What is the threat of the new law on online advertising? Analysis from Prospectacy

The material is based on the FAQ principle. Each chapter is an answer to a specific question concerning Article 18.1 of the Law “On Advertising”. The accepted article is called “Advertising on the Internet information and telecommunications network”. The author of the material is Dmitry Bulgakov, senior lawyer of Prospectacy.

Dmitry Bulgakov

What is the essence of the new article?

All advertising in the Russian segment of the Internet should now be subject to mandatory labeling and accounting.

What does labeling and accounting mean?

From now on, any advertising creative must have a so-called token.

A token is an advertising identifier, a unique digital designation designed to ensure the traceability and accounting of advertising distributed on the Internet.

Getting a token is marking, and its further tracking is accounting.

The token must be received and assigned to the creative before the start of the advertising campaign. The advertising data operator (hereinafter referred to as ORD) is responsible for this procedure.

ORD is a new special body. In addition to generating and transferring tokens to advertisers, it must transmit the information received from the participants of the advertising campaign to the Unified Register of Internet Advertising (ERIR).

ERIR is under the jurisdiction of Roskomnadzor. Information about each advertising campaign must be stored in it for five years.

What kind of advertising is subject to labeling and accounting?

According to the new article, “all possible types of advertising on the Internet” are subject to labeling and accounting, including such formats of creatives as:

• banners;
• text blocks;
• videos;
• audio recordings;
• live broadcasts.

However, in all cases, we are talking exclusively about the advertising that is targeted at residents of the Russian Federation. The new rules do not apply to advertising that does not cover the Russian audience.

The changes do not affect social advertising operators. Also, according to the Order of the Government of the Russian Federation dated May 30, 2022 N 1362-r, it is not required to label:

• emails and push-mailings on its own database with advertising of the advertiser’s own products. At the same time, as soon as you wish to promote other people’s goods or other manufacturers through these channels, it should immediately be marked and taken into account;
• advertising distributed without changes in the composition of TV/radio programs and TV/radio broadcasts.

The legal status of the advertiser does not matter to the law. The rules for labeling and accounting of advertising do not apply to Russian legal entities and individuals if it is targeted at foreign users. The opposite is also true: if a foreign company distributes advertising in Russia, then it falls under the law.

In the case when advertising is distributed without targeting, it is necessary to take into account “other qualifying signs“. According to Roskomnadzor, if such signs indicate that advertising is aimed at consumers located in Russia, then it will also fall under the obligation to label and record.

Who does the new law concern?

In fact, everyone who is engaged in advertising on the Internet.

• Advertisers — Russian and foreign legal entities/individuals, as well as individual entrepreneurs who plan to distribute advertising in Russia.

But there is a nuance here: the additional burden on advertisers associated with labeling and accounting for advertising can be significantly reduced.

According to one of the resolutions, if the advertiser has the exclusive right to the objects of advertising and (or) is the manufacturer or seller of the advertised goods, then either the advertiser or the operator of advertising systems can communicate with the ORD instead (that is, transmit information).

Important: this scheme will not work automatically. The contract (or an additional agreement to it) between the advertiser and the advertising distributor / operator of advertising systems should specify that this obligation is assigned to them.

• Advertising distributors are companies that “organize the distribution” of advertising by any advertisers.

Roskomnadzor also includes advertising agencies among them. But only if advertising budgets pass through them. In the same case, if they exclusively provide services (for example, to search for advertising distributors), receiving only remuneration to their accounts for this, then this is beyond their jurisdiction.

• Operators of advertising systems — advertising distributors who own:

(a) social networks;
(b) audiovisual services;
(c) news aggregators;
(d) the organizers of the dissemination of information on the Internet;
(e) instant messaging services;
(f) search engine operators.

What does the labeling and accounting procedure look like in general terms?

Advertising labeling and accounting can be divided into three stages.

AE

Before the start of advertising distribution, the creative must be:

• registered in the ORD;
• a token was received for it.

