On-demand services

IRIS Plus 2017-2: Commercial communications in the AVMSD revision

Author: Francisco Javier Cabrera Blázquez, Maja Cappello, Christian Grece, Sophie Valais, European Audiovisual Observatory

Published: 09/10/2017

As technology grows, so too do highly technologically influenced markets such as the audiovisual market. Already at the time of publishing the IRIS Special on “New forms of commercial communications in a converged audiovisual sector” at the end of 2014 the claim for this report was: “Who’s afraid of the big bad data? The face of advertising has changed forever. “Commercial communications” (as they are now known) now exist in an increasingly converged media universe. As a result, the lines between real content and advertising are increasingly unclear.”

This is even truer today, as we face the emergence of a digital duopoly with Google and Facebook representing up to 85% of all digital advertising market growth in 2016 and the many challenges the whole industry has to address as a consequence. One of these is certainly the future of traditional advertising-financed media companies, such as commercial TV channels, newspapers and magazines which have a far more limited audience reach. A connected issue is the role of data, which has become the most valuable resource in the online economy, and which is also causing new social divide issues between citizens who can pay for the services and others who pay for them by providing their personal data and allowing themselves to be exposed to advertising. At the same time, consumers are becoming more demanding and are starting to reject interruptive advertising formats, which has in turn led advertisers and media companies to rethink how to capture attention.

Against these market realities, legislation is undergoing a significant revision process with the reform of the Audiovisual Media Services Directive (AVMSD). Considering the increased blurred boundaries between the various types of audiovisual services, existing advertising rules have been criticized for not ensuring fair competition, on the assumption that they are too severe for linear services and too soft for non-linear ones. Among the goals of the reform, the European Commission has mentioned the provision of rules to shape technological developments and create a level playing field for emerging audiovisual media, and for this reason the rules on commercial communications are undergoing a significant overhaul.

This report analyses the ongoing AVMSD reform in relation to commercial communications: it begins by setting the scene with regard to the market developments that have triggered it; it goes on to look into the foreseen developments in the advertising sector (chapter 1); and then it delves into the currently applicable rules as defined by the current AVMSD, investigating both the general rules for commercial communications on whatever type of audiovisual services and the specific ones applicable to television advertising, teleshopping and product placement, as well as other directives mentioned in the AVMSD (chapter 2).

The national implementation of the rules is analysed in chapter 3, with regard to both the general qualitative restrictions and the more stringent ones applicable to sponsorship and product placement, as well as to the quantitative restrictions applicable to linear transmissions. Self- and co-regulatory initiatives at international and EU level are dealt with in chapter 4, with particular emphasis on unhealthy foods and beverages and alcohol advertising. Relevant judiciary and administrative case law at European and national level is examined in chapter 5, with particular attention paid to the definitions, advertising limits and stricter rules applicable to linear transmissions. The final chapter provides an overview of the ongoing AVMSD reform and analyses the proposal tabled by the European Commission in May 2016 in light of the amendments proposed by both the European Parliament and the European Council in May 2017 with regard to definitions and general principles, advertising and teleshopping rules, and provisions concerning sponsorship and product placement.

The report is completed by an Annex with eight valuable overview tables that go into more detail on the transposition of the rules on product placement and quantitative restrictions, self- and co-regulatory schemes, national case law and ongoing AVMSD reform.