🚨 Self-Regulation of Advertising: Finding Balance Between Industry Autonomy and Public Control

Today Korean Social News | 2025.05.03

📌 Digital Era: Limitations of Self-Regulation and the Need for New Regulatory Frameworks

💬 With the explosive growth of online platform advertising, limitations of existing self-regulation methods are becoming apparent. Experts point out the need to shift to a "co-regulation" approach that respects industry autonomy while strengthening public control. Especially in professional service areas like finance, law, and medicine, demands for stronger regulations to protect consumers are increasing. The government is preparing a new advertising regulatory framework suited for the digital environment.

Summary

• Self-regulation of advertising is a system where the industry creates and monitors advertising standards instead of the government.
• It has advantages in utilizing industry expertise and reducing regulatory costs, but has limitations in effectiveness and transparency.
• In the digital platform era, a new regulatory approach combining self-regulation and public regulation is needed.

1️⃣ Definition

Self-regulation of advertising refers to a system where the industry itself establishes advertising standards and monitors compliance, rather than government or regulatory agencies. Simply put, it's a way of managing advertising according to rules created by the industry itself, not by laws or government regulations.

Self-regulation of advertising is an approach that seeks to find a balance between respecting industry autonomy and protecting consumers.

💡 Why is it important?

• Advertising is an important communication tool connecting businesses and consumers.
• False or exaggerated advertising interferes with rational consumer choices.
• Government regulation alone finds it difficult to respond to rapidly changing advertising environments.
• Appropriate regulatory methods are essential for healthy market development and building consumer trust.

2️⃣ Characteristics and Types of Advertising Self-Regulation

📕 Key Characteristics of Advertising Self-Regulation

• Advertising self-regulation is based on voluntary industry participation. The basic principles are as follows:

  • First, the industry creates and follows its own rules. Advertisers, advertising agencies, media, and other advertising industry stakeholders establish their own regulations or guidelines.
  • Second, the industry operates internal monitoring and sanction mechanisms. They monitor rule violations and take measures such as warnings, requests to stop advertisements, or member expulsion when violations occur.
  • Third, they maintain cooperative relationships with the government. Rather than being completely independent, they complement government regulations and sometimes receive government certification or approval.

• Advertising self-regulation operates in various forms. The main types are:

  • First, industry association-centered type. Industry groups like advertisers' associations or advertising industry associations create regulations and manage member compliance.
  • Second, independent organization type. Organizations established by the industry but operating independently handle advertising review and monitoring. The Korea Advertising Self-regulatory Board falls into this category.
  • Third, media self-regulation type. Media platforms like TV, newspapers, and internet portals establish and apply their own advertising standards.
  • Fourth, professional organization regulation type. Professional organizations like bar associations or medical associations regulate advertising in their respective fields.

📕 Advantages and Disadvantages of Advertising Self-Regulation

• Advertising self-regulation has several advantages. The main benefits are:

  • First, it can utilize industry expertise. Advertising industry practitioners can create effective rules based on field experience and specialized knowledge.
  • Second, regulatory costs are reduced. It reduces administrative costs that would occur with direct government regulation, with the industry covering its own regulatory costs.
  • Third, flexible and quick responses are possible. It can respond rapidly to new advertising techniques or media without legal amendment procedures.
  • Fourth, regulatory compliance may increase. Rules created with direct industry participation may have higher acceptance and willingness to comply.

• However, advertising self-regulation also has limitations. The main disadvantages are:

  • First, effectiveness is questioned. Weak enforcement power and limited sanctions may result in inadequate regulatory effects.
  • Second, there's concern about industry interest bias. There's a possibility of prioritizing industry interests over consumers.
  • Third, transparency and accountability may be lacking. Regulatory processes and decisions may not be disclosed or responsibility may be unclear.
  • Fourth, regulating non-member companies or new market participants is difficult. Companies not joining associations or organizations may fall into regulatory blind spots.

Key Challenges for Advertising Self-Regulation

1. Digital Environment Response: Spread of new advertising channels like online platforms and SNS makes regulation application difficult
2. Cross-Border Issues: Limitations in applying domestic self-regulation to global digital platforms
3. Lack of Consumer Participation: Problem of insufficient consumer opinion reflection in the regulatory process
4. Weak Legal Foundation: Unclear legal basis and authority for self-regulation in many cases
5. Difficulty Measuring Performance: Challenging to objectively evaluate self-regulation effectiveness

3️⃣ Current Status and Implications

✅ Domestic and International Advertising Self-Regulation Status

• Various self-regulatory advertising models operate overseas. Key examples include:

  • The UK's Advertising Standards Authority (ASA) is an independent self-regulatory body with government certification that exercises strong authority. It has a balanced structure with participation from advertisers, media, and consumer representatives, and ensures transparency by disclosing decisions.
  • The US National Advertising Division (NAD) is part of the non-profit Better Business Bureau (BBB), reviewing advertisements to resolve disputes between competitors and protect consumers. It maintains a cooperative relationship with the government agency FTC (Federal Trade Commission), playing complementary roles.
  • Australia's Advertising Standards Board (ASB) has a structure with diverse stakeholder participation, handling consumer complaints and advertising reviews. It's considered a successful self-regulation case showing high compliance rates without direct government intervention.

• Various forms of advertising self-regulation are also implemented domestically. Key current status:

  • The Korea Advertising Self-Regulatory Board (KARB) is an independent organization jointly established by advertisers, advertising agencies, and media to handle advertising review and consumer complaints. However, it has limitations with weak enforcement power and low awareness.
  • By sector, self-regulation centered on industry associations operates in finance, pharmaceuticals, food, and other areas. For example, the Korea Financial Investment Association conducts self-review of financial investment product advertisements.
  • The Korea Internet Self-Governance Organization (KISO) is a self-regulatory body with participation from portals, SNS, and other internet service providers, establishing policies for online advertising.
  • In professional fields like law and medicine, each association handles advertising regulation, but issues of regulatory effectiveness due to digital environment changes have recently been raised.

