Introduction
Hidden advertising, existing in many different forms, is a problem more than ever. Not immediately identifiable advertising is effective, because you do not realise that it really is advertising. The consumers are not prepared and therefore they are easy to manipulate and influence in the way the trader wants. The media development, among other things the media convergence (the media amalgamation) and the new techniques make it possible for the businesses to introduce new and different marketing which make it easier for the businessess to reach the consumers and not least children and young people - at a very early age. This is among other things due to the fact that more and more children and young people have their own television set in their room and also free access to the internet and that the means of the new media is becoming stronger and more sophisticated. The use of live pictures and sound and the interactivity mean a more intense and direct influence, and the borderline between advertising and information, entertainment and play is getting more undefined with a risk of hidden advertising.
Current regulation in Denmark
The Danish Marketing Practices Act does not include a general provision concerning hidden advertising. Therefore, when it is a question of hidden advertising, we have to use the general clause of the Marketing Practices Act s. 1 (now sections 1 and 2), providing that activities shall be carried on in accordance with fair marketing practices. It is a general provision according to which the courts are empowered to decide what shall be considered as fair marketing practices at the time in question, taking into consideration a total balancing of the respect for the businesses, the consumers and the society. The International Chamber of Commerce (ICC)' rules of advertising practices make up an essential part of the interpretation basis for the provisions in the Marketing Practices Act about fair marketing practices and the prohibition against misrepresentation.
Article 12 of the code says that advertising should be clearly distinguishable as such, whatever their form and whatever the medium used. When an advertising appears in a medium which contains news or editorial matter, it should be so presented that it will be readily recognized as an advertisement. Advertising contrary to the advertising code, art. 12, is basically also contrary to the Danish Marketing Practices Act, s. 1 (now sections 1 and 2).
Very few explicit rules about hidden advertising exist in the Danish special legislation, i.e. the TV Act and the E-commerce Act, but they are consequently only in force in these fields.
During the years the Consumer Ombudsman has repeatedly indicated the importance of the introduction of a general provision on hidden advertising in the Marketing Practices Act, which shall include any form of marketing irrespective of media, and which should be sanctioned with fines.
With a view to this wish the Consumer Ombudsman drew up, at the end of 2000, the statement "Advertising identification - hidden advertising" for the Ministry of Trade and Industry, as the Marketing Practices Act falls under this ministry. The Report includes a going through of the Consumer Ombudsman's experience with hidden advertising on the basis of examples from every day life and his own cases through the years.
The report "Hidden advertising - an examination of the experiences with this advertising form, development trends and regulation possibilities", worked out by the researchers Mr. Roy Langer, senior master, Ph.D. cand.comm., and Ms. Anne-Dorte Bruun Nielsen, senior master, Master of Law.
In the spring 2001 the Danish Ministry of Trade and Industry / the National Consumer Agency took the initiative in a research project about hidden advertising. The real purpose of the project was to clear out if there is a need for the introduction of a general provision on hidden advertising in the Danish Marketing Practices Act.
The examination resulted in the research report "Hidden advertising - an examination of the experiences with this advertising form, development trends and the regulation possibilities." This report is the first one of that kind in the field, both in Denmark, in the Nordic countries and internationally, and it contributes to a new and more varied knowledge and a better understanding of "hidden advertising". However, it is a scholarly and complicated report of which the last third bases on law.
The report confirms that the social development results in the replacement of the traditional advertising by new, creative and untraditional advertising forms and advertising channels and media, which make it more difficult for the consumers to see through the advertising and to identify it. At the same time the consumers' increasing resistance towards established and traditional advertising forms contributes to the fact that the businesses want to find new ways of marketing.
The development of the advertising takes place in accordance with the general society development which the report characterises with the words "overcommunication", "commercialisation" and "globalisation". It is presumed that a national regulation of hidden advertising should have a low effectiveness because of the internationalisation and the globalisation. At the same time certain advertising forms are found in such a development that it is impossible to say, for the time being, what they will look like in the future - but it is to expect that the development will raise quite new and until now unknown questions.
