States. At the conclusion of the session, I was struck, not so much by the special relationship between our two nations, but by how countries can be so divided when it comes to self-regulation.
Attending was Malcolm Phillips, the CAP (Committee of Advertising Practice) Code Policy Manager. (The CAP Code is independently administered by the ASA.) Mr. Phillips outlined how the ASA is proceeding with its new jurisdiction over digital content. I was there to provide the U.S. perspective. What was fascinating to me was how Mr. Phillips and I compared the two self-regulatory systems. Whatever our special relationship may be, when it comes to self-regulation, it’s my impression that we’re on two different planets. And the UK is in a far smarter place than the United States.
In the United States, one of the ways we tout the success of our self-regulatory system is to cite the level of compliance by advertisers with NAD rulings. Indeed, compliance is well into the 90 percentile. Impressive. The ASA compliance is just as effective, if not better. In the United States, we also cite the many supportive statements by federal regulators, most notably the FTC, about the efficiency and effectiveness of our self-regulatory system. On that level, both the UK and the Unites States are on the same page. But unlike the United States, the UK regulators mean what they say and have a true hands-off attitude with respect to ASA proceedings. While U.S. regulators and legislators are quick to compliment the NAD and its sister organizations within the National Advertising Review Council (NARC), those compliments are increasingly followed by calls for more regulation and greater governmental intrusion into free markets. Not so in the UK, where regulators and legislators take a clear “wait and see” approach and do not second-guess ASA rulings, but instead give them increasing authority to oversee marketplace activities. Contrast that with the developing trend in the United States that fails to give self-regulation a chance to mature and adjust to the marketplace before the government steps in, either from a bully pulpit or, worse, with its own regulations. As a result, self-regulators are forced to become overly aggressive where little or no proof exists that doing so will promote better consumer protection. In the UK, self-regulation is allowed to grow and adjust. Not so in the United States.
Moreover, the UK is not plagued with the specter of class actions and multi-state attorneys general actions that may spin off from self-regulatory rulings. This obviously makes dealing with self-regulators in the United States far more complicated than dealing with them in the UK (and most other countries that depend on self-regulation). Nor are advertisers in the UK faced with anywhere near the financial exposure present in the United States, where a challenged advertising claim can lead to millions in settlements, fines and other costs. In the UK, once the ASA rules against an advertiser, that’s pretty much the end of it, particularly since media cooperates with the ASA and declines to run advertising the ASA has found unsubstantiated.
All this leads me to ask which system is better. Are consumers better-protected in the United States by an approach that depends on a hydra of protagonists and financial Armageddon, as opposed to one self-regulatory body? I think not. Consumers in the UK are just as smart as any U.S. consumers. Or, alternatively, they can be misled in the same fashion. Yet in the UK, brands, regulators, and consumers have come to truly respect self-regulation, resulting in a far less complex marketplace and, by definition, a more open market. In the end, that’s all to the consumers’ benefit.
So to all the U.S. federal regulators, state attorneys general, and judges in class actions, I say “Back off!” Give self-regulation a true chance and not just lip service. Because it really does work. Just take a look at the UK. Or is our special relationship truly divided only by a common language of consumer protection?