Japan To Seek Transparency In Digital Advertising

The government on Tuesday released an interim report calling for the development of rules for digital advertising, at a meeting on competition in digital markets chaired by Chief Cabinet Secretary Yoshihide Suga.

The report points out the need for giant IT companies to clarify the effectiveness of advertising, prices, and the use of personal data. A final report will be compiled by the end of this year, and legislation and compliance systems will be developed thereafter.

Digital advertisements are displayed when users browse the Internet. A typical example is “targeted advertising,” which displays content tailored to a user’s preferences, based on data from search and social networking services. Google and Facebook in the U.S. have a large share of this market.

The report states that the digital advertising market is becoming an oligopoly, with data concentrated in the hands of certain mega-IT companies, and that the market lacks transparency. The report also highlights some instances of impropriety, such as the watering down of advertising effectiveness and the IT giant’s preferences for their own media to display ads.

In order to prevent these problems, the report called on the IT giants to disclose their transactions and the effects of consumer responses and other factors on advertising. It suggests the creation of an external organization to measure the effectiveness of the ads.

The report also presents the results of a survey which shows that about 70% of consumers find targeted advertising to be a hassle.

The report sets an agenda item to consider that the IT giants should provide consumers with an easy-to-understand mechanism by which they can refuse the use of their personal information, including their preferences, for advertising. The report says it is necessary for the IT giants to explain to consumers how the companies will use personal information when it is obtained.

Suga said at the meeting, “We will proceed with the design of specific rules from the perspective of increasing fairness and transparency and ensuring free choice for consumers and businesses.”