Published on 11 September 2015

Over the past decade, children’s lives have been increasingly intertwined with the internet in one way or another. A 2014 report from Net Children Go Mobile and EU Kids Online shows that two out of three children in Europe had access and used the internet on a daily basis (see also our idiot’s guide on children’s safety on the internet). The increase in advertising spending to reach children on the Internet, allied with diversification in minors’ habits to go online creates new risks and opportunities for them. This guide explores the issues at stake and intends to give readers an overview of the state of regulation in the domain of online advertising targeted at children.

1. Background

The way in which children under 18 years old are going online is diversifying and bringing both new risks and opportunities. Hand in hand with the take up of the internet is the rise in spending and efforts from the advertisers to locate their products in prime positions online for children to see and consume. This entails but is not limited to:

  • Advergames – games that are specifically designed for advertising and for the purpose of marketing a single brand or product;
  • Product placement – the insertion of a brand or product in an entertainment medium such as television, film, or an online game. The opportunities for product placement in games range from merely placing a logo on a virtual billboard to integrating the product into the online game’s plot. Static and dynamic product placement should be distinguished;
  • Sponsorship – situation in which a person, company or organisation finances an online game either directly or indirectly.

A large number of games that can be found on either iTunes or Google Play contain one form of embedded advertisement or another. Due to such prominence some fear that the rise in advertising is harmful for children as it encourages unhealthy intake of sugary foods, for example, while there are also concerns regarding introducing children to consumerist culture through the aggressive or exploitative commercial practices at an early stage, and regarding children’s ability to recognize and filter out adverts.

While much research is still needed to elucidate the potential risks and relationships between children and online advertising, this piece aims to provide information on some of the key dimensions of the discussion. These have been broken down into economic, health/cognitive and policy dimensions. For a literature review, see Digital marketing and advertising to children.

2. The economic dimension

Economics play a crucial role in understanding the links between advertising, children and the internet. First of all, the internet is the biggest sector of ad expenditure both in the UK and internationally, with more than a third of all advertising spend now online. Mobile platforms are the biggest growing medium for advertising, accounting for almost half of all ad growth in 2012. The UK spends more on mobile advertising per head than any other country.

Second, on average, parents in the UK seem to give children under 16 on average £5.75 to spend each week, although according to some estimates this amount can reach £10.20 per week. It is also estimated that under 18s have a considerable amount of spending power and are worth close to £5 billion to the UK economy. Boys prefer to spend their money on sweets and technology (computer games) while girls spend mostly on sweets and clothes. This leaves children as more than desirable targets for advertising.

However, while children have a considerable spending power and are surrounded by ads online offering all sorts of products, it is not responsible to treat children of different ages equivalently. Children under the age of 12 are seen by marketers as capable ‘pesterers’ even though they do not possess the relative purchasing autonomy of teens. Those 14 or older are seen as ‘early connoisseurs’ of brands and commodities in general. For these teenagers, spending on clothes increases as compared to their younger peers. Perhaps more importantly, both hold considerable influence over their households’ spending decisions.

This information has to be understood in light of what children are doing online, for how long and how. On an average day, children in the UK spend 1.7 hours online, 1.3 hours with a gaming console and 1.2 hours on mobiles. The report from Net Children Go Mobile points to a privatization of online navigation, largely due to increased use of both tablets and mobiles which make it harder for parents to monitor, control and guide their children’s activities, while allowing the child to have a more private, unsupervised and personal experience of the internet. This creates a potential space where children are consuming and navigating the web without their parents meddling, something companies are keen to capitalise on – and teens themselves are reportedly also willing to support brands online.

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3. The health/cognitive dimension

The marketers’ interpretation of children as ‘pesterers’ and teenagers as ‘savvy’ and ‘brand connoisseurs’ leads to the cognitive and health dimension. According to some reports and papers, teenagers are considered as subjects capable of both rational economic decisions, and as consumers who develop strong brand loyalty online. This makes for a smooth relationship with advertising and its messages. Yet they are not necessarily good at handling their own personal finances or at distinguishing between content and advertisement in certain locations. According to the Children’s Commissioner’s report, children do not see ads playing such a big role when compared with pressure from their peers.

