Regulating social media advertising

Abstract

The advent of social media advertising in an unregulated environment has created new legal problems and rehashed old ones. For one, the ineffective disclosure of the true nature of an advertisement, e.g. the advertiser-endorser relationship, can be regarded as misleading, and can be subjected to legal penalties, according to existing laws. Regulatory regimes are also undermined when social networking sites carry advertisements that are not allowed to be in print or broadcast media.

These problems are studied in this paper so as to propose a set of regulatory mechanisms that governments can put in place to ensure fair competition among businesses and to protect consumers rights. To do so, this paper employs the legal research method, which surveys the current regulatory models in three countries.

Ineffective disclosures in advertisements have been found to be the primary issue with social media advertising. The inefficient handling of the problem can lead to problems such as astroturfing, sock puppeting, and flogging. Together, they undermine the credibility of social networking sites as a viable advertising platform. The growing popularity of native advertising underscores the urgency of dealing with these problems.

No advertising works in a vacuum. By installing a regulatory framework for social media advertising to operate in, these problems can be alleviated. Therefore, this paper also discusses the differences between the various types and tools of regulatory regimes, the current market structure, and how they are applied in countries such as the UK, US and Australia.