✅ Directions for Improving Advertising Self-Regulation in the Digital Age

• A new regulatory paradigm suited to the digital environment is needed. Key improvement directions are:

  • First, introducing a 'Co-regulation' model is necessary. This combines self-regulation and public regulation, where the industry creates rules and the government approves and supervises them. It operates successfully in the UK, Australia, and other countries.
  • Second, strengthening the legal foundation for self-regulation. The status and authority of self-regulatory bodies should be clearly defined by law, and cooperation systems with government agencies should be institutionalized.
  • Third, expanding consumer participation. Systems should be established to ensure consumer representative participation in self-regulation processes and gather feedback on regulatory results.
  • Fourth, strengthening transparency and accountability. Regulatory processes and results should be disclosed, and regulatory effectiveness verified through regular performance evaluations and reports.

• Strengthening regulations on online platform advertising is particularly urgent. Key tasks for platform advertising regulation are:

  • First, applying regulations to global platforms is important. Measures are needed to encourage self-regulation participation for domestic advertisements on overseas platforms like Google and Facebook.
  • Second, ensuring algorithm advertising transparency is important. Transparent disclosure is needed for principles and data use in algorithms used for targeted and customized advertising.
  • Third, establishing regulatory standards for new advertising forms is necessary. Clear guidelines are needed for new advertising forms like influencer marketing, native advertising, and live commerce.
  • Fourth, international cooperation is important. Cooperation with international organizations and overseas self-regulatory bodies should be strengthened to address digital advertising issues that transcend borders.

4️⃣ Related Terms Explanation

🔎 Native Advertising

• Native advertising is an advertising method created in a form similar to content and naturally exposed.
• Native Advertising refers to advertisements created to look like content of the media platform. It has characteristics of being naturally mixed with news articles, blog posts, SNS feeds, etc., making it difficult to distinguish from regular content.
• Native advertising has advantages of less user resistance and higher participation rates than traditional banner ads, but there are concerns about misleading consumers if not clearly marked as advertising, making it an important target for self-regulation.
• Domestic and international self-regulatory bodies require native advertisements to be marked as "Advertisement," "Sponsored," "Partnership," etc., and recommend transparent disclosure of relationships between advertisers and media.

🔎 Influencer Marketing

• Influencer marketing is a method of promoting products through influential individuals on social media.
• Influencer Marketing refers to marketing methods that promote products or services through individuals (influencers) who have many followers and exercise influence on SNS.
• Influencer marketing has advantages of authentic communication with consumers, but problems can arise such as not specifying it's an advertisement or promoting exaggerated effectiveness.
• Recently, self-regulatory bodies have developed guidelines requiring influencers to clearly indicate sponsorship/partnership relationships, and some countries have introduced legal regulations. In Korea, the Fair Trade Commission has strengthened regulations on influencer marketing through guidelines on indication and advertising of recommendations and endorsements.

🔎 Co-regulation

• Co-regulation is a method where government and industry build and operate regulatory systems together.
• Co-regulation combines the advantages of self-regulation and public regulation, where the industry creates and operates rules independently, but the government approves and supervises them.
• Key features of co-regulation include: First, legal foundation. The status and authority of self-regulatory bodies are specified by law. Second, government supervision. The government periodically evaluates self-regulation performance and can intervene when necessary. Third, diverse stakeholder participation. Not only industry but also consumers, experts, etc. participate in the regulatory process.
• The UK's Advertising Standards Authority (ASA) and Australia's Australian Communications and Media Authority (ACMA) are representative cases operating in a co-regulation manner. As limitations of self-regulation in the digital environment become apparent, many countries are trending toward co-regulation methods.

5️⃣ Frequently Asked Questions (FAQ)

Q: What are the differences between advertising self-regulation and government regulation?

A: Advertising self-regulation and government regulation differ in terms of entity, enforcement power, flexibility, and more. First, regarding regulatory entity, self-regulation involves the industry creating and operating rules themselves, while government regulation involves the state regulating through laws and administrative power. Second, regarding enforcement power, self-regulation uses limited sanctions based on industry agreement (warnings, requests to stop advertisements, etc.), but government regulation has legal enforcement power (fines, criminal penalties, etc.). Third, regarding flexibility, self-regulation can respond quickly to market changes, but government regulation requires procedures like legal amendments, making responses slower. Fourth, regarding costs, self-regulation has the industry bearing costs, reducing government financial burden, while government regulation incurs administrative costs. The ideal regulatory system combines the advantages of both methods in a 'co-regulation' form, and many countries are developing in this direction recently.

Q: How can I report unfair advertising as a consumer?

A: There are various channels to report unfair advertising. First, you can report unfair advertising through the Fair Trade Commission's '1372 Consumer Counseling Center'. Counseling and reporting are available by phone (1372) or website. Second, the Korea Consumer Agency's 'Consumer Counseling Center' also accepts reports of false or exaggerated advertising. Third, you can submit relevant reports to sector-specific self-regulatory bodies like the Korea Advertising Self-Regulatory Board (KARB), Financial Supervisory Service Consumer Protection Department, Ministry of Food and Drug Safety, etc. Fourth, for online advertising, you can use the reporting function of the platform in question. When reporting, it's important to provide as much detail as possible about the advertising media, content, false/exaggerated content, and evidence (screenshots, product information, etc.). These reports greatly help correct unfair advertising and prevent harm to other consumers.