UK Advertising in a Digital Age (Communications Committee Report)

Lord McNally Excerpts

Thursday 25th April 2019 Lords Chamber

[Lord McNally (LD)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Currie, who, as he explained, has immense experience in this area, particularly over the last 20 years. The House listened with great care to what he had to say. I also congratulate the noble Lord, Lord Gilbert, and his committee on producing this timely and useful report.

Seventeen years ago I served on the Puttnam committee, the pre-legislative scrutiny committee looking at what became the Communications Act 2003, which led to the noble Lord, Lord Currie, becoming chair of Ofcom. That committee took a hands-off approach to the internet, the world wide web, partly because the spirit of the age was that it was going to be a massive stimulus to enterprise and innovation—and I think that that optimism has been justified. Of course, throughout history new technologies have been disruptive and old technologies have often tried to protect themselves with overrestrictive regulation. This is certainly true of advertising in the digital age. As the report reminds us, the internet is already attracting more advertising spend than all other media collectively, and this has had a dramatic impact on the business models of advertising-funded sectors, such as print media, commercial radio and commercial television.

However, before rushing into regulation, I think we have to be careful about who, how and what. In some ways it is good to look at the 1955 introduction of commercial television. That was extremely disruptive but was a benefit to television. The Government of the day had the confidence to say to those who were going to bring in commercial television that they must also sign up to strict public service responsibilities. Those public responsibilities gave us an excellent news service in ITN, which certainly raised the BBC’s game, and a network of regional television, which, even under its new structure, ITV still provides, giving a strong boost to the creative industries outside London. It depends on how confident the Government are in addressing these new technology powers. There is the view that they are so big and global that they are beyond the reach of the rule of law or any single Administration. I do not agree with that. A Government and Parliament with confidence can make sure that the FANGs come to the table.

We are also seeing advertising shying away from some of the initial impact of digital advertising. Reputational damage is causing both the suppliers and the advertisers to question its effectiveness. John Wanamaker, an American retailer in the late 19th and early 20th century—I had to go to Google to find out that it was he who actually said this—said:

“Half the money I spend on advertising is wasted; the trouble is, I don’t know which half”.


In advertising, there has always got to be caveat emptor—buyer beware—if you are going to spend large amounts. There are already signs in the industry that the big advertising spenders are taking such a view on these matters.

Both the Government and the committee have advocated self-regulation. The noble Lord, Lord Currie, gave us a perfect example of what a good self-regulator looks like. I worry that there is a slight difference in emphasis between the committee report, which seems to believe that the Joint Industry Committee for Web Standards, JICWEBS, is the answer, and the government response, which emphasises the excellent work that the Advertising Standards Authority has done. Perhaps I could tease out from the Minister where the Government want self-regulation to go. Will we have two regulators? That is not a recipe for good regulation, in my opinion.

JICWEBS has sent me a good brief, telling me how it is expanding, what codes it is putting in practice, et cetera. But why go for a new regulator when we have an excellent regulator in place to take on this responsibility? Beyond the law, one encouraging thing is that we successfully carried through the general data protection legislation, both within the EU and now in our own law. I was told the other day that other jurisdictions are looking at the GDPR—so the idea that it is not possible to create laws and limitations for this industry is false. We are very fortunate in having the right person in Elizabeth Denham, and the right organisation in the Information Commissioner’s Office, to pilot us through the next stage of bringing order and accountability into the digital world.

I am worried by all the mentions of the Competition and Markets Authority. The evidence that was given to the committee showed a perhaps justified reluctance in terms of resources for the CMA to take on a study of this industry. But this is not good enough and, again, I would be interested to hear where the Minister thinks we are at. However, it raises an even more fundamental problem. Professor Jason Furman chaired an expert panel for the Treasury on the need to update rules governing merger and antitrust enforcement in this new digital age. The call by the Furman panel for a code of conduct for the bigger digital platforms and a need to foster greater competition by opening up data to new players in the field is surely the right direction of travel. But it is worrying to hear that the CMA is still hesitant about its own capacity to carry out that kind of work.

The noble Lord who chaired the committee emphasised its work on education, and the Government are keen to promote their STEM initiative. From these Benches we would say merely that perhaps there is also a need, particularly in this sector, to recognise the important contribution of the arts here—perhaps a STEAM rather than a STEM initiative is the way forward. I was at a meeting last night where the speaker said that artificial intelligence would provide twice as many jobs as it would destroy. But the problem with that is that the jobs it destroys are done by people who are ill-equipped to do the jobs that it creates. The mismatch that this technological revolution is producing will be our biggest challenge as an economy: how to give people the skills and the ability to adapt to rapid change.

I have one final thought. As my bedtime reading I am reading a book called Titans, on the rivalry between Fox and Pitt in the 18th century. As I read it, it struck me just how much our procedures in both Houses of this place are in fact an 18th-century creation. I worry about whether government and Parliament have the flexibility to deal with the rapid changes in technology that are only just beginning. In one way, this House is providing help, with reports like this putting these difficult problems on the agenda—but I do not envy the next generation of Ministers and parliamentarians who will have to deal with them.