New advertising law tolls the death knell for electronic newspapers

Le Quoc Vinh

This regulation, enacted in government decree 38/2021 on penalties for administrative offenses involving cultural and advertising activities, may seem reasonable to readers but for businesses it is very upsetting.

The new rule would move ads from newspapers to other platforms like YouTube, where they can run for five seconds or more, and even force users to watch all of the ad if they’re short videos. Other options include OTT (over-the-top) platforms and games, where ads are not yet regulated by Vietnamese laws.

The biggest losers under the new rule would be e-newspapers, national advertisers and businesses, while the beneficiaries would be giants like Google, Facebook, game publishers and OTT apps.

The total revenue generated by Vietnam’s electronic newspapers each year is estimated at just over VND 4 trillion ($ 173 million), while the total cost of online advertising is around VND 14.5 billion. . The difference of more than VND 10 trillion goes into the pockets of “foreigners”, namely the cross-border companies. Regulations such as those contained in the new Decree 38 would give the giants an even greater slice of the already cupcake.

I started studying the mechanism for attracting newspaper advertisements in 1994, when I was still working for some publications. Typically, advertisers are willing to invest their money where they think they have a certain audience in the segment they want to reach. They would pay even more if they were guaranteed to appear on pages with important, engaging content that readers never skip, like page 3, page 5, or the first page of important sections.

I also applied similar mechanisms to sell ads in some of my magazines later on. Luxury brands were competing with each other for the best spots that they believed readers, those who could potentially pay for their products, would see first. If not, at the very least, they would want their ads to appear to the right of the top articles in the first half of the magazine.

And this placement is not limited to newspaper printing. In the early days of e-journals about fifteen years ago, it was very important to secure the place at the top or have the logo on the homepage, because whatever happened, readers had to go through the “front door” to enter the “house” and read the news. Later, readers could discover the content by following the links suggested or shared on social media. Readers could access the article directly through the links without having to go to the home page.

Of course, smart advertisers would choose their content to appear directly in the article, with many using algorithms to determine if the current reader is the type of audience they want to reach. The reason is very simple and inevitable: the ad must appear in a place that customers can see when they turn the pages or browse the web.

However, by the time the new Decree 38 goes into effect, these seemingly obvious actions would be considered a violation of the advertising law and would face heavy fines.

In print newspapers, advertisements would not be allowed to appear on content pages and contextual advertising in electronic newspapers would be prohibited. Being placed “next to the content”, a precondition for advertisers to enter into agreements with newspapers, would no longer be possible.

In fact, the intersection of advertisements with news content has already been prohibited since the Advertising Act 2012. Experts have already pointed out various shortcomings and backlogs of many provisions of the law that have not kept pace with advancements in communication technologies.

All over the world, in free newspapers like those in Vietnam, the ads can be interspersed with content and personalized for the target audience. In addition, there are many methods that people have already developed to avoid offending readers. Videos, picture boxes and friendly recommendations are in the body of the article. Articles paid for by companies should be clearly labeled “sponsored content”.

Readers are completely free to click or ignore them. If a reader doesn’t want to be bothered by ads, they can pay for ad-free online content by month, quarter, or year.

Forget about corporate rights

I think that in their desire to protect the rights of readers, our legislators have forgotten the rights of advertisers, the companies which are the main source of income for newspapers and which are part of the media market. They were gradually deprived of the tools used to reach customers through mainstream media products. The right to develop newspapers, which meet the information needs of society, is ignored.

A screenshot from a paid publication in the New York Times.

A screenshot from a paid publication in the New York Times.

Printed newspapers are already struggling to get more and more readers to leave them every day. And only one or two electronic journals have adopted the reader loading model. To this day, advertising remains the only source of income for most news agencies, allowing them to offer free news content to readers.

Naturally, companies must continue to sell their products and services. Now, even if they don’t want to, they will now be forced to shift the advertising budget from electronic newspapers to other channels. Revenues from electronic newspapers, which currently represent only 20-25% of the total online advertising market, would be further reduced.

In fact, it would also be detrimental to the state. Making product promotion more difficult will hamper socio-economic development, as newspapers have long been a popular channel for businesses to reach their customers.

During the Covid-19 pandemic, in particular, the need to observe social distancing and other restrictions is forcing businesses to make even greater use of electronic journals to reach the public. But the new barriers would make it even more difficult for companies to promote their products and services. Advertisers unable to effectively use the newspaper channel would move to other platforms where tax collection remains a difficult challenge for the government.

Unfair competition becomes even more so

The Ministry of Information and Communications has also clearly noticed that the online advertising market share of domestic companies is declining due to unfair competition from cross-border platforms, which do not follow the same rules.

The ministry has tried many ways to make Vietnam’s digital advertising market fairer and more just. Against this background, Executive Order 38 inadvertently created even more benefits for Big Tech.

Even readers may be affected by the new decree. They may have to accept unreliable advertisements because unlike mainstream electronic newspapers, social media is not responsible for the accuracy of information or the credibility of advertisers.

Another important issue is that the driving force behind the publishing and digital content industry, one of the creative economic sectors, would be significantly diminished.

Readers have the right to block advertisements if they wish. They may refuse to read or watch content with too many ads. They even have the right not to pay the content creators if they don’t like the content. However, newspapers and businesses do not have such rights under the law.

I will not comment on the levels and forms of sanctions under the new decree, as they were set with the aim of preventing violations. But I am convinced that its implementation will be a step backwards for media innovation in Vietnam, undermining our ability to be competitive regionally and internationally.

* Le Quoc Vinh is a businessman working in advertising and communication. The opinions expressed are his own.

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