It is also necessary to transmit information about the contract between the advertiser and the advertiser to the ORD.

during

Every distributed creative must:

• have a token;
• contain the mark “advertising”;
• contain an indication of the advertiser of the advertisement and (or) a website containing information about the advertiser (the exception is advertising placed in TV and radio programs and TV and radio broadcasts on the network).

after

Monthly (from the date of the start of the advertising campaign), reports containing deallocation from all participants in the advertising chain must be transmitted to the ERIR through the ORD.

Deallocation is the detailing of acts under contracts for the provision of advertising services between the participants of an advertising campaign, broken down into amounts along the entire chain of participants.

What does the labeling and accounting procedure look like in detail?

Before the start of the advertising campaign, it is necessary to register a creative, get a token and transfer information about the initial contract between the advertiser and the first participant in the advertising chain to the ORD.

Any member of the advertising chain can do this:

Advertiser — Advertising Agency — Advertising Distributor/Operator of advertising systems

In the example of the advertising chain above, there may be several intermediaries instead of one Advertising Agency.

If advertising budgets pass through such intermediaries, then they are all participants in the advertising chain participating in reporting on this advertising campaign.

If the last participant in the chain receives the token and submits information to the ORD, then, accordingly, each previous participant must transfer the necessary data (creative and information about the original contract with the advertiser) to the next one:

• according to the primary contract: information about the customer / contractor (TIN, OGRN, name, addresses, position and full name of persons acting without a power of attorney on behalf of a legal entity), contract details, amount (optional), with VAT or not.
• by creative: the creative / image itself, the target url, description, type of creative.

It will not be possible to transfer the reporting information directly to the EPIR. Only through the advertising data operator.

Participants submit this information independently.

Only the advertiser can shift the obligation to transmit information, as already mentioned above. In this case, he disclaims responsibility for the transfer of data.

The rest of the participants in the advertising chain cannot shift responsibility to anyone. The maximum they can do is to get technical support from other participants in the advertising chain for reporting.

For example, in the chain:

Advertiser — Advertising Agency 1 — Advertising Agency 2 — Advertising Distributor

monthly reporting for agencies can technically be transferred by an advertising distributor. However, the legal responsibility for the transfer of data from agencies will remain with them, and will not pass to the distributor.

The deadline for assigning the token, as reported by the representatives of the candidates in the ORD, is a few seconds (after downloading all the necessary data).

The participants of the advertising chain are required to report on the advertising campaign in a month from the beginning of its implementation.

Reports are submitted during the entire duration of the advertising campaign, as well as at its end.

The deadline for submission is one month after the end of the reporting month.

If, for example, an advertising campaign started on September 10 and ended on November 15, then

• the first reporting will be for the period from September 15 to September 30 with a deadline of submission until the end of October;
• the second reporting will be for October with a deadline of submission until the end of November;
• the third reporting will be for the period from November 1 to November 15 with a deadline of submission until the end of December.

Monthly reporting includes deallocation for each creative and each advertising platform. Thus, detailed information about all contracts and acts between the participants of the advertising chain, including the volume of ad impressions and its cost, will be transmitted to the ORD for EPIR.

Which HORDES already exist?

None yet.

The status of an advertising data operator should be assigned by a special commission of Roskomnadzor from the participants who submitted the application. At the time of writing, there are no officially approved hordes.

The list of approved ORDS should be on the Roskomnadzor website.

Roskomnadzor promises that the commission on the approval of the ORD will take place in October 2022. Candidates for the ORD are Yandex, VK, MTS, Ozon, AmberData, Vimpelcom and Sber.

Prior to the approval of the ORD by the Roskomnadzor Commission, participants in the advertising chain can apply to candidates for the ORD for cooperation in order to comply with labeling legislation.

Some of the candidates are actively offering their services, especially the operators of advertising systems that have declared themselves as future hordes. They promise their current and potential customers that their life after innovations will not be complicated due to the fact that the process of marking creatives and submitting reports will be automated as much as possible.

In other words, they assure that reports on advertising distributed through their advertising systems will be prepared automatically with minimal participation from advertisers and advertising agencies.

This is understandable, since such companies (combining operators of advertising systems and operators of advertising data) will have all the necessary information on advertising in their advertising system.

