SUBMISSION BY THE ADVERTISING STANDARDS AUTHORITY OF SOUTH AFRICA
NOVEMBER 2002

this submission contains important background information to the Advertising Standards Authority of South Africa (ASA). It deals with the extent to which the ASA has transformed itself in recent years and sets out its vision for the future.

BACKGROUND

What is advertising self-regulation
Self-regulation and the Law
Role and Relevance
Compliance with international standards and best practice
Services to the public and the industry
Funding of the ASA
Membership of the ASA
Statutory recognition of the ASA

TRANSFORMATION AND PUBLIC SERVICE

The Process of Transformation
Independence
The Code of Advertising Practice
Public participation in decision making
Interpreting the Code
Sanctions
Informing consumers of their rights
Public reporting
Accessibility
Transparency
Co-operation with Government, Statutory and Consumer bodies
Industry sensitisation
Staffing policy

FUTURE VISION

Jurisdiction
Funding
The way forward

1. BACKGROUND

1.1 What is advertising self-regulation

The effectiveness and hence the value of advertising as an economic tool are directly related to its standing in the eyes of the consumer. In order to fulfill its persuasive and informative task, advertising must enjoy a high level of consumer trust and confidence. If consumers are misled by advertising they will not buy again; if offended, they are unlikely to buy in the first place. It is in the longer-term interest of all those in the advertising industry, whether they be advertisers, advertising agencies or the media, to ensure the protection of the freedom of commercial speech by upholding its probity.

The need for consumer protection and high ethical standards is recognised by the advertising industry throughout Western Europe and in many other countries, where the industry actively participates in its own regulation. This process is called self-regulation; and its underlying principles are always the same:

that advertising should be legal, decent, honest and truthful;
prepared with a sense of social responsibility to the consumer and society; and
with proper respect for the rules of fair competition.

This is achieved by means of rules or principles of best practice, by which the advertising industry voluntarily agrees to be bound. The rules are applied by self-regulatory organisations (SROs) set up for this purpose and funded by the advertising industry itself. The aim is to ensure high standards in advertising and thus to maintain consumer trust and confidence, to the benefit of all concerned.

The term self-regulation is potentially misleading, because at first sight it may suggest little more than voluntarily self-restraint on the part of an individual advertiser or agency. If self-regulation were indeed nothing more than this, it would deserve the lack of confidence sometimes expressed by those who are unfamiliar with it. In reality, properly designed and well administered self-regulatory systems provide a swift, flexible, inexpensive and effective means of enabling the responsible majority of the industry to restrain the irresponsible minority whose activities might otherwise bring advertising into public disrepute.

Self-regulation and the Law

It is now generally accepted that self-regulation works best within a framework of statute law, to define broad principles and to act as a 'last stop' in cases where all else has failed. In handling the detail of advertising content, particularly those 'important trivia' which matter very much to consumers, self-regulation has advantages of speed, flexibility and cheapness which detailed legislation cannot equal. The law and self-regulation complement each other, rather like the frame and strings of a tennis-racquet, to produce a result which neither could fully achieve alone.

The statutory framework within which the ASA in South Africa operates is set out in Annexure 1.

Role and Relevance

The ASA of South Africa is an independent body, put in place to protect the public interest and to resolve disputes in the marketing communications industry. Its task is to facilitate the setting of standards and to uphold the Code of Advertising Practice in an impartial and objective manner.

For the general public the ASA is the national body to which they can complain when advertising is unacceptable.

For official agencies and statutory bodies the ASA is a source of information and assistance in the realm of marketing communication. Rather than liaise with dozens of groups, officials can consult a single, authoritative independent body that is in touch with industry and public sentiment.

For consumer and special interest groups the ASA is a responsive communication channel, taking their concerns to the entire marketing and media sector.

For media and marketing companies the ASA is a fast and an affordable means of resolving disputes, whether the complaints are from fellow marketers or consumers.

Compliance with international standards and best practice

With globalization and cross border advertising campaigns the harmonization of advertising standards and best practice has become increasingly important in a global marketplace. For an international company seeking to invest in South Africa the assurance that South Africa complies with international standards and best practice is of prime importance.

