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Online advertising is a marketing strategy that uses online services to deliver paid-for adverts or promotional messages to consumers. It is also referred to as digital advertising. It is the fastest growing area of advertising globally. The dominance of online advertising in the UK reflects a shift in consumer consumption habits over the last decade from traditional media (such as newspapers and television) to online formats.

Large ad-funded platforms seek to attract potential consumers by offering their core services for free. In addition to capturing their attention, platforms collect contextual or personal information/data about consumers to help their advertising business. Such platforms include, but are not limited to, search engines and social media sites. For businesses (in particular, small and medium sized enterprises (SMEs)), targeted digital advertising is highly cost effective. For consumers, accessing free online services generally means accepting targeted advertising that sits alongside the content they enjoy.

The Government’s stated aim is to maintain a pro-innovation and proportionate approach to digital regulation. While noting the benefits of online paid-for advertising, the Government recognises that it also carries risks across the content, media placement and targeting of the ads. Potential harms include misleading and fraudulent ads, legal but harmful ads (such as those which target vulnerable groups), and illegal harms. The Government has stated that “market participants across the advertising ecosystem (from advertisers to publishers and all those in between) have a collective responsibility to tackle the harms created to society”.

There is a separate Library briefing on Consumer protection: online scams. It considers the scale of the problem, the different types of scams, and who are the targeted victims.

This briefing considers how the online advertising ecosystem operates, the size and value of the sector, and its current regulation. It also examines the Online Safety Bill currently progressing through Parliament, which aims to protect internet users from the devasting impact of fraudulent paid-for adverts. If enacted, the Bill would impose a new legal duty on large social media platforms and search engines to put in place proportionate systems and processes to prevent fraudulent paid-for adverts appearing on their services, and to quickly take them down if they do appear.

This briefing also considers the Government’s Online Advertising Programme, concerned with the regulatory framework for paid-for online advertising and the transparency and accountability of the supply chain. The aim of the Programme is to bring more of the major players under regulation.

Other initiatives and proposed regulatory interventions that would impact on online advertising are also looked at in this briefing. These include a Plan for Digital Regulation, reforms to promote competition in digital markets, and the delivery of a new data protection regime. Finally, this paper considers a new UK-wide restriction on paid-for online advertising of less healthy food or drink contained in the Health and Care Act 2022. This restriction was to be implemented on 1 January 2023 but has been delayed until 1 October 2025.

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