If the advertiser or agency:

• they work with the operator of advertising systems without their own ORD,
• they work with an advertising distributor,
• use other advertising channels,

then they will have to register creatives and contracts, as well as form a package of documents necessary for reporting on an advertising campaign, in the personal accounts of the ORD or via the API themselves.

By the way, you can cooperate with any ORD and simultaneously with several ORDS. For example, you can run ads through Yandex Direct, and take into account this advertising through the VK ORD.

An important aspect of the relationship with the ORD is financial. At the moment, candidates for the ORD offer their services free of charge. But this, apparently, is for now.

According to the representative of Vimpelcom, their ORD plans from the beginning of 2023 to establish the remuneration of their services in the amount of 0.5% to 1% of the budget of the advertising company, reporting on which will pass directly through their ORD.

If there are no registered hordes, then what should I do now?

Already now it is possible to start interacting with the above-mentioned candidates for the ORD.

According to Roskomnadzor, they are all currently interacting with ERIR. Therefore, even if a candidate for the status of an ORD does not pass the selection, all the transmitted data will remain in the ERIR, and the advertiser will be able to choose another operator approved by Roskomnadzor.

At the same time, Roskomnadzor strives to ensure that all candidates are approved as ORDS.

Even in the absence of an approved list of hordes, Roskomnadzor declares that the submission of information about advertising is mandatory.

Now the following stages of implementation of the requirements of the labeling law are envisaged:

• until September 1, 2022 — the preparatory stage, according to which candidates for the ORD were to begin pilot operation of their services and testing of data transmission to Roskomnadzor;
• September 2022 is the beginning of the transition period for debugging the interaction of market participants. During this period, candidates for the ORD will continue to work in a pilot mode, providing a full range of services to all market participants. In particular, the acceptance of data on the initial agreement with advertisers and the assignment of tokens to creatives;
• October 2022 — the end of the transition period, during which the ORDS will be approved. By this time, all participants in the advertising chain must submit acts on the advertising services rendered over the past month and submit reports to the ERIR through the ORD;
• from November 1, 2022 — transition to regular work.

What is the danger of ignoring a new article?

At the moment, there are no special liability measures for non-compliance with the requirements of Article 18.1 of the Law “On Advertising”, which regulates the accounting and labeling of advertising on the Internet.

Moreover, at a meeting with representatives of the advertising market, the speaker from Roskomnadzor said that there were no intentions to fine for non-compliance with the requirements of the legislation on labeling Internet advertising as early as March 2023.

However, there are general rules of liability for violation of the law on advertising. In particular for:

• for individuals — from 2000 to 2500 rubles.;
• for officials — from 4,000 to 20,000 rubles.;
• for legal entities — from 100,000 to 500,000 rubles.

In our opinion, it is not worth ignoring the law and it is necessary to start interacting with candidates for the ORD on issues of labeling and advertising accounting as soon as possible.

What are the nuances of the marking and accounting procedure?

1) The first nuance

Roskomnadzor will provide access to information from the EPIR to the following actors:

• Federal Tax Service;
• Federal Antimonopoly Service;
• “to other persons in the manner prescribed by the Government of the Russian Federation.”

Thus, the Federal Tax Service can use information from the EPIR to, for example, verify the validity of advertising expenses.

2) The second nuance

All participants in the advertising chain get access to data in the EPIR through an account on Public Services.

At the moment, there is information voiced by representatives of Roskomnadzor that an advertiser through Public Services can see not only his contract with the contractor with whom he directly concluded it, but also the entire chain of contracts for his advertising company.

Consequently, the entire chain of intermediaries becomes transparent for the advertiser, up to the real advertising platform.

3) The third nuance

According to Roskomnadzor, creatives must be identified by a token in the click link, as well as in the adChoice menu.

The problem is that the click link is not always used by the advertiser, and for some creative formats it is impossible at all.

Unfortunately, what to do with the advertising campaign in this case is unclear. The regulator reports that it is able to “process only the most massive and understandable formats, and the coverage of other formats is in operation.”

Be that as it may, information about such a campaign must also be submitted to the ORD for registration in the ERIR.