In 1995 the ASA was granted membership of the European Advertising Standards Alliance. Members of the Alliance include:

Austria Belgium Czech Republic
Denmark Finland France
Germany Greece Hungary
Ireland Italy Luxembourg
Netherlands Portugal Russia
Slovakia Slovenia Spain
Sweden Switzerland Turkey
United Kingdom Canada New Zealand
United States

As a member of the Alliance South Africa has to comply with a set of common principles and standards of best practice. The principles which underpin every self-regulatory body in membership of the Alliance are:

The consumer benefits

The purpose of a self-regulatory system is to maintain consumer confidence in advertising by offering a rapid and effective response to consumer concerns. It facilitates consumer protection by providing a route for the individual consumer to express a view directly to the advertising business and the advertiser. It enables brands to compete on a level playing field to the benefit of the consumer. In all this, the advertising business will also be seen to be actively, continuously, and responsibly engaged with the consumer.

Self-regulatory systems should, above all, ensure that the individual consumer is the focus of attention.

Independence

Self-regulation must be and be seen to be impartial.

Operation and outcome/decisions of the self-regulatory systems should be made independently of government, specific interests and interest groups.

Transparency and accessibility

Access to the complaints process should be easy and at no cost to the consumer.

The right of a consumer to access the self-regulatory system and the means of doing so should be well known.

The workings and outcome/decisions of a self-regulatory system should be transparent to all parties.

Effectiveness

Not withstanding the national legislative framework, self-regulation must be and seen to be effective, in both its operation and outcome.

Self-regulation must be rapid, flexible, current and applied in a non-bureaucratic manner.

Self-regulatory rules and procedures should be applied in both the spirit and the letter, and regularly reviewed.

Efficient Complaint Handling and Enforcement

A self-regulatory system should have a means to handle consumer complaints, which should be handled free of charge.

A self-regulatory system must have adequate and credible sanctions to support its decisions.

A self-regulatory system should have the power to enforce effectively its decisions, i.e. sufficient moral and practical support from the constituent parts of the advertising industry.

Self-regulation and the Law

Self-regulation must always be in compliance with the law, and no part of the self-regulatory process should deprive a consumer of the protection provided by the law.

Co-operation

Self-regulatory systems and bodies in membership of the EASA have a duty to co-operate with each other in order to handle complaints effectively and converge on best practice.

Resources

Self-regulatory systems must be sufficiently resourced and supported to be able to meet their objectives.

Industry members should ensure adequate moral and financial support for advertising self-regulation and its implementing organisations.

Services to the public and the industry

The primary service offered by the ASA is to the South African public. This service is offered free of charge and over 80% of complaints received by the ASA emanate from the public or from bodies representing the public interest.

In keeping with the trend towards alternative dispute resolution the ASA also offers competitors a forum to resolve disputes relating to the content of advertising. During 2001 the ASA investigated and resolved 147 disputes between competitors, both local and international. A charge system for complaints lodged by commercial entities apply. At the request of marketers, the ASA also offers a dispute resolution facility to resolve sponsorship disputes within the industry.

Competitor complaints account for approximately 20% of the overall number of complaints received.

Funding of the ASA

The advertising regulatory system, in keeping with international practice, is funded entirely by the marketing communications industry. A levy is placed on all advertising and the proceeds are placed in a trust. Money from the trust finances the ASA. ASA decisions can therefore not be influenced by the 'power of the purse' of large advertisers or any industry group. This method of funding preserves the integrity of the system.

Membership of the ASA

The following industry bodies as well as their members have voluntarily agreed to be bound by the Code of Advertising Practice as well as by the rulings made by the ASA:

Association for Communication and Advertising
Association of Unit Trust
Cinemark
Cosmetic Toiletry & Fragrance Association
Direct Marketing Federation
Franchise Association
Furniture Trader's Association
Health Products Association
Industry Association of Responsible Alcohol Use
Information Technology Association
Hospital Association
Marketing Federation of Southern Africa
Namibia Broadcasting Corporation
National Association of Broadcasters
Outdoor Advertising Association
Pet Food Institute
Pharmaceutical Manufacturers' Association
Print Media SA
Printing Industries Federation
Retail Motor Industry Organisation
SA Optometric Association
Sales Promotion & Design
Self-Medication Association
Timeshare Institute

Statutory recognition of the ASA

The Independent Broadcasting Authority Act recognises the ASA Code as the standard that all broadcast advertising has to comply with, thus giving the Code statutory recognition. All advertising on electronic broadcast media is subject to the Independent Broadcasting Authority Act. In terms of this Act all electronic broadcasters must adhere to the ASA Code as determined and administered by the ASA.

