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

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