Agnes Nairn, author of Consumer Kids: How big business is grooming our children for profit, and Juliet B. Schor, author of Born to Buy: The Commercialized Child and the New Consumer Culture, have written compellingly about the risks that some forms of advertising pose to children. Children are often susceptible to advertisements as they are unable to discern the messages in them or even, in the case of advergames, that they are a form of advertising at all. Schor argues that it is only at the age of eight that a deeper understanding about ads and their nature develops in children. This is a point of concern, given how pervasive technology, and with it advertising, is in most children’s lives in the UK well before that age. Self-regulation and banning advertising to children, the two conventional responses in policy and in the industry, are not sufficient tools to ensure the marketer-advertisement-child relationship works in favour of and in the best interests of the child.

4. The policy/regulation dimension

The Bailey Review, the UK government-led initiative to assess the commercialization and sexualisation of childhood in the UK, recommended on the topic of ‘children as consumers’ that while the UK’s advertising regulation is generally effective, it has not been able to keep pace with some of the ‘newer’ marketing techniques like advergames, peer-to-peer marketing, brand ambassadors and online behavioural advertising (OBA). Therefore it is important that companies are trying to take advantage of the existing loopholes when advertising to children who require some special consideration. Thanks to this Review, several changes have taken place. After the review called for parental controls to be introduced and offered to all parents, the four main ISPs published a code of practice in 2011 which implemented an active choice for every customer to activate parental controls if they wished. Furthermore, whole-home controls have been offered to parents and new customers. Filtered services for mobile are also now being widely offered and public Wi-Fi is more family-friendly. A final recommendation and result of the Bailey Review is that in order to combat ‘stealth’ peer-to-peer marketing practices, brand ambassadors featured in ads cannot be under the age of 16.

While the Bailey Review suggested banning all underage participation in peer-to-peer marketing, the Committee of Advertising Practice (CAP) —the body of the ASA that helps monitor the industry-established code of practice— proposed, after a review of their own that stricter guidelines were necessary but not a ban. According to the Internet Advertising Bureau, digital advertising is regulated through legislation and self-regulation. With regards to children, CAP regulates non-broadcast advertising, a set of industry-agreed regulations that are monitored and enforced by the ASA. At the European level the matters of hidden advertising and targeting of children are covered within the Unfair Commercial Practices Directive which was adopted in 2005 and seems to remain relevant today. Overall the European regulatory framework is based on the principles of transparency of marketing communications and draws attention to the necessity of special considerations when it comes to protection of children.

Increasingly the method of choice for the regulation of the advertising to children seems to be the combination of general rules imposed by framework legislation and self-regulatory undertakings. The legislation provides rules primarily for businesses that appear reluctant to self-regulate, but it rarely covers specific cases and it lacks the adaptability which is vital for the rapidly changing industry. Self-regulatory initiatives, on the other hand, can be more responsive to the market trends but they often only apply to the members of self-regulatory organisation and therefore do not cover the entire market. For such reasons, in late 2013 the Office of Fair Trading (now closed) recommended a set of principles required to prevent misleading, aggressive or unfair commercial practices adversely affecting children.

5. Conclusions

It has to be noted that both legislative and self-regulatory measures tend to be preventive and punitive. It is important, however, to move beyond the existing moral panics and take a closer look at the factors that may affect individual cognitive and affective reactions to the games and the brands embedded into them. Such a shift in the focus is likely to provide insights into the associated behavioural responses. This in turn, may affect the regulatory responses as well as provisions within individual families. For this, we need updated and in-depth research with parents and children, some of which is now underway.

Complied by Benjamin De La Pava, Alexandra Chernyavskaya and Sonia Livingstone