The report deals with many grey areas where hidden advertising might come up.
Sponsorship of sports and athletics, exhibitions etc., product placing on TV and film mean that trade marks, firm names and products become visible in another way than through the traditional advertising.
Even if product placing is a rather new way of advertising in Denmark the Danish cinema and TV public has been familiar with product placing in feature productions through foreign films for many years. This globalisation means that it is difficult to put up standards nationally.
Schools and other education institutions open their doors for advertising messages in order to obtain the economically necessary basis. Many education materials would not exist without the economic basis that advertising gives.
An analysis of the contents of the media confirms that the number of product and business references in Danish press media has been markedly increasing through the last 20 years and that the boundary between commercial messages and the editorial material is being blurred. Generally, the development reflects, however, an increasing market orientation in the society. The formerly so clear boundaries between commercial and other messages are disappearing.
Commercial messages refer as much as possible to the editorial material in order to profit by the reliability of the media. However, there is a big difference between the different media that have been analysed. First of all you will see the blurred boundaries compared to certain periodicals, e.g. women's magazines and local newspapers. The development is also shown in certain subject fields in the big newspapers, e.g. consumer informing material, travel material, life style material and motorcar material.
The traditional boundaries between journalism and advertising especially seem to be in a state of disorganisation in the increasing number of articles on almost all sorts of products; these articles are presented as consumer informative "reviews". Here it is a question of historically established habits, where it has become legal to "review" certain - also commercial - products and services, e.g. cars, travels, books, music and film industry products.
For other types of products and services, however, this is not considered as legitimate, this concerns for example clothes, interior design which, formerly, did not get editorial publicity in the media in the same extent. Often it can be impossible to decide from the form and the contents criteria of the articles, if, in this concrete case, it is a question of a mixture of commercial and journalistic interests.
Many public institutions are increasingly ruled by commercial thinking. Is the educational information of the institutions actually marketing/advertising as part of the struggle for the students, or is it a question of objective information about the education? Public and cultural institutions, administrations and businesses sell products and goods. Information about these goods is not considered as commercial information. Is this fair?
In the research sections of the report it is postulated that a scientific definition of hidden advertising is not possible, as you cannot make the demarcation necessary because of the different expression forms of the advertising and the different basic elements of the communication, i.e. sender, text, channel, medium and receiver. Legal intervention, in itself, therefore seems not to be able to solve the problematic aspects in the ongoing development which pervades the society.
A request for indication of advertising/commercial messages, however, would have a preventive effect and would stop some of the negative development trends so that the consumers will easier be able to identify commercial messages. Therefore a provision in the legislation is recommended which commands clear indication of advertising. Such a provision, however, will possibly not be able to change the volume of hidden advertising, at all, or create substantial changes in the attitude towards this advertising form.
Not-indicated advertising is defined as commercial messages for products, services, businesses etc. which the advertiser has paid for in the form of ready money, presents, sponsorship contracts, agreements on co-operation of different kind, lending of objects etc., and without this message being explicitly marked as advertising.
In the research part of the report three ethical problem fields are emphasized where, in spite of everything, there is a need for legal regulation, i.e.
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where advertising is directed at children and young people;
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where there is a melting together of advertising and information/entertainment;
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where public institutions are used as exposure place for commercial messages.
The businesses target their marketing on weak social groups, not least children and young people who are specially vulnerable. Children cannot be described as consciously and critically reflecting consumers. Therefore an increased regulation in this field is necessary.
It is proposed that children and adults are educated in a way, so that they can get on with advertising in a conscious, reflected and critical way. Furthermore, a longer-term focusing on the media pedagogy which should have its fixed and legitimate position in the Danish elementary school is recommended. This should have the highest priority.
Pursuant to the report it will be effective, if in the branches of trade involved a profession and ethics code is worked out in order to parry off unethical aspects in the advertising development together with active efforts to observe these codes.
