Virtual advertising: exceeding the regulations

This fall, SVG will present a series of white papers covering the latest advances and trends in sports production technology. The complete series of SVG Tech Insight white papers can be found in the SVG Fall SportsTech Journal. HERE.

This document proposes a way forward for organizations looking to implement virtual advertising solutions. Although there is a complex legal framework, with different positions around the world, we believe that it is useful to develop some general principles in this emerging regulatory area to support the development of the virtual advertising sector.

Virtual advertising has been used in various ways for many years. For example, digital insertion of logos on the field at sporting events has been experienced for a couple of decades.

However, only recently has technology advanced to the extent that it is possible to digitally overlay billboards that do not impede live action. It is now also possible to distribute multiple streams to international markets, each of which displays different virtual advertisements. As such, various rights holders are now exploiting virtual advertising to allow personalized advertising to be sold on virtual perimeter boards to different territories or regions. This presents opportunities to segment advertising and, for example, enables:

  • Multiple regional sponsors of the same category of an event to ensure publicity on broadcasts, shown only in ‘your’ region;
  • A global sponsor who will be offered the ability to present different messages in different territories to reflect differences in language, culture or taste; or
  • Virtual perimeter boards offered to the general market for sale to local brands targeting only their local markets.

The result is the ability to increase advertising revenue.

But while the technology is ready to go, one of the barriers to widespread adoption of these new virtual advertising solutions has been concerns about regulatory issues. This is not a simple regulatory landscape. Much of the relevant regulation is old and does not anticipate this type of technology, and when you take a global approach, the idea of ​​receiving legal advice in dozens of territories is dazzling. However, by understanding the issues and goals of the regulation, and by taking a sensible, risk-based approach to implementation, we believe that a way forward can be found.

There are, of course, many national variations, but the regulation of broadcasting with respect to commercial references in editorial programming generally has four key objectives wherever it is looked around the world: to avoid over-commercialization of editorial programming; guarantee the editorial independence of broadcasting organizations and the absence of commercial influences; ensure that viewers are not misled about what is advertising and what is not; and protect viewers (or specific audience groups) from subliminal and inappropriate advertising.

These objectives tend to manifest themselves in rules on business referrals in programs and ‘product placement’ rules in the following ways:

  • Avoid over-marketing: controls on the “undue prominence” of advertising in programs. (Note that advertising on the show does not normally count towards the limits on the number of advertising minutes that can be shown in a period, but this must be verified territory by territory as there are anomalies).
  • Editorial independence: rules to ensure that advertising is appropriate / natural in the context of the program in question, that it is not inappropriately focused / stopped, and that producers / broadcasters maintain final editorial control;
  • Ensuring viewers are not misled: transparency rules, prohibition of “surreptitious” advertising, and requiring notices to be given at the beginning and end of shows to highlight that product placement has been included; and
  • Viewer Protection: Specific bans on product placement or commercial references on certain types of programming (for example, children’s news or shows), or with respect to certain types of products (such as alcohol, tobacco / e-cigarettes, food, and ‘unhealthy’ drinks, gambling and medications). Subliminal advertising is also generally prohibited.

Advertising content is globally controlled through a combination of legislative mechanisms and “self-regulation” through industry codes of practice, which are adopted and enforced by agencies designated by the advertising industry. Beyond that, most sports will have rules, whether at the international, regional, national and / or league / competition level, that govern the field of play and the advertising of kits. Some will deal specifically with virtual advertising. For example, in UK football, the “Laws of the Game” state that “No commercial advertising of any kind, whether real or virtual, is allowed on the playing field, on the ground within the area delimited by the goal nets or in the technical area, or on the ground within 1 m (1yd ) of the boundary lines from the moment the teams enter the field of play until they leave it at half-time and from the moment the teams re-enter the field of play until the end of the match ”.

Clearly, sports rights owners will need to ensure that any use of virtual advertising complies with these rules. The situation is further complicated by the current reservation of data privacy legislation and the great complexities of sports streaming globally. Since regulation is generally country-specific, the question arises: whose laws are applied? Is it the country where the relevant sporting event takes place? The country where the sports rights holder or agency (implementing virtual advertising) is based? The country where the relevant digital ads are inserted in the streaming feed? The country to which a specific ad or virtual feed is directed?

In fact, this is probably the most difficult legal issue to tackle, particularly since the answer will vary depending on which of the different types of regulation mentioned above is being considered, and possibly where the enforcement action takes place.

Therefore, this document proposes an approach that we believe is likely to meet the majority jurisdictions, so the question of “whose regulations apply” becomes secondary. Below is a set of low-risk principles that we would propose that the industry could adopt with a view to:

  • Minimize regulatory challenges; and
  • Paving the way for low-risk exploitation of the opportunities that virtual advertising presents.

Sports rights holders will assess the level of risk they are willing to take in each given scenario. This will be influenced by a host of factors, including public relations considerations, likely exposure to contractual liability, the type of advertising, where it will be viewed, and your relationships with your broadcasters. Getting an opinion from local broadcasters on whether they have any concerns about the proposed use of virtual advertising is likely to be very influential.

Principles of engagement

  1. Specific rules for sports and regulations that apply to the event being broadcast must always be fully adhered to.
  2. If a streaming feed is being produced for a specific country, the laws of that country must be followed.
  3. Data protection laws should be carefully considered and adhered to if you are using personalized advertising in online broadcasts.
  4. For multi-jurisdictional feeds, the following principles are proposed with a view to ensuring compliance with most broadcasting and advertising laws and regulations throughout the world:
    • The inserted advertising must go virtually unnoticed, that is, it must appear “normal” to viewers who are used to the advertising appearing in the context shown at the sporting event.
    • Injected advertising should virtually not be unduly prominent during a show where there is no editorial justification for this.
    • Notices should be given at the beginning and end of the program, and between breaks, to indicate that virtual advertising / product placement is included.
    • Advertising of cigarettes, tobacco products, e-cigarettes, prescription drugs, political advertising, weapons, escort agencies, pornography and other types of advertising that are prohibited and / or that may discredit the event if advertised should never be inserted in virtual advertising feeds.
    • Advertising of other highly regulated products and services, such as alcohol, gambling, fantasy games, “ unhealthy ” foods and beverages (high in fat, salt, sugar), baby formulas, and highly regulated financial products, such as Payday loans should be treated with caution. Different territories will obviously take different approaches.
    • The rights of this party must be respected. A virtual advertisement should only be placed on land / buildings or other property of third parties: where the owner of the land / building has given their consent; where regulatory consents would not be required if the advertising were actually there (or where consent from the relevant regulator has been obtained); and if the virtual advertisement is replacing physical advertising, where the advertiser has no contractual or other right to object.
    • The content of the ads included in the virtual feeds must not be promotional (that is, it must not include an active call to action to buy or promote sales, offers or promotions for the consumer). Generally, it should only be advertising based on the brand, the slogan or the product.
    • Whenever possible, advertisers should be placed under a contractual obligation to ensure that the advertisements they serve comply with the advertising laws and regulations in the territories where the advertisements will be displayed.

This is not an exhaustive list and there are many entities that will accept higher degrees of risk for the appropriate reward. But in the absence of international regulation, it is a useful framework to work with to further establish the success of virtual advertising on a global scale.

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