New advertising law sounds death knell for e-newspapers

May 30, 2021 | 04:06 pm PT
Le Quoc Vinh Businessman
A regulation set to take effect on June 1 requires that the waiting time to close or open an advertisement on digital news publications not exceed 1.5 seconds.

This regulation, issued in the government's Decree 38/2021 on penalties for administrative violations involving cultural and advertising activities, might seem reasonable for readers but for businesses, this is very upsetting.

The new rule would move advertisements from newspapers to other platforms like YouTube, where they can run for five seconds or more, and even compel users to watch the whole ad if they are short videos. Other options include over-the-top (OTT) platforms and games, where ads are yet to be regulated by Vietnamese laws.

The biggest losers under the new rule would be e-newspapers, domestic advertisers and businesses, while the beneficiaries would be giants like Google, Facebook, game publishers and OTT applications.

The total revenue earned by Vietnam's e-newspapers each year is estimated at just over VND4 trillion ($173 million), while the total cost of online advertising is about VND14.5 trillion. The difference of over VND10 trillion is going into the pockets of "outsiders," namely cross-border corporations. Regulations such as those contained in the new Decree 38 would give the giants an even larger slice of the already small cake.

I started looking into the mechanism to attract advertisements in newspapers in 1994, back when I was still working for some publications. As a rule, advertisers are willing to put their money where they believe has a certain audience in the segment they want to reach. They would pay even more if they are guaranteed to appear on pages with important, attractive content that the readers never skip, like page 3, page 5 or the first page of important sections.

I also applied similar mechanisms to sell ads in some of my magazines later on. Luxury brands used to compete with each other for the best spots that they believed readers, those that could potentially pay for their products, would see first. If not, at the very least, they would want their ads to appear to the right of the top articles in the first half of the magazine.

And this placing is not confined to print newspapers. In the early days of e-newspapers some 15 years ago, securing the spot at the top or having the logo on the homepage was very important, since no matter what, the readers had to go through the "front door" in order to enter the "house" and read the news. Later on, readers could experience the content by following links suggested or shared on social media. Readers could go straight to the article through the links without having to go through the homepage.

Of course, smart advertisers would choose their content to appear right within the article, with many using algorithms to determine whether the current reader is of the audience type they want to reach. The reason is very simple and inevitable: the ad must appear in a place the customers can see when they turn the pages or browse the web.

However, the moment the new Decree 38 comes into effect, these seemingly obvious actions would be considered a violation of the Law on Advertising and be fined heavily.

In print newspapers, ads would not be allowed to appear on content pages, and contextual advertising on e-newspapers would be banned. Being placed "next to the content," a prerequisite for advertisers to strike deals with newspapers, would no longer be possible.

In fact, the interspersing of advertisements with news content has already been banned since the 2012 Law on Advertising. Experts have already pointed out various shortcomings and backwardness of many of the law's provisions that have not kept pace with the advance of communications technology.

Across the world, in free newspapers like those in Vietnam, ads can be interspersed with content and customized for the target audience. Besides, people have already come up with many methods to avoid offending readers. Videos, picture boxes and friendly recommendations are in the body of the article. Articles paid for by businesses must be clearly labeled "sponsored content."

Readers are completely free to click on or ignore them. If a reader doesn't want to be bothered by ads, they can pay for ad-free online content per month, quarter or year.

Forgetting businesses' rights

I think that in their desire to protect readers' rights, our lawmakers have forgotten the rights of advertisers, of businesses that are the main source of revenue for newspapers and are part of the media market. They have been gradually deprived of tools used to reach customers through mainstream media products. The right to develop of newspapers, which meet the information needs of society, is being ignored.

A screenshot of a paid post on the New York Times.

A screenshot of a paid post on the New York Times.

Print newspapers are already struggling with more and more readers leaving them each day. And just one or two e-newspapers have adopted the model of charging readers. To this day, advertising remains the only source of revenue for most press agencies, allowing them to offer news content free for readers.

Naturally, businesses must continue to sell their products and services. Now, even if they don't want to, they will be forced now to shift the advertising budget from e-newspapers to other channels. The revenue of e-newspapers, which currently accounts for just 20-25 percent of the total online advertising market, would be cut further.

In fact, this would also be detrimental to the state. Making the promotion of products more difficult will hinder socio-economic development, since newspapers have for long been a reputable channel for businesses to reach customers.

During the Covid-19 pandemic, in particular, the need to observe social distancing and other restrictions enjoins businesses to use e-newspapers even more to reach the public. But the new barriers would make it even more difficult for businesses to promote their products and services. Advertisers unable to use the newspaper channel effectively would switch to other platforms where tax collection remains a difficult challenge for the government.

Unfair competition becomes more so

The Ministry of Information and Communications has also clearly noticed that the online advertising market share of domestic firms is shrinking due to unfair competition from cross-border platforms, which do not play by the same rules.

The ministry has been trying many ways to make Vietnam's digital advertising market more equitable and fair. In this context, Decree 38 has inadvertently created even more advantages for Big Tech.

Even readers can be affected by the new decree. They might have to accept unreliable ads, since unlike mainstream e-newspapers, social media are not responsible for the accuracy of the information or credibility of advertisers.

Another important issue is that the driving force behind the publishing and digital content industry, one of the creative economic sectors, would be significantly diminished.

Readers have the right to block advertisements if they want. They can refuse to read or watch content with too many ads. They even have the right to not pay content creators if they don't like the content. However, newspapers and businesses don't have such rights under the law.

I will not comment on the levels and forms of penalties under the new decree, because they have been set with the goal of preventing violations. But I am certain that its implementation will be a step backward for media innovation in Vietnam, undermining our ability to compete regionally and internationally.

*Le Quoc Vinh is a businessman working in advertising and communications. The opinions expressed are his own.

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