The development should also introduce an ethics and quality discussion among journalists.
The last part of the report, the juridical part, starts from the professional juridical perspectives and goes through the state of the law in Denmark, partly on the basis of the Consumer Ombudsman's experience with the phenomenon hidden advertising, partly on the basis of cases concerning hidden advertising on TV. Furthermore, there is a going through of the rules in force in the other European countries. All countries of the EU have as a minimum rules which implement the TV-directive rules on hidden advertising, and all of them must implement the rules of the e-trade directive about hidden advertising. The legislation of the main part of the West European countries has at least one general clause concerning competition and marketing. France, Ireland and Great Britain have not got a general rule, but here, to a certain extent, practice based and/or freely arranged rules are applicable which give the same state of the law as a general clause. Sweden, Norway and Iceland have furthermore a general rule about hidden advertising.
In this part of the report the following definition of hidden advertising is mentioned:
"Verbal, visual or other emphasizing of goods or services or of the name, trade mark or activities of a manufacturer or a service supplier, when the emphasizing is done on purpose with a view to marketing and will be able to mislead the general public as regards the art or the purpose of this emphasizing. "
It is discussed if a regulation of a field in such a tremendous development, and where the demarcation problems are so big, is possible at all. However, these conditions are not arguments for failure to make regulations, if necessary, as demarcation problems often are general problems within law and the system of justice.
The going through of the state of the law leads to the conclusion that Denmark has shown a striking fear of contact towards the problems of hidden advertising. The Danish regulation of hidden advertising is indistinct, somehow sporadic and neither homogeneous nor co-ordinated. The author estimates that a general regulation in this field will be necessary.
Various proposals for provisions about hidden advertising are given, and an analysis of advantages and disadvantages compared to the different forms of regulation is carried through. In one of the proposals it is mentioned expressly that special attention shall be paid by the improvement and the presentation of marketing towards children and young people. Sub-article 3 in the provision says: "Marketing initiatives towards children in schools, day-care centres etc. is only allowed if permitted by the parents. Any placing of products, advertising etc. in such places which are generally accessible for the children is forbidden."
Finally, the report recommends that a provision about identification of advertising similar to the rules in Norway and Sweden is added to s. 2 (now section 3) in the Danish Marketing Practices Act.
The proposal to an addition goes as follows: "All marketing shall be formed and presented in a way that it is clear that it is a question of marketing. It shall also be clear who is responsible for the marketing.
In the marketing it is not allowed to use methods which seek to hide that it is a question of marketing, no matter which marketing methods and which marketing media are being used. It shall also be clear who is responsible for the marketing." It is proposed that contravention of this provision should be punishable by a fine.
The Consumer Ombudsman's remarks to the report:
The Consumer Ombudsman agrees on the fact that a regulation of the hidden advertising is necessary in relation to the problems mentioned in the report. In the Consumer Ombudsman's opinion this regulation must be made through a general legislation and not only through ethics codes in the branches of trade involved.
The businesses have had their own self-regulation for a long time - since 1937 - i.e. in the International Code for Advertising Practices, where among other things is stipulated that advertising shall be identifiable. However, in the Consumer Ombudsman's opinion, the businesses have not understood to live up to their own code. This is documented very clearly in the report.
On this basis the Consumer Ombudsman finds et necessary to tighten the existing self-regulation by legislating with a prohibition against hidden advertising liable to punishment if not observed, and the Consumer Ombudsman supports the proposal of the addition of a new sub-section to s. 2 (now section 3) in the Danish Marketing Practices Act. The proposal is in accordance with the Consumer Ombudsman's former recommendations.
The Danish government's new consumer politics
The Danish government's new consumer politics cover among other things plans of alteration of the Marketing Practices Act in various fields. In this connection we must consider that the question of regulation of hidden advertising will be taken up. Unfortunately, from the Consumer Ombudsman's point of view, it will take several years, according to the timetable for the time being, before we possibly get a provision on hidden advertising in the Danish Marketing Practices Act.