Edith Ramirez, the new chairperson of the Federal Trade Commission (FTC), said that self-regulation can be “an important tool for consumer protection that can respond more quickly and efficiently than government regulation.”  For the advertising industry, that is certainly the case.  When advertising self-regulation was created in 1971, there were plenty of skeptics.  But today, the Advertising Self-Regulatory Council (ASRC) – which establishes the policies and procedures for advertising industry self-regulation, including the National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), National Advertising Review Board (NARB), and Electronic Retailing Self-Regulation Program (ERSP) – remains critical for the industry, providing guidance on new developments and technologies, and implementing real monitoring and enforcement to preserve consumer protection standards.  This fall’s NAD Annual Conference, held in conjunction with both the CARU Annual Conference and ERSP Summit, focused on legal trends and new developments, including digital and mobile trends that are impacting self-regulation.

The Way I See It

  • I see industry self-regulation playing an extremely important role for advertisers and marketers, particularly in defining standards and encouraging transparency when it comes to critical issues including behavioral advertising, app privacy, and advertising to children.
  • In the digital age, with constantly-evolving opportunities for advertisers with new technologies and new media, self-regulation – unlike the government – is able to keep up with the swift pace of change to provide guidance, set benchmarks, and monitor for issues.
  • I see an important moment for self-regulation as it continues to develop and enforce industry best practices and standards for consumer privacy and data protection, especially through the development of apps, new smartphone and tablet capabilities, and new social networks.

The Way The Industry Sees It

I sat down with C. Lee Peeler, President and CEO of the ASRC and Executive Vice President, National Advertising, Council of Better Business Bureaus (CBBB) to discuss industry self-regulation, consumer protection, and this year’s NAD Annual Conference.  Prior to joining the ASRC, he had a 33-year career at the FTC, where he served as Associate Director of the Division of Advertising Practices and Deputy Director, Bureau of Consumer Protection.

This fall’s NAD Annual Conference focused largely on self-regulation, government enforcement, and legal issues surrounding emerging social media and digital marketing.  How critical do you think this is for the industry and how is self-regulation monitoring and addressing it?

The advertising industry has established an extraordinary record of delivering real self-regulatory programs that address the needs of both ethical competitors and consumers.  The NAD’s Annual Conference is the place where the advertising industry can both look back at what it has accomplished and look forward to the challenges facing it. And, like the advertising industry itself, the challenge for self-regulation is going digital. That’s why our first panel was “3-inch screens and 140 characters.” We were so delighted to have representatives from Foursquare, Evidon, General Electric, and LG Electronics, as well as law professor Eric Goldman, Director of the Santa Clara University School of Law High Tech Law Institute. The advertising industry has a real opportunity in the digital space to demonstrate exactly the type of leadership and commitment to high standards and impartial oversight that it has in more traditional media.

In 2012, ASRC units resolved more than 175 cases.  What have been the most prevalent issues and challenges facing the industry over the past year?

One of the great things about self-regulation is the range of issues and products it deals with.  NAD in the past year has handled cases for products as diverse as telecommunications, infant nutrition, over-the-counter medications and dietary supplements, and “green” products.  ERSP’s casework has included the review of claims for work-at-home programs, affiliate marketing companies, and dietary supplements. Our Interest Based Accountability Program released its first compliance guidance to the industry and a decision on certain Facebook exchange privacy practices.  Child-directed marketing in any form is always a flash point and it receives careful and continuous scrutiny by CARU.  Priorities in child-directed advertising include anything having to do with child-directed mobile apps or COPPA compliance. For the adult-focused programs,  the implementation of basic privacy protections for mobile devices, health-related claims, and practices in new media that blur the line between advertising and editorial content are among our priorities.

How do you see the role of self-regulation evolving over the next five years?

Advertising self-regulation faces two major challenges in the next five years. The first is to maintain the quality of and support for our existing programs as they deal with new forms of advertising and marketing in the digital marketplace. The success and recognition of these programs is hard won.  As an industry, we need to be wary about taking these accomplishments for granted.  The second challenge is to expand our impartial, independent, and accountable process to new issues as they arise: to resist the temptation to ignore new concerns simply because they are new. The leadership demonstrated by the advertising industry in forming the Digital Advertising Alliance is a great example of the type of collaboration that is needed.  It is difficult for any industry, or industry member, to commit to self-regulation in the short term, but as we have repeatedly seen there are long-term benefits to setting consensus-based industry standards and setting up an objective program to monitor compliance.

As a former regulator at the FTC, how do you think self-regulatory bodies best work with the government to ensure consumer protection, and how has the relationship between the FTC and self-regulatory bodies changed over the years?

The relationship between advertising self-regulation and the government has been remarkably consistent since it was outlined in the FTC’s Advertising Substantiation Policy Statement in 1984. While the government encourages self-regulation, there is no official relationship between the government and advertising self-regulation.  What has changed since 1984 has been advertising self-regulation’s demonstrated track record.  We are also making substantial efforts to be sure other government agencies are aware of our work. These include the Food and Drug Administration, the Environmental Protection Agency, the Department of Commerce, and the National Association of Attorneys General. The goal is to be sure that they understand the substantial efforts the adverting industry invests in self-policing and will think of self-regulation as an option to address some of the concerns they may have. Self-regulation has proven that it can develop high standards and apply them objectively. Moreover, the government has increasingly recognized that – done correctly and supported by the industry – self-regulation can be an important tool for addressing some concerns in the market place.  In a time at which the government faces both resource constraints and increasing responsibilities, I think the industry has an opportunity to expand the support and the use of self-regulatory tools.

What is the coolest object in your office right now?

The coolest thing in my office is the people who work here. They are just amazing. Smart, talented, mission-driven professionals who day in and day out do amazing work despite the ups and downs of any organization. What I like best is how ready everyone is to help out and how willing everyone is to step up to make sure the job gets done.

Ronald R. Urbach is the Chairman of leading advertising law firm Davis & Gilbert LLP