This statutory framework created for broadcasters has proven to be extremely effective without detracting from the benefits of speed, cost and effectiveness self-regulation offers.

TRANSFORMATION AND PUBLIC SERVICE

The Process of Transformation

The ASA, as a body dealing with human rights and charged with the responsibility of acting in the public interest, embarked on a process of transformation in the early nineties when a human rights culture started to develop in South Africa.

At the time:

The Code was completely rewritten to conform to the Interim Constitution
Representation was re-looked and extended
Consumers were afforded the right to representation
Summaries of findings were published
Hearings were opened up to the media
International ties were established and the ASA started acting in accordance with international standards and best practice and gained membership of the European Advertising Standards Alliance
Procedures, staffing policies and structures were re-looked and adapted.

In 1999 that process gained momentum when a Strategic Review was conducted to ensure that the ASA was "structured and directed to fulfil its role in a new society".

The decisions taken during the Strategic Review were approved by all Constituent members and were subsequently implemented.

2.2 Independence

Independence was identified as a key factor in ensuring the credibility of the regulatory system.

The ASA has an independent President, an independent Chairperson of the Board and independent Chairpersons of the various decision making committees.

- Independent President

The President of the ASA is Mr Mervyn King S.C., a former Supreme Court Judge and Chairman of the King Committee on Corporate Governance.

- Independent Chairperson of the ASA

Dr Danisa Baloyi is the Chairperson of the ASA Board. Dr Baloyi is a director of various boards in South Africa and chairs the Gauteng Tender Board, Tourism Business Council of South African and the South African Entrepeneurship and Small Business Association. Dr Baloyi obtained a Doctorate in Education from Columbia University and in addition to her many other activities, acts as a business consultant for Deloitte & Touche.

Independent Chairperson - Advertising Standards Committee

Brian Leveson, a nominee of the Consumer Institute of South Africa, was appointed as the Independent Chairperson of the Advertising Standards Committee. As an attorney Brian practised in the Human Rights arena for 9 years. He was responsible for the establishment of the Housing Advice Project of the Legal Aid Bureau and the Housing Rights Unit of Lawyers for Human Rights. He also played a major role in the establishment of the Housing Consumer Protection Trust.

Independent Vice-Chair - Advertising Standards Committee

Adv Gcina Malindi is the Vice-Chair of the Advertising Standards Committee. His experience includes acting as Counsel to the Commission of Enquiry into the affairs of the University of Durban Westville and serving as a member of the Ministerial Task Team into the affairs of rugby and the South African Rugby Football Union. He is a member of the Johannesburg Bar Council and served on the professional Committee of the National Association of Democratic Lawyers.

Independent Chairperson - Advertising Industry Tribunal

Sara Gon is the Chairperson of the Advertising Industry Tribunal. Sara is an attorney with a special interest in industrial relations and labour law matters. She serves on the panel of the Arbitration and Mediation Service of South Africa and sat as an acting judge in the Labour Court as well as an assessor in the labour Appeal Court on numerous occasions.

2.3 The Code of Advertising Practice

The South African Code is based on the principles contained in the International Code of Advertising Practice prepared by the International Chamber of Commerce. This Code forms the basis of all self-regulatory systems. With widely differing legislation in different countries, the ICC Code serves to harmonise ethical principles in a global marketplace.

The content of the SA Code is fully in line with the South African Constitution. It requires human rights to be respected and covers particular sensitivities in South African society while providing for democratic freedoms to be observed. Discrimination, gender issues and children's rights are all covered.

