How is Australia’s advertising self-regulation system funded?
Responsible advertisers assist in maintaining the self-regulation system’s viability and support its administration by agreeing to a levy being applied to their advertising spend.
Funding of Ad Standards and its secretariat support of the Ad Standards Community Panel and Ad Standards Industry Jury is provided through the voluntary levy - Ad Standards receives no government funding.
How is the levy collected?
The levy is collected mainly through media buying agencies but also directly from advertisers and advertising agencies that buy their own media space. As part of their role in the self-regulation system, media buying companies (principally members of the Media Federation of Australia, but now also including Aegis Media) took responsibility for the application, collection and remittance of the industry levy. The role of media buying companies resulted in the levy system being inextricably linked to advertising spend through media buyers.
The levy is remitted quarterly through the Australian Advertising Standards Council (AASC), the funding body of advertising self-regulation. The AASC holds the industry funds in an account which is drawn upon to pay the costs involved in administering and operating the self-regulatory system.
What media is captured by the levy?
What is the levy money used for?
All levy monies are applied exclusively to the maintenance of the self-regulation system, for more information take a look at funding of the self-regulation system.
What are the industry safeguards around the levy and advertiser information?
Management of the levy collection, receipting and accounting is outsourced by Ad Standards/AASC to an external independent accounting firm. The financial accounts are audited by an independent audit firm.
The control of information between the AASC, Ad Standards and the contract accountants is governed by strict confidentiality deeds. As part of the remittance information, AASC obtains information from media buyers about the advertisers who are paying the levy, not about how much is paid. The information about who pays the levy allows for the accurate recognition of those responsible advertisers who financially support the system and assists in following up other advertisers to obtain similar support.
Why should advertisers pay the self-regulation levy?
As an advertiser, support of the self-regulation system through the payment of a levy is critical to ensure Ad Standards can continue to administer a national system of advertising self-regulation.
Advertisers, advertising agencies, media proprietors and media agencies know that there is no government intervention in the self-regulation system and to maintain this position it is necessary to have adequate support from the very industry the system has been established to serve. This includes having sufficient financial support to allow for the independent adjudication of complaints in a transparent, fair and balanced manner that has the confidence of the community, advertisers and Government.
Ad Standards exists so that the community, industry and government have confidence in, and respect for the advertising self regulatory system and that they are assured that the general standards of advertising are in line with community values.
By paying the levy, advertisers support this mutually beneficial approach and ensure that Ad Standards can continue to respond to complaints in a timely and fair manner, is transparent in its decision making and continues to be accountable to both advertisers and the community.
Does an advertiser’s levy contribution impact on the Ad Standards Community Panel’s adjudication of complaints?
The foundation of the self-regulation system is the independent assessment and adjudication of complaints in line with the prevailing advertiser Codes, regardless of the status of financial support.
Ad Standards does not take into account whether an advertiser pays the levy in assessing if a complaint against that advertiser is within its jurisdiction. Similarly, the Community Panel considers all valid complaints against all advertisers regardless of whether or not they pay the levy.
Choosing to ‘opt out’ of the levy payment does not mean that an advertiser will be discriminated against or negatively impacted. Information about who pays the levy is kept confidential from the Community Panel. This ensures total segregation between complaint adjudication and financial support.
While the status of levy system participation does not influence Community Panel decisions, the financial support of all advertisers is critical to ensure that the entire system is resourced appropriately to continue to deliver a best practice system that is benchmarked to international standards.
Under what authority is the levy applied?
There is no statute underlying the advertising self-regulation system. Accordingly, the collection of levy by Media Buyers is undertaken on the authority of the self-regulation system itself, endorsed by the AANA and the MFA and with the support of the Commonwealth Government.
What arrangements apply overseas?
There are many different approaches to support advertising regulation internationally and these vary depending on the unique systems applied in each country. Some are based on subscription, membership, levy payment and any number of combinations depending on how advertising regulation is administered.
The European Advertising Standards Alliance (EASA) is the key organisation regarding advertising self-regulation in Europe and beyond. It coordinates advertising best practice recommendations which self-regulatory member organisations, including Australia, are encouraged to implement. Australia works very closely with EASA to ensure that our approach is aligned with international best practice and is committed to continuous improvement.
In countries with a levy system, how does Australia’s rate compare?
The increase in the levy rate to 0.05% is in line with international standards. The levy rate for several of our international counterparts:
- UK - 0.1% of non-broadcast and broadcast advertising expenditure.
- Direct marketing sector – 0.2% (up to a maximum of 57.000€).
- New Zealand – 0.06%
- in addition to media proprietors providing direct financial support to the NZ Advertising Standards Authority.
- Sweden - 0.05%.
Other hybrid models include
- Ireland - 0.2% of media spend plus subscription and membership fees.
- Netherlands - 0.025% plus a range of fees.
- Greece - 0.02% plus an annual fee of 300€.