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.
