Key Points of the New Administrative Measures for Internet Advertising in China

May 5, 2023

Author:Leo Liu, Tate Zhao

As internet advertising continues to evolve in terms of form, business model, and delivery methods, the Advertising Law and the Anti-Unfair Competition Law have been revised accordingly to adapt to these changes. China’s State Administration for Market Regulation (the “SAMR“) recently issued the Measures for the Administration of Internet Advertising (the “Measures“), which will take effect on May 1, 2023 and replace the Interim Measures for the Administration of Internet Advertising (the “Interim Measures“) previously issued in 2016.

The Measures could be recognized as a comprehensive optimization and supplement to the Interim Measures, and this article introduces the key points of the Measures.

1. Native Advertising

With the prevalence of mobile internet, more and more people are sharing their lives on social platforms. You won’t miss social media posts titled “a must-buy product” or “goods recommended by online celebrity” when you surf the internet. In fact, such posts are “native advertising” which is usually used by brand owners in cooperation with social media influencers to promote products and attract consumers to make purchases.

In order to regulate KOL marketing, the Measures stipulate that all types of reviews, shop explorations, and other content that promotes goods or services while attaching shopping links should be clearly labeled as “advertisements”. Some social platforms have already required their bloggers to add a “sponsorship” icon when promoting brands. It is foreseeable that such labeling will be implemented on various platforms.

According to the Measures, an attached shopping link is a precondition for the labelling requirement. But the absence of a shopping link will not necessarily exempt the content from being classified as an advertisement. The content without shopping links could also be recognized as an advertisement and subject to the Advertising Law in practice if one of the following situations is met:

– the posting is directly commissioned by the brand owner;

– the contents are posted via multi-channel networks (MCNs);

– the products reviewed in the posted content are gifted from PR of the brand owner to the KOL or key opinion customer (KOC).

2. Linked Advertising

Interlinking and redirecting are characteristics of online advertising. Most online advertising can guide you to another webpage once you click the attached link. Due to the lack of supervision, it is difficult to specify the subject of responsibility for such advertising. For example, it is unclear how the ad publisher would take responsibility for the contents in the several jumping links attached to its original advertising, or how the responsibility shall be attributed to different ad publishers in the same jumping link.

To address this issue, the Measures provides that when publishing an online advertising containing any link, the ad publisher is only obligated to verify the ad content in the next-level link which is related to the front-end ad.

3. Pop-up Advertising

The Interim Measures simply provided that pop-up ads should be closed by “one click”. Such a vague provision hardly makes it binding to ad publishers. Most pop-up ads hide the close buttons in the garish interface or make them so small that it is highly likely that you mistakenly click on the link.

The Measures elaborated the requirements for pop-up ads by listing specifically prohibited behaviors as follows (also applied to any open-screen ads when activating a web app):

1) where there is no closing sign or the ad can only be closed after countdown;

2) where the closing sign is fake, not clearly visible or identifiable, or other obstacles to close the ad;

3) where the ad requires more than two clicks to close;

4) where the ad continues to pop up after being closed during browsing the same page or document, affecting users’ normal use of the internet; and

5) others adversely affecting “one click” closing.

4. Livestreaming Advertising

The Measures for Administration of Live Streaming Marketing Activities (for Trial Implementation) clearly provides that where the live streaming content published by a live streaming room operator or live streaming marketer constitutes a commercial advertisement, the operator or marketer shall assume the responsibilities and obligations of the advertisement publisher, agency, or endorser. The Measures reiterates this point.

The streamers and their team need to be aware of the nature of livestreaming.  If the livestreaming is promoting goods or services, it should comply with relevant advertising laws and regulations, even if it is named as “sharing.” Livestreaming on cosmetic medicine, dietary supplements, and other special services and products faces higher regulatory requirements. The Measures requires that advertisements for medical services, drugs, medical devices, pesticides, veterinary drugs, dietary supplements, or food for special medical purposes should be subject to prior review. However, livestreaming is different from other advertisements. Improvisation and interaction make it difficult for the content to be consistent with the content reviewed. Livestreaming teams and brands should pay close attention to regulatory developments to ensure that their livestreaming is legal and compliant.

5. Advertising on Smart Devices

With the development of Internet technology, vehicles and home appliances have been connected to the Internet. While make life more convenient, there are also cases where advertisements are constantly played on the screen of refrigerators or where advertisements pop up on the central screen of a car during driving. The fact that consumers buy “an advertisement screen” not only affects their shopping experience but may also lead to traffic accidents or other situations that adversely affect their personal safety.

Regarding such situations, Article 17 of the Measures stipulates that absent the consent or request of a user, or if a user has clearly expressed his/her refusal, Internet advertisements shall not be sent to vehicles, navigation systems, or smart home appliances, etc., nor shall an advertisement or a link to an advertisement be attached to the emails or Internet instant messages sent by the user.

Today, with the prevalence of Internet advertising, the promulgation of the Measures has provided more detailed guidance for this thriving and developing industry. While putting forward higher compliance requirements, it also provides clearer compliance guidelines for relevant entities.