CREATION: Beijing moves to tighten control over online ads with new declarations

In a move to show that commercial advertising on the unruly Internet remains regulated by existing advertising legislation, the Beijing Administration of Industry and Commerce (BAIC) has issued a series of official notices, including the "Notice on Regulating Online Advertising Operation Qualifications". As Internet adspend increases in the mainland, agencies have emerged to play a pivotal role in creating, planning and buying Internet space for their clients. These agencies are mainly start-up, online advertising Internet companies or interactive media divisions established by conventional agencies. The new regulations require all network business operations (NBO) engaged in profit-making online advertising activities to register with BAIC within 180 days. NBOs that sell advertising on their Web pages will only be allowed to carry commercials created by accredited advertising agents and only after being granted permission by BAIC to act as an online advertising medium. Meanwhile, companies already holding an advertising business licence issued by the Beijing municipal government will be allowed to plan, create and offer agency services for online advertising as well as being allowed to sell advertising on their own site. NBOs that wish to offer advertising services themselves must register with BAIC in order to receive an advertising business permit and will be required to add "online advertising" to their legal business scope. Accurate figures for China's online advertising market have so far been hard to come by, as the market is still to a large extent without regulations. It has proven close to impossible to force mainland advertising companies to account for their advertising revenues. However, the online advertising market is valued at RMB20-50 million (about US$2.4 to US$6 million) in 1998 and this figure rose to RMB80-100 million (about US$9.6 to US$12 million) in 1999 with Sina.com, Sohu.com and Netease declaring nearly half of the total revenues for that year. So far, the Internet is a niche market and does not cater to a mass audience yet, according to experts in the market. IT companies are the main online advertisers, with only a few old economy companies following suit so far. Other advertising laws that are being enforced include the "Supplementary Notice for the Registration and Filing of Online Business Operations" and the "Notice on Regulating Behaviour in Sending Commercial Information Via Electronic Messages". The latter prohibits companies from sending commercial information via email without prior consent from the recipient. While the notices aim to regulate the municipality's online business operations, many observers believe they are more likely to cause chaos and confusion. Most notices on the Internet issued by various government organs including the State Council have been widely ignored by interested parties in the past. Source: CMM Intelligence.

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