The basic principles contained in the Code can be summarised as follows:

Stay within the law
Don't lie - substantiate claims
Don't mislead
Don't knock
Compare fairly
Be responsible
Don't offend
Don't steal
Don't exploit the vulnerable
Consider your neighbour

The Code of Advertising Practice is revised annually to keep pace with social and economic change. This process starts in November each year when the industry and the South African public are called upon to propose changes to the Code. The Code Revision Committee is chaired by Dr Danisa Baloyi, the independent Chairperson of the ASA Board.

When revising the Code in regard to children, many public submissions were received and incorporated into the Code. Furthermore, the ASA closely co-operated with the Commission on Gender Equality to include a section in the Code pertaining to gender issues.

Public Participation in decision making

The Advertising Standards Committee is responsible for considering complaints from consumers and setting the standard. It was therefore constituted to include representatives of all sectors of South African society.

Public bodies were approached to nominate representatives to serve on this Committee. The Committee now comprises 8 representatives nominated by the industry and 8 representatives nominated by bodies representing public and consumer interests.


The public representatives nominated to serve on this Committee are:

Independent Chairperson - Brian Leveson
Independent Vice-Chair - Adv Gcina Malindi
Black Housewives League - Joyce Mavuka
Commission on Gender Equality - Dr Sheila Meintjes
Consumer Forum - Lulu Letlape
FAMSA - Annette van Rensburg
Institute for Democracy - Dumile Mzaidume
SA Bureau of Standards - Dareth Baker
SA National Consumer Union - Lillibeth Moolman

To assist Committee members in reaching decisions, independent expert opinions are obtained or experts co-opted onto the Committee eg. Association for the Blind, Liquefied Petroleum Gas Association of SA, SA Counsel of Churches, The Lesbian & Gay Equality Project, Human Rights Commission, etc. This ensures that the necessary knowledge or expertise is on hand when decisions are made.

2.5 Interpreting the Code

Those who are bound by the Code, agree to observe it both in spirit and in the letter and not to circumvent it by dubious ingenuity. The Code is therefore applied in both the spirit and the letter.

In assessing an advertisement's conformity to the Code, the primary test applied is that of the probable impact of the advertisement as a whole upon those who are likely to see or hear it.

In a democracy every individual has the right to be heard. Any complaint which is reasonable and falls within the jurisdiction of the ASA, is therefore investigated. It is not the number of complaints but the validity of a complaint that determines whether the Code has been contravened. A single complaint about an advertisement which makes false claims or a complaint about claims in an advertisement which cannot be substantiated, is as valid as a thousand complaints.

In judging whether an advertisement is offensive to SA society it must be considered objectively from the viewpoint of the hypothetical viewer or listener. This fictional, reasonable person is the normal balanced right-thinking person who is neither hypercritical nor over sensitive. It is the task of the Advertising Standards Committee, which is as far as possible representative of a diverse and complex society, to finally determine whether an advertisement is likely to be viewed as offensive by the reasonable South African. When an advertisement is found to be offensive it is the end result of a democratic process. An individual or group of individuals with a particular viewpoint is in no position to make such a judgement.

2.6 Sanctions

The ASA is in a position to instruct an advertiser

to amend an advertisement to conform to the Code of Advertising Practice
to withdraw an advertisement
to pre-clear the amendment of a specific advertisement
to pre-clear all advertising for a specified period, normally 6 months, in the case of regular contraventions
adverse publicity
disciplinary action.

In 2001 the ASA identified a need to have a further powerful sanction to adequately deal with those who disregard the Code.

The ASA is now in a position to order an advertiser to publish a summarised version of an ASA ruling in the media in which the advertising appeared. The ASA is responsible for summarising the ruling and the advertiser is required to pay all production and media costs. This punitive sanction is a powerful deterrent to those advertisers who may consider breaching the Code.

To ensure enforcement of a ruling or sanction where an advertiser refuses to co-operate, an AD ALERT is issued to television, radio, newspapers, cinema, outdoor advertising and members of the Printing Industries Federation who will then not accept the advertising in question.

Informing consumers of their rights

The ASA, recognising the need to inform consumers of their right to truthful and honest advertising, embarked on a communications campaign in 2001. The campaign includes:

A television commercial
A radio commercial in 9 languages
A print advertisement
A corporate brochure
A website containing all ASA rulings
An electronic Newsline
Contact and co-operation with consumer offices in all provinces
A user friendly summary of the Code for consumers.

