New legislation set to be introduced this year will change the way advertisers can target people on platforms like TikTok and Twitch. Sarah MacDonald from law firm Wiggin explains what it means.
Even before social distancing measures were introduced to combat the spread of Covid-19, the virtual world was a rapidly growing space. This is evident in the explosion of international video-sharing platforms (VSPs) such as TikTok and Twitch, the Amazon-owned platform with over 15 million daily active users.
While these VSPs compete with television time amongst the younger demographic, the levels of regulation differ significantly; VSPs, which include live streaming services, have been something of an unregulated space and a legal grey-area when it comes to content and advertising compliance in the UK.
It is only since the revision of the Audiovisual Media Services Directive (AVMSD) in 2018 that a fairer regulatory environment has sought to be created between traditional broadcasters and these newer services. As the UK looks to implement the revised AVMSD, due by 19 September 2020, VSPs are preparing to have tighter regulation imposed. This could have important implications for the content of adverts and the type of adverts permitted and therefore the platform revenue streams as a result.
The AVMSD is the bedrock for the regulation of linear TV and video-on-demand (VOD) services, mandating that all audiovisual media services under the jurisdiction of an EU Member State must follow a minimum set of rules outlined by their local regulator when promoting goods or services on TV. It is these rules that prevent product placement in news and current affairs programmes or those aimed at children.
Until now, this EU directive has not encompassed the content on VSPs such as Twitch or YouTube, meaning that UK providers have not been under Ofcom’s restrictions in relation to sponsorship or any paid-for promotion of products or services in or around user-generated videos. Whilst the UK’s Advertising Standards Authority (ASA) is clear that advertising on social media platforms falls within its remit, providing the marketing in question is not in ‘foreign media’; it has upheld a complaint against Lionsgate for an in-stream transmission of a film advert on Twitch during a League of Legends World Championship in 2015; and it recently sent an advice note to gambling operators as a reminder that gambling advertising compliance applies to ads on VSPs, we have yet to see widespread complaints or CAP Code rules being enforced against non-complaint ads appearing there.
We know that the revised AVMSD will require VSP providers to take basic steps to protect the general public from illegal content and that which incites violence or hatred and to protect children from harmful content. To comply with the rules on commercial communications, minors will also need to be protected from images that promote economic activity and which may “impair their physical, mental or moral development” in or around any user-generated video. Where the VSP provider sells the advertising within the VSP (hello Amazon and Google-owned platforms) there are additional requirements. For UK-based VSPs, we can expect to see users indicating when content contains a paid-for commercial communication – increasingly seen on Instagram and Twitter where posts are accompanied by the hashtag ‘#ad’. Under the revised AVMSD, Member States are also encouraged to reduce the exposure of children to adverts for unhealthy foods – rules relating to which have already been adopted in the UK for other advertising formats. These new restrictions will provide food for thought for the brands advertising on VSPs.
As a result of the revised AVMSD, advertisers may need to adapt or change either their content or their chosen methods of advertising, especially given the emphasis on the prevention of harm to minors. Twitch’s youngest users for example can be 13 and with no age-verification process required to sign-up, many are even younger. As a result, this might impact the platforms’ short-term revenue streams; a large part of the appeal of advertising on Twitch for brands was reaching a far-flung and significant audience without the same restrictions that a brand such as Coca-Cola might encounter when advertising at the cinema or on television. Nonetheless, it is unlikely that this will be a long-lasting impact, as there are enough brands with adverts that will easily pass the new basic rules to whom the growing audience on VSPs will appeal.
Interestingly, this may also inadvertently impact on the availability of certain videos on VSPs. For example, if Twitch is under an obligation to take appropriate measures to protect minors from damaging content, does this apply to a stream of a user playing Call of Duty (PEGI rating 18)? Currently, product placement in video games is not regulated, but if a game of Fortnite which an influencer is streaming via YouTube contains in-game advertising, is this something which the influencer could be expected to know and be required to flag to the VSP when uploading or commencing his or her stream? We will have to wait to see how these provisions are incorporated into UK law (which may be on a transitional basis until it is decided how to fully implement the outcomes of the Online Harms White Paper) to see how VSP providers will deal with non-compliant content, how Ofcom and the ASA will be dealing with non-compliant providers, and the impact that this will have on both users and brands.
Clearly, the introduction of the revised AVMSD later this year will significantly change how content and advertising is served on VSPs, having an impact on the type of adverts permitted, potentially the time of day and the content it surrounds – this will therefore affect the appeal of VSPs for certain brands. Will the regulation have an impact on advertising revenue for VSPs or will this more carefully curated advertising space drive prices up in the long-term? Only time will tell, but one thing that is for certain is that brands advertising on VSPs and those users who generate an income are unlikely to suffer a lasting impact given the size of the audiences that these platforms have.
Sarah MacDonald is head of the advertising, marketing and sponsorship team at Wiggin LLP