Both advertisers and social media marketers are finding that they need to pay more attention to how their ads hit the eyes and ears of the public, because last year the long arm of the law started to reach into the realm of new media advertising. In July, 2015, China’s State Administration for Industry and Commerce (SAIC) amended the PRC Advertising Law to cover internet advertising. Previously, advertising laws did not apply to new media. The new regulations went into effect last September but were largely unenforced. This year, the SAIC updated new provisional measures for online advertising, which include the stipulation that all internet advertisements need to be labeled with the Chinese word “广告” (advertisement), and not other words where advertisement is only implied.
The event that triggered deepening restrictions for online advertising was a tragic one: the death of a college student named Wei Zexi. Wei had a rare form of cancer, and after searching on Baidu, he was led to try dubious and expensive cancer treatments. The hospital he went to claimed a high success rate in their ad, and they were featured prominently in the search results. But Wei didn’t get any better and found that the alleged “most advanced technology in cooperation with Stanford University” was a lie. In April this year, Wei died. Afterward, an investigation exposed that the hospital had subcontracted Wei’s controversial treatment to the Putian Medical Group, an organized group of entrepreneurs originally from the city of Putian, Fujian Province who set up private hospitals all over China. It also appeared that Baidu had close ties with this medical group, with a party official from Putian stating that these hospitals may have made up 12 billion RMB of the 26 billion RMB Baidu reported in ad revenue in 2013.
Wei’s tragedy sparked a considerable outcry among the Chinese public that threw the concept of “paid listings” into the limelight, with many demanding the search engine’s paid listings for medical facilities be banned. According to an ad hoc online poll conducted by Sina.com, which attracted more than 17,000 responses, over 50 percent of the participants thought “the inaction of medical regulators” was the main reason for Wei’s death, while more than 35 percent blamed Baidu’s system of search engine optimization.
China’s new regulations in this area have deeply impacted some of the country’s most prominent internet giants. Among all the segments of China’s online advertising industry, “search-engine advertising” makes up the largest, with a 32.6 percent market share. Baidu is probably the best example, allowing paying clients give big bucks so that they can show up at the top of the search results, with just a little label reading “promoted by Baidu” next to the ad. Before the regulation came around, approximately 96 percent of Baidu’s revenue in 2016 was to come from internet advertisements. E-commerce giant Alibaba was expected to rely on ads for 59 percent of its estimated income in 2016, and Sina Weibo, the Twitter-like social media platform, was going to obtain 87 percent of its revenue from ads, according to data from Credit Suisse.
Wang was quick to add the “广告” sticker to his wuxia articles to get in line with the new regulations. “We should let readers know that they are ads. It’s not good for the accounts to abuse their reputation,” says Wang.
Other social media accounts, however, have not been so scrupulous and are nearly impossible to regulate. A social media account is very far indeed from a search giant like Baidu, so Song doesn’t believe the new regulations will change things on the social media front. “Sometimes a woman can just post a video of her makeup application, in the name of sharing some makeup skills, and those products she uses and displays on her desk are product placements for which she is paid,” Song explains. “In this case, the online celebrity won’t label her article as an advertisement, even after the new regulation. That person can always insist that they were just sharing personal experiences.”
This type of stealth marketing is the bread and butter of the social media advertising sphere. For example, you may find a post published by an online celebrity on his or her Weibo, sharing her experiences on losing weight. In the article the writer will suggest a low-calorie diet, exercise routines, and just happens to casually mention a “slimming tea” brand you should try. In these cases, the authorities are forced to wonder, how do you regulate a recommendation?
The regulations aim to draw a clear line between online ads and non-ad information to fight against misleading and malicious ads, but Song still has reservations about how effective these new guidelines will be. “Of course it will make a difference to regulate the paid searches; both the advertisers and the search engine will be more careful. But, you know, search engine optimization is a comprehensive campaign and paid listings are not the only method,” says Song.
The most common search engine optimization route takes a little longer than simply doling out money to a search engine. “If you want a certain cosmetic brand to have a good spot on the search result page when you search ‘cosmetic products’, you can publish articles on news websites, online forums, and social media, with the brand name and the key words like ‘cosmetic’ inserted in the title,” says Song, describing the old but effective method of bumping a product up the search engine algorithm chain. Regulating this sort of advertising blitzkrieg, which has been around since the internet itself, is difficult.
In an age where every social media personality is a potential ad platform, there are platforms like Weiboyi.com and Chuanboyi.com, where advertisers and social media accounts can find their perfect match. Potential advertisers can check out the number of followers, average views, and business scope of an account. Account holders, meanwhile, can search for advertisers that might be seeking to hock items in which they are interested. On these platforms, social media profiles become more than just a record of one’s life and interests; they are goods on display.
“Online advertising is a mature industry,” Song says. “These social media accounts are a precious resource.”