The much-awaited Decree No. 2017-159 of February 9, 2017 on digital advertising services (the “Sapin Decree”) has entered into force as of January 1, 2018.
This Decree adapts the rules of the French Sapin law of January 29, 1993 – originally introduced for traditional media, i.e. television, radio and press – to digital media and constitutes a clear step forward in terms of transparency in the digital advertising sector. Its impact will be particularly felt in the interpretation and enforcement of audit clauses in advertiser/media agency agreements requiring transparency across all media platforms.
However, the conditions of implementation of the Sapin Decree raise some unanswered questions in practice that the French Competition Authority has asked the government to clarify.
The French digital media market was estimated at more than 4 billion euros in 2017, and has therefore become the leading advertising media, ahead of television advertising. The magnitude of abusive practices in this sector have led the French legislator to take over and to extend the scope of the Sapin law to digital media (Macron law No. 2015-990 of August 6, 2015). While not behind the change, the 2016 K2 Intelligence report commissioned by the U.S. Association of National Advertisers on media transparency cited a variety of non-transparent transactions in media buying that will no longer be shielded from discovery under the new law.
18 months later, the government adopted the Sapin Decree in order to define the contours of the principle of transparency, which is now applicable to transactions in the digital media market.
The adoption of the Sapin Decree was much-awaited by French advertisers. It extends the French legislator’s fight against the opaque pricing practices to the various intermediaries providing online advertising services.
Merits of the new regulations
With the recent entry into force of the Sapin Decree, sellers of advertising space established in France – as well as those established in another EU or EEA Member State, insofar they are not subject to similar obligations, are now subject to a reporting obligation towards advertisers on the global campaign price and on the unitary price of each advertising space, including the date and place of diffusion of the advertisements. This new requirement includes any heretofore undisclosed rebates or other incentives received by media buying agencies that have previously not been disclosed to advertisers.
In addition, in case of digital advertising campaigns that rely on real-time services purchasing methods, the sellers of advertising space are required to provide advertisers with information on the actual implementation and the quality of their advertising services, as well as on the ways and means used in order to provide adequate protection of the image of the advertiser.
Grey areas to be clarified
Following a vast sector-specific investigation into online advertising, the French Competition Authority (the “FCA”) has made public an opinion No. 18-A-03 on March 6, 2018 regarding data exploitation in the online advertising sector (the “Opinion”).
This Opinion outlines the necessity to develop a legislative framework which will allow publishers and advertisers to benefit from a high level of transparency in their relations with advertising intermediaries and content distribution platforms.
Regarding the new Sapin Decree, the FCA notes that the law gave rise to different interpretations between advertisers, publishers and technical intermediaries. In that respect, the FCA expresses doubts as to whether a publisher of a website or an agency could be considered as a seller of advertising space within the meaning of the Sapin Decree. If not deemed a seller, then the law may not apply.
The differing interpretations in the context of digital advertising is notably due to the fact that there is a considerable number of intermediaries which are likely to be involved in a digital advertising campaign (such as platforms, trading desks, demand side platforms “DSP”, supply side platforms “SSP”, etc.). Indeed, in the online advertising market, the relations between advertisers and digital media owners are rarely direct, as advertising professionals with varied roles often intervene between them. The qualification of these numerous actors under the Sapin Decree remains uncertain and needs to be clarified.
The FCA is also concerned about the scope of the exclusion according to which the reporting requirements introduced by the Sapin Decree are not applicable to media owners (and their agencies) established in another EU or EEA Member State, provided that they are subject to “equivalent reporting duties” in their Member State of origin. The FCA outlines that this concept may be too vague and could lead to significant differences of interpretation and thresholds, depending on the jurisdictions. Therefore, a clarification of the term of “equivalent reporting duties” is necessary, according to the Opinion.
Finally, the FCA criticises the French lawmakers for not taking into account all transparency issues in the digital advertising sector and, in particular, for failing to regulate publishers’ access to campaign data. According to the FCA, the intermediaries used by the publisher to sell parts of its advertising space should also be subject to specific reporting obligations.
Expected actions from the French Government
There is no doubt that the aforementioned grey areas call for clarification.
The French government, fully aware of the difficulties, has indicated a willingness to provide further advice in order to clarify several points of the Sapin Decree and to specify the conditions for its implementation.
The future developments on this topic should therefore be closely monitored.