Italy: (In)Game Advertising: The European Perspective On Related Legal Problems.

Last Updated: 2 April 2009

By Avv. Felix Hofer 1

1. When I came around 'game advertising' for the first time my attitude as a lawyer, not necessarily familiar with what I – snobbishly – considered as basically being "kid's or nerds' stuff", was obviously extremely skeptic. Running more and more frequently into articles published on the topic, I very soon had to realize that this was already a definitely "hot" topic to a number of industry sectors, involving an incredible amount of investment as well as offering truly exciting business perspectives.

According to an interesting US study2, published in June 2007 on in-game ad spending targeted to digital homes in the period 2006–2012, companies had already invested 370 mln. of USD and were expected to increase such figure up to 2.051 mln. USD in year 2012.

Fairly impressed by the forecast exposed in the US study I got curious about how feelings would be in Europe about potential business development with respect to the specific area. Again surprise, surprise: according to a study performed on behalf of the EU Commission3 total revenues from on-line content sales will reach 8,3 bln. on Euro by 2010 (at an increase rate of a growth of over 400% in five years!) and on-line games will contribute with a significant share to that quite remarkable pie. In Fall 2007 another study 4 showed that the Internet had already become the most popular communication tool among youngsters aged between 16 and 24; in the specific target group 82% affirmed to go on-line at least 5 days per week for entertainment and information purposes, while 46% declared that they preferred the Internet over (and used it more than) TV.

With the final blow I was provided when I had to realize that 9,8 bln. Euro had been spent for game consoles only during the 2007 Christmas period, that even traditional community venues (as sports arenas, shopping centers) were arranging specific gaming areas and organizing new entertainment events (e. g. "disc burn" sessions) attractive for gamers, that digital platforms did score important come-backs for popular past-time games and that in France the gaming sector had surpassed the entertainment industry for the first time in annual revenues.

2. So, this wasn't exactly a 'niche area'! It was fairly obvious that this was actually big, big business and therefore extremely attractive to the advertising industry for a number of reasons, the most evident ones being that:

- gaming had definitely developed form a 'lost boys' domain into a widely accepted 'social activity', not limited to a young public, but intensely practiced by entire families and people of all ages,

- gamers did not appear to be disturbed by in-game ads (a reaction very different from that widespread among the TV audience), they actually did perceive those ads as relevant for (and realistic within) the gaming context,

- they were even more eager to accept such advertising when it reflected positively (through some additional benefit as a lower sales price) on their game purchase5,

- during recent years dynamic in-game ads had been on a constant rise compared to static ads (2006, 40% of global spending - 2007, approx. 55%).

Furthermore industry enthusiasm appeared widely justified by the fact that:

- game play metrics offered an extremely interesting perspective both, on marketing effectiveness as well as on user habits (just think of details as: angle/distance of ad views, game pauses, position changes; not to speak of a truly exciting profiling potential, where users' in-game behavior can be evaluated and categorized, e. g. the "dishonest/unfair", "brave/daring", "non-competitive/confrontational" guy),

- identical in-side views were available with respect to demographic targeting (based on the kind of game it's possible to deliver different dynamic ads to specific audience groups), while real time placement may easily be performed and consumer engagement may be achieved (e. g. by combining an on-line ad with an advergame),

- the opportunities for product placement and cross marketing appeared to be simply immense.

3. Not much doubt about the attractiveness to business, but what are the legal implications of this popular new marketing tool? Well, from a European (more specifically from an EU) perspective those implications are multiple and somehow worrying. Let's therefore have a closer look at the provisions likely to come into play, when in-game advertising is performed.

3.1. A company intending to promote and advertise a game will need to properly consider:

  • the general principles laid down in the EU Directive on misleading and illicit comparative advertising6,
  • the principles and criteria established by the EU with the aim of preventing unfair commercial practices7,
  • the additional rules introduced by the so-called "Audiovisual Media Services Directive - AVMSD"8,
  • the national implementing provisions of the Directives indicated above as well as some (domestic) sector specific regulations9.

3.2. When a game is sold through an on-line order system, it'd be advisable to bear in mind that the EU Directive on Distance Sales 10 grants customers a specific right of withdrawal11, which may not be waived, and puts a number of obligations on the seller12.

3.3. Where a game reaches users through on-line purchase (e. g. through a download) it's to be borne in mind that the so-called E-commerce Directive 13 imposes specific consumer information duties, peculiar obligations as to sales promotions and also restrictions on (unsolicited) commercial communication.

4. Industry and Business (especially marketing experts) have given a particular hype to the opportunities of 'product placement' quite obviously offered by in-game advertising. This hype was even more stressed as several European countries 14 apparently felt that the upcoming "Audiovisual Media Services Directive" 15would remove most of the previous restrictions and obstacles, which up till now resulted in significant limitations to product placement tactics.

Aside from remarkable lobbying efforts performed with the patent aim of liberalizing product placement throughout the territory of the EU, it's all but clear on which legal basis such convincement was grounded.

4.1. As a matter of fact, while EU Directives did not specifically deal with 'product placement', it's been quite clear that the so-called Television without Frontiers Directive16, requiring both, all advertising to be readily recognizable and to be kept quite separate from other program parts as well as surreptitious advertising to be strictly avoided, did actually leave little space for a broad use of product placement17.

In addition, on a national level European Courts have constantly been quite sensitive and coherent in interpreting laws and regulations governing advertising as hardly compatible with product placement techniques. An Austrian Administrative Control Authority did not hesitate 18 to consider headlines in a TV program, crediting fashion houses for the supply of the host's and moderator's clothing, as an unacceptable and illicit practice. In Switzerland an independent Advertising Watchdog upheld 19 a complaint against the Swiss Public TV and Broadcasting company, filed with respect to images of a moderator commenting on the sailing team victorious in the America's Cup with a mike in his hand featuring the winner's logo.

