Nigel Huddleston MP: Politicians must understand how online advertising actually works

New technology can be confusing, but with advertising funding so many of the online services we use daily, Conservative MP Nigel Huddleston explains why policy-makers must ensure they understand how the digital economy actually functions

Nigel Huddleston, MP

Most online services are funded by advertising. We probably all know that, if we stop to think about it, but it’s often taken for granted as we’ve have become used to accessing so many digital services for free in our daily lives. Whether you’re keeping track of the news, keeping in touch with friends or constituents, or using an online map to get from a-to-b, if you’re not paying directly for it, it’s usually because of advertising.

This online advertising industry is an economic success story for the UK, generating £11.55bn a year for the economy in 2017, which is over half the total UK advertising market – that’s something I think we should be shouting about! It has been revolutionary for many businesses, particularly the thousands of small businesses that only exist because of their ability to reach their target audiences online far more easily and cost-effectively than previously possible.

And it is critical for the general public’s use of the internet. Nine out of ten adults in the UK prefer to access content that’s free and funded by ads than pay to access it ad-free, according to recent polling by IAB UK, the online ad industry’s trade body. Some of us are fortunate enough to be able to afford to pay for ad-free subscriptions, but not everyone can, and most prefer not to.

As the Digital Secretary Jeremy Wright said recently, ‘trust is the lifeblood of any digital economy’ and we’ve seen a growing atmosphere of mistrust in digital advertising, arising in part because we don’t understand it very well. With so much discussion of the internet’s impact on society, and how to harness its benefits while managing the risks, it’s incumbent on all politicians to ensure they have a solid working knowledge of how the digital economy – that is such an integral part of our daily lives – actually functions. That’s why, last week, I hosted a ‘Full Disclosure’ event in Parliament with IAB UK, aiming to give MPs and peers a behind-the-scenes look at how online advertising actually works.

For instance, policy-makers may be familiar with ‘banner’ adverts on websites, but there are so many other types of online advertising: from paid-for search engine results, to sponsored content, to classified ads for jobs, cars and houses. And when we see an online ad for something we were browsing for yesterday, do we actually understand how it got there; that with automated ‘programmatic’ advertising, a live auction is taking place when we load up a webpage, with brands choosing how much they are willing to pay for the chance to show you their ad? When we debate how to best regulate the internet, do we understand the regulation that already applies to data processing, and what rules the Advertising Standards Authority enforces on social media and elsewhere online?

These are the questions the IAB was answering, while also acknowledging the real challenges facing the industry. Concerns rightly exist around what advertising is being seen, where, and by whom. The IAB’s Chief Executive, Jon Mew, spoke about his goal of building a sustainable future for online advertising, making it more responsible and trusted as an industry, and this is undoubtedly the right objective. The new technology landscape can be tricky to understand, and efforts by the industry to explain how it works, what controls people and advertisers have, and how it’s regulated are welcome.

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