Virtual advertising in China
What is virtual advertising
Virtual Advertising is the use of digital technology to insert virtual advertising images into a live or pre-recorded television show, often in Sports events. This technique is often used to allow broadcasters to replace real advertising panels (existing on the playfield) with virtual images on the screen when broadcasting the same event in other regions which are not concerned with the local advertising; a Spanish football game will be broadcast in Mexico with Mexican advertising images. The viewer has the impression that the advertising image he/she sees on screen is the one in the reality. Virtual advertising in China is currently a very hot topic in the marketing field.
Virtual advertising in China
Virtual advertising may not yet exist in China per se, provided that the broadcaster or the TV channel uses digital technology to insert virtual advertising images into a live or pre-recorded television show, often in Sports events, therefore, instead of the sports club, the broadcaster or the TV channel owns the advertising rights broadcast on the screen and can benefit from selling this virtual advertising. China’s broadcaster, TV channel or Network Company usually purchases TV broadcasting rights of sports events such as NBA or British Premier League which include virtual advertising, and more often than not, according to online paper introduction, the broadcaster or TV channel has neither a share of advertising revenue generated from virtual advertising nor rights to benefit from selling this virtual advertising in China.
However, virtual advertising in China applies in online games either as props of the game player or game background. Usually advertisers enter into online advertising contracts with online game companies and pay advertising fee for the consideration.
Virtual advertising governance in China legal regime
No specific governing rules or regulations have been formulated for the purpose of regulating virtual advertising, nevertheless, given the business line virtual advertising involves in, i.e, advertising, and subjects which are allowed to operate in this area, it may generally follow relevant laws and ordinances, as follows:
1. Catalogue of Industries for Guiding Foreign Investment (2011 Revision)
Catalogue of Industries for Guiding Foreign Investment stipulates restricted and prohibited industries that contain or relate to television stations and channels and coverage network.
2. Provisions on the Administration of Foreign-invested Advertising Enterprises (Amended in 2008)
Any entity or individual that establishes a foreign-invested advertising enterprise shall abide by the provisions.
Here are relevant laws and regulations to govern and supervise Advertising agents: Advertising Law of the People’s Republic of China， Administrative Regulations on Advertising，Detailed Rules of Implementation of the Administrative Regulations on Advertising, Administrative Measures for the Broadcasting of Radio and TV Advertisement, Regulations on Broadcasting and Television Administration,“广电总局关于禁止播出虚假违法广告和电视“挂角广告”、游动字幕广告的通知” issued byState Administration of Press, Publication, Radio, Film and Television of PRC,“广电总局办公厅关于重申广播电视广告播放管理有关规定的通知” issued by General Office of State Administration of Press, Publication, Radio, Film and Television of PRC
Aforementioned laws and rules state duties and obligations of advertisers, advertising agents and publishers, contents contained in an advertisement that may not be published, broadcasted, installed outdoor, procedures to be followed for registration of an advertising business operator, fee charging criteria and consequences incurred from failing to perform such duties. It is worth noting that Chapter III Advertisement Broadcasting of Administrative Measures for the Broadcasting of Radio and TV Advertisements provide detailed rules for advertisement broadcasting arrangement when broadcasting，rebroadcasting or transmitting a radio or TV program, such as length of time for broadcasting commercial advertisements, corner advertisement, floating subtitles, overlaying subtitles, size of logo of a film, TV play theatre or program etc.
(4)As for Broadcaster and TV station, below are the legal references we can look into:Regulations on Broadcasting and Television Administration, Interim Provisions on the Administration of Cable Broadcasting and Television Operation Services, Measures for the Administration of Landing of Foreign Satellite Television Channels
Aforementioned regulations and provisions prescribe duties and obligations of Broadcasting stations, television stations and how they should run programmes, how to import and relay external broadcasting and television programmes via satellite and other modes by broadcasting stations and television stations,cable Broadcasting and Television Operation Services and Landing of Foreign Satellite Television Channels.
(5) Anti-Monopoly Law of PRC, Anti-Unfair Competition Law of PRC
IF FIE (Foreign Invested Enterprise) sets up a firm bridging between the advertiser and TV station through licensing agreement, sub-licensing agreement (if not in a principal-agent relationship) inWholesale and Retail Industries, then probably it will be governed by Anti-Monopoly Law or Anti-Unfair Competition Lawdepending on the business operator’swith a dominant market position or being presumed to have a dominant market position (Art.19 of AML). According to Art.14 of AML, vertical agreement such as resale price maintenance is prohibited.