During 2002 a summary of the Code of Advertising Practice was published and copies were distributed to Consumer Affairs Offices in all the provinces. This summary is being translated into various languages and will be printed as soon as funds are available.

The Sowetan has already agreed to publish the summarized Code to assist in educating consumers. Other media have been approached to do the same.

From January to September 2002 the communications campaign resulted in a 53% increase in complaints.

2.8 Public reporting

The ASA publishes an Annual Report, which is distributed to various stakeholders including national and provincial government, the media, the industry as well as consumer and public bodies.

In the Report information is given regarding the percentage of complaints received from consumers, competitors and bodies or organisations. The nature of complaints (top 12 categories), the services or product categories which drew complaints and the medium complained against, are also reported on.

Complaints Report

2.12 Industry sensitisation

The ASA attempts to sensitise the industry in regard to various issues:

On 21 June 2001 the ASA held a Human and Consumer Rights seminar, bringing representatives of key constituencies into contact with advertising practitioners and media owners. Simultaneously industry delegates were exposed to trends shaping public discourse in the areas of human rights, gender, consumer and children's rights.

Mr Alec Erwin, Minister of Trade and Industry, was invited by the ASA to address the marketing communications industry on 5 September 2002. At this event he informed the industry of government's expectations when advertising to consumers.

An electronic Newsline is sent to advertisers, marketers and media owners every quarter to provide them with information and guidance in regard to the Code and its interpretation.

Lectures are regularly given at tertiary institutions serving the marketing communications industry as well as to advertising agencies and marketers.

Staffing policy

To effectively serve a diverse and complex society the ASA has a policy of employing staff representing all sectors of society. Currently 66% of the management and professional staff at the ASA are black while 34% are white.

FUTURE VISION

3.1 Jurisdiction

One of the ASA's principal concerns for the future remains the fact that for so long as it remains an entirely voluntary self-regulatory body its jurisdiction will be confined to those media owners and advertisers that submit to its jurisdiction, either through membership of the ASA or through membership of one of its constituent members.

There will be constant resistance to the ASA's actions from those who are affected thereby, but who by choice or circumstance fall outside of the ASA's jurisdiction.

The ASA has, for some time, recognised the desirability of a statutory framework within which it can continue to perform its self-regulatory role. Such a framework already exists in respect of broadcast media, which is subject to the ASA Code by application of the IBA Act. An extended statutory framework could make all advertisers, whether mainstream or informal, subject to the ASA's jurisdiction. Such a statutory framework could, in addition, give "teeth" to the ASA's sanctions, perhaps even by establishing that contraventions of such sanctions would be an offence.

Self-regulation within a statutory framework is common. It exists in man professions and trades in South Africa, and the fact that new industries, such as the micro-lending industry, have recently been subject to such a system seems to indicate that the current Government is in favour of the retention of statutory self-regulation.

Funding

In 2002 the ASA had at its disposal a total budget of R4,8 million. With a 53% increase in complaints during 2002, the minimum budget required for 2003 will be R5,9 million. Even with an increased budget, the ASA will require additional funding if it is to further inform the general public of their right to honest advertising and to deal with the resultant workload.

If statutory self-regulation were to be achieved, then the ambit of the ASA's activities would be expanded. This would, obviously, require an increase in the funds required to finance the ASA's activities. Whilst there is no reason why advertisers themselves should not be called on to fund competitor complaints, the issue of consumer complaints is more complex.

In keeping with international practice it would be ideal for the ASA to be entirely funded by the marketing communications industry. This would mean that the industry would voluntarily have to increase its contributions. In the current financial climate it is unlikely that this approach would receive a favourable response.

Other options should then be considered. One is to look to the state to provide funding within the statutory framework that has been mooted above. The second option is to provide within the statutory framework for a levy, the payment of which is compulsory, on all advertising. Yet further options could be explored.

The way forward

It is proposed that the ASA engages with Government in a forum where all relevant stakeholders are represented to discuss statutory underpinning and to explore funding possibilities to best serve the interest of the South African public.