4.2. On these premises too much of expectation seems to have been placed in the upcoming provisions of the AVMS Directive no. 65 of 2007, as it:

  • strictly maintains the "transparency principle" for all commercial communication,
  • actually confirms the previous ban of hidden/surreptitious advertising,
  • contains strict limitations as to advertising targeted to children,
  • finally, allows - but entitling Member States to rule differently - product placement :
  • for movies and TV films/serials, sports and entertainment programs, or
  • when resulting in free supply of products/services,

provided it does not:

  • exercise undue influence on content or programming,
  • directly push products/services' purchase,
  • excessively high lighten the product/service,
  • lack of appropriate identification (at program's beginning and end).

It actually appears as if the Directive, originally meant 20 to ease product placement – in its function of a crucial financial resource for the broadcasting and media industry - had to compromise on a significantly "watered down" text21, which is likely to face further limitations 22 in the context of national implementation throughout the EU23.

5. Identically critical and problematic do result two other beneficial aspects, generally associated with in-game marketing: behavioral targeting as well as gamers' profiling.

Such marketing tools will have to keep a sharp eye on the provisions governing processing of personal data in countries members to the EU.

In fact, Directive no. 46 of 199524:

  • defines as "personal data" any information apt to identify a physical person,
  • requires for processing the consent of (properly informed) data subjects,
  • grants data subjects specific rights as to their personal information,
  • may eventually require in-advance notification with Personal Data Commissioner.

Furthermore, Directive no. 58 of 2002 25 additionally:

  • harmonizes data handling in electronic communication,
  • sets an opt-in system with respect to unsolicited commercial communication,
  • allows use of location data only previous consent or under anonymity,
  • requires an easy opt-out mechanism ("killer bottom").

It's no secret that the EU Commission plans to have a closer look on how personal data submitted by consumers are used by search engines, social networks and IS providers and has repeatedly voiced serious concern 26 about deep packet inspection techniques allowing consumers' online tracking even after cookies have been deleted.

6. This legal framework doesn't make in-game advertising exactly easy to perform. Marketers are clearly challenged to weave through a battleground crowded with legal mines. On the other hand, the EU results also in an – highly appealing – plus 500 million consumers market, which definitely induces to take some risks.

Footnotes

1. Felix Hofer is a naming and founding partner of the Italian law firm Studio Legale Associato Hofer Loesch Torricelli, in Firenze (50132), via Giambologna 2/rosso; he may be reached through the following contact details: Phone +39.055.5535166, Fax +39.055.578230 – e-mail: fhofer@hltlaw.it (personal) or info@hltlaw.it (firm e-mail).

2. Industry Report from PARKS ASSOCIATES 2007: 'Electronic Gaming in the Digital Home: Game advertising'.

3. Comments of the Commissioner for Information Society and Media on the results of the study.

4. Named 'Mediascope Europe' and preformed by Synovate on behalf of the European Interactive Advertising Association- EIIA.

5. According to UK survey 'a vast majority of gamers, 86%, said that they were happy to see ads placed within games if it brought down the prices they had to pay' and also that they 'do not see in-game ads as intrusive'. Source Jennifer Whitehead's article 'Gamers respond well to in-game advertising' in Brand Republic 28-Aug-07.

6. Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading and comparative advertising.

7. Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council. Section 6 of the Directive specifically governs marketing and advertising.

8. Directive 2007/65/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities. The Directive is due to be implemented by EU Member States no later than by December 19th, 2009.

9. Reference is to countries' rules on State Monopoly eventually covering games of chance with entry fees and awarding money prizes (should such a system be built into the game).

10. Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts.

11. To be called on within a "cool off" period from 7 up to 30 days (but not after a sealed package's opening).

12. As to contract performance, delivery costs and terms, pricing, product's characteristics and functioning requirements.

13. Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market.

14. In particular the UK.

15. Directive 2007/65/EC of the European Parliament and of the Council of 11 December 2007.

16. Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by Law, Regulation or Administrative Action in Member States concerning the pursuit of television broadcasting activities, now due to be amended and integrated by the Audiovisual Media Services Directive.

17. The Consolidated ICC Code of Advertising and Marketing Communication Practice (which inspires most of the Self-Regulation systems) also provides (in Section 9) that "Marketing communication should be clearly distinguishable as such, whatever their form and whatever the medium used".

18. "Bundeskommunikationssenat" – (Austrian) Federal Office for Communication, decision April 4th, 2006; previously, on an identical topic, decision October 14th, 2005.

19. "Bundesamt für Kommunikation (BAKOM)" – Federal Office for Communication - and "Unabhängige Beschwerdeinstanz für Radio und Fernsehen" – Independent TV and Broadcasting Complaint Authority - decision December 7th, 2007.

20. On huge pressure of the Media Industry.

21. Consumer protection advocacy groups have certainly played a crucial role in this outcome.

22. Strong objections against product placement in TV programs had already been voiced by the German Journalists' Association in November 2007.

23. Rather surprisingly, according to recent press reports, the UK Culture minister announced – in a public statement – that ".. the government had examined the idea of introducing branded products on screen - as is increasingly common in the United States - but had decided to keep its current ban in place".

24. Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.

25. Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications).

26. In March 2009 Commissioner Meglena Kuneva, in charge of Consumer Protection, has announced a "black list" of improper and misleading terms with respect to policies aiming at making on-line access conditional to the submission of personal data.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions