Most companies’ digital advertising spend has been increasing rapidly over the last few years as more and more traffic is driven from engagement with consumers on their phones or tablets. However, J. Crew and Jaguar have recently pulled all of their digital advertising in the UK as a result of placement of their ads on extraordinarily inappropriate webpages.
In the digital world, many advertising agencies have come increasingly under scrutiny for poor practices. Fraud is a growing problem and recent studies have found that around 70% of advertising is never seen by humans. Brands may be billed even though no-one has seen their advertisement (often the result of bots altering traffic statistics). There are also issues resulting from incompatibility of adverts with hosting software or simply bad quality advertisement inventory all of which lead to an inferior customer experience.
A current problem faced by some brands is that they are receiving unwanted and unwarranted publicity for their advert appearing on distasteful or unlawful websites. Brands are finding that their adverts are being placed without their knowledge on websites featuring such things as fake news, extremist content, counterfeit products or illegally uploaded films and music. This is largely due to the use of programmatic advertising methodology in acquiring the ad spaces. Programmatic advertising is an automatic, virtually instantaneous exchange where ad agencies have placed bids for ads in their portfolio to appear on a website. The idea is that webpage information and browsing history of the user viewing it are analysed and an appropriate ad provided. The problem is that the removal of personal input into the process can also remove common sense judgment.
Brands may find themselves in a difficult position as their agreement with the agency is unlikely to give them much control over the placement of their ad and agencies are reluctant to give up any of their autonomy. They are unlikely to be able to claim that there is an implied business link and so will not have a right of action for passing off. To add to their woes, celebrities featured on the ads may also have an actionable claim against the brand, depending on reputation protection provisions in their endorsement agreements.
What can be done? Some brands are simply pulling all of their UK digital advertising (an extreme move, but one which might force the advertising industry and government into action). In the meantime, brands should review their agreements with ad agencies – do they have robust blacklists (agreed lists of inappropriate sites)? Can they agree appropriate whitelists (i.e. specifying sites which are appropriate)? What level of autonomy does the ad agency have over placement? Programmatic methodology, while offering a cheaper way to access a targeted audience, may come at too high a price for some.
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Focus Antitrust - 1 August 2018
Welcome to the latest edition of Focus Antitrust, providing updates on the latest competition law developments.