China's State Administration for Market Regulation (SAMR) recently issued the Measures for the Administration of Internet Advertising (New Measures), which will take effect on May 1, 2023, and replace the Interim Measures for the Administration of Internet Advertising previously issued in 2016. The New Measures improve regulatory oversight thereon, explain the roles of important business parties involved, and further refine the do’s and don'ts for online advertising in China as an implementation regulation to the Advertising Law and Ecommerce Law.
The New Measures are expected to have important implications on the social media marketing and internet advertising activities for businesses across a wide range of industry sectors.
The New Measures reiterate the censorship requirement under the PRC Advertising Law upon online advertising for certain categories of products. Specifically, the advertising for the following products shall be reviewed and approved by a competent advertising censorship authority before publication: (1) medical treatment; (2) drugs; (3) medical devices; (4) pesticides; (5) veterinary drugs; (6) health food; (7) formula food for special medical purposes; or (8) other advertisements that are subject to censorship as required by other laws and administrative regulations. Without being reviewed and approved, the advertising for such products shall not be published on the internet.
Furthermore, the New Measures expressly clarify and require that the online advertising subject to censorship be published strictly in accordance with the contents as approved by the censorship authority and not edited, spliced, or modified. If it is necessary to alter any content in the advertising that has been reviewed and approved, the advertiser shall resubmit the revised advertising to the authority for a new review and approval.
The PRC Advertising Law's identifiability requirement is highlighted by the new regulations. Online advertising needs to be recognizable for people to understand that it is in fact advertising. To ensure that customers can tell paid web rank advertising apart from organic search results, for instance, an indication like "advertisement" shall be put in a conspicuous area.
For products or services that are advertised via knowledge introduction, experience sharing, or consumption feedback and have a buy link or other method of payment attached, an indication must also be posted in a conspicuous location to ensure that customers can tell it is an advertisement.
This suggests that for "soft sell" advertising, such as native advertising, where key opinion leaders (KOLs), or influencers, use experience or product endorsement posts on social media platforms that are actually compensated for promoting the advertisers' products and are attached with purchase links or other purchase methods, the content would be regarded as advertising and a declaration reflecting its advertising nature would need to be made.
In accordance with the PRC Advertising Law, the New Measures state that advertisers are accountable for the veracity of online advertising contents and must follow any legal requirements for qualification, approval, citation, or supporting documents, as applicable.
Significantly, the New Measures also mandate that advertisers create and maintain advertising archives for their own internet-published commercials (e.g., those published on its own website, applications, official account, online store, etc.). The archival records for advertising must be updated on a regular basis and must be retained for at least three years after the advertisement has stopped being published.
Additionally, in accordance with the New Measures, the relevant terms of the algorithmic recommendation service and the advertising release records must be entered into the advertising archives whenever an internet advertisement is published. If the advertiser violates the aforementioned, the local Administration for Market Regulation (AMR) may order them to correct the non-compliance and impose a fine of up to 50,000 renminbi. According to PRC law, once the enforcement agency issues the penalty decision, it is likely to be published online to the public, which would further damage the company's reputation and image in China.
The New Measures require that any changes to the advertising contents for publication be communicated in writing or in another form that can be well confirmed by the vendors when the advertiser engages advertising vendors (such as an advertising operator or advertising publisher) to publish advertising online for it. The advertising vendors must also create and maintain their own advertising archives and keep the records for at least three years after the advertising has ceased to be published.
The advertiser, advertising operator, and advertising publisher must verify the contents of the next-level connections that are connected to the front-end advertisements before publishing an internet advertisement that contains a link. If it doesn't, the local government (AMR) has the right to demand that the advertiser make the necessary corrections and impose a fine of up to 50,000 renminbi.
The New Measures also require that the publication or sending of online advertisements shall not affect users’ normal use of the internet. Specifically, it is prohibited to deceive or mislead users to click or browse advertisements by, among other things, (1) giving false alerts of system or software updates, error reports, cleanups, or others; (2) setting false signs of playing, starting, suspending, stopping, or returning to certain webpages; or (3) making false promises of rewards or others.
In addition, the New Measures for pop-up advertising mandate that the advertiser and advertising publisher clearly identify a closure indicator to ensure that the pop-up advertisement can be closed with a single click and forbid the following situations:
It should be noted that the aforementioned rules also apply to open-screen adverts shown while launching online applications.
The New Measures also put an emphasis on regulating online livestreaming advertising, and they do so in a way that is consistent with the laws and regulations already in place. The New Measures reaffirm that in cases where internet livestreaming is used to advertise goods or services for a fee, the companies selling the goods or providing the services are legally responsible for fulfilling the duties and obligations of advertisers.
Operators of livestreaming rooms and livestreamers who accept the responsibility of providing advertising services (such as advertising design, production, agency, and publishing services) must assume the legal duties and liabilities of advertising operators and publishers.
The New Measures also make it clear that livestreamers must comply with all legal requirements associated with advertising endorsers when they make recommendations or testify about goods or services in their own names or images.
Building on the PRC Advertising Law's general requirements, the New Measures broaden the scope of the prohibition and show that it is unlawful to advertise on the internet for the following five types of products under the premise of introducing health or wellness knowledge: (1) medical treatment, (2) drugs, (3) medical devices, (4) health food, or (5) formula foods for specific medical purposes.
The New Measures also stipulate that the address, contact information, purchase link, and other details of the product sellers or service providers of such products shall not be presented on the same webpage or presented in conjunction with the introduction of health or wellness knowledge in order to prevent disguised advertising for the aforementioned products; failure to comply with this requirement would constitute a violation of the prohibition on disguised advertising.
The New Measures also forbid the publication of advertising for nine categories of products on online media (such as websites, webpages, internet applications, and official accounts) aimed towards children. These products fall under the following nine categories: (1) medical treatment, (2) drugs, (3) medical devices, (4) health food, (5) formula food for special medical purposes, (6) cosmetics, (7) alcohol, (8) cosmetology, and (9) advertisements for online games that negatively affect minors' physical or mental health.
In light of the upcoming New Measures and anticipated increasingly strengthened advertising enforcement in China, it is advisable for Chinese subsidiaries to review and examine all existing online advertising in the China market to ensure compliance with all legal requirements of PRC laws.
Additionally, per the archiving requirement under the New Measures and to be well prepared for advertising agencies regular or dawn-raid inspections, it is advisable to commence establishing an archiving policy and protocol as soon as practicable to keep updates of the company’s self-published online advertising in documentation.
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