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China to issue tighter regulation on online advertising

The regulations come amid quickened efforts to regulate online advertising practices following the public uproar over the death in April of a college student with a rare form cancer. The student died after trying a treatment he found advertised on Chinese internet search giant Baidu’s platform.

In less than a month since the Cyberspace Administration of China (CAC) issued new rules for search engines, the Industrial and Commercial Bureau (ICB) said on July 9 it is also going to implement a new regulation targeting online ads from September 1, 2016.

While the CAC regulation said a search engine must identify and label paid ads clearly, distinguishing them from regular search results, the ICB’s new rules regulate that paid ads which are now being labeled as “promotion” or “commercial promotion” on Baidu must be identified as “ad”.

This new regulation comes as the ICB tries to further improve the new advertising law launched last year which does not cover the online advertising sector.

While several years ago, China imposed strict supervision on advertisements on newspaper, television and magazine, the number of illegal advertisements on the Internet increased as more and more Chinese turned to Internet for information.

One highlight of this new regulation is that it, for the first time, defines the practice of “paid searches”, or Pay Per Click (PPC) in which an advertiser pays the search engine when the ad is clicked, as advertising, while in the past opinion was divided on whether PPC can be considered as advertising.

According to Wang Jun, a professor in journalism and communication school at the Communication University of China, in 2015, China’s online ad income for the first time surpassed that of television, newspaper and magazine, and whether PPC profit should be classified as ad income triggered heated discussion.

China’s online advertising has been a target of criticism for a long time because of illegal ads, and “paid search” was one of the most important causes for such untrue ads.

However, this problem didn’t ignite a nationwide anger in China until the death of Wei Zexi, a 21-year-old college student who died after he found inefficient cancer treatment through Baidu, China’s largest search engine.

Wang Jun said the new regulation can urge search engines represented by Baidu to do self-adjustment and make a fair, just and transparent environment for the operation of online ads, as quoted by CB.com.cn.

After Wei’s death, the Chinese government launched an investigation into Baidu in early May, and urged Baidu to reform the PPC system as soon as possible, which included clearly identifying promotions and limiting ad results to only 30% of each search-results page.

In response, Baidu said it “will comply fully with relevant laws and regulations as outlined by the CAC.”

According to Zhu Wei, vice director of the communication law center at the China University of Political Science and Law, one of the difficulties in supervising online ads is that online advertising can be made in many forms which can be hardly identified, for example the so-called “soft article” where it seems the author is writing a story but actually it is a publicity article. 


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