New Requirements for Online Advertising

Federal Law No. 347-FZ dated July 2, 2021, has created new obligations for advertisers, advertising distributors, and operators of advertising systems.

Scope of the amendments

Starting from September 1, 2022, the abovementioned persons shall:

• provide Roskomnadzor with information on online advertisements;
• put a mark “advertising” on online advertisements, as well as indicate the advertisers placing such advertisements and/or websites and webpages containing the information on the advertisers placing such advertisements.

Roskomnadzor will therefore record, store (for no less than five years from the date of receipt of information on online advertisements), and process online advertisements with the use of the Unified Information System for Keeping a Record of Advertising on the Internet.

Actors affected by the law

We recall that according to Article 3 (5), (7), and (14) of Federal Law No. 38-FZ dated March 13, 2006:

Importantly, not all advertisers, advertising distributors, and operators of advertising systems will be subject to the new regulations, but only those that:

• distribute online advertisements with a view to attract Russian consumers (consumers of advertising);
• meet the following criteria specially designed by the Government of the Russian Federation:¹

Exemptions

The new Law exempts:

• certain types of advertising, such as:
  • advertising broadcast in television programmes and shows, radio programmes and shows distributed online as broadcast (with no alterations) through terrestrial, satellite, cable broadcasting networks;
  • social advertising;
• certain persons and entities such as:
  • operators of social advertising;
  • advertisers who hold exclusive rights to advertising objects and/or are product manufacturers/sellers, and have delegated, in accordance with agreements concluded with advertising distributors/operators of advertising systems, the obligation to inform Roskomnadzor;
• certain advertising objects and formats (push notifications, email newsletters regarding own products of suppliers of advertising data and their affiliates):
  • advertising information about own products of advertisers, advertising distributors, operators of advertising systems disseminated by those persons and entities themselves and/or by persons and entities belonging to the same group as such advertisers, advertising distributors, operators of advertising systems and sent to email addresses, as well as groups of users online in the form of electronic messages.

How to provide information to roskomnadzor

There are two ways to provide information to Roskomnadzor:

• on one’s own, or
• via an operator of advertising data – a new subject introduced by the Law.

Operators of advertising data

There are certain features distinguishing operators of advertising data, namely:

• they possess software designed to establish instances of online distribution of advertisements; and
• they are authorized by Roskomnadzor to register online advertisements and submit the relevant information.

Roskomnadzor will keep the Register of Operators of Advertising Data.² An entry in the Register will contain the following information regarding operators of advertising data:

• TIN (Taxpayer Identification Number);
• PSRN (Primary State Registration Number);
• name of the software used;
• names of the holders of rights to the software;
• date of state registration of the software with Rospatent and the registration number assigned (if any).

Fee

A specially created commission is another new subject involved in the selection of operators of advertising data. The procedure for setting up the commission, its activities, and composition are regulated by Resolution of the Government of the Russian Federation No. 966 dated May 28, 2022. Roskomnadzor will publish the results of the selection procedure on its official website within five working days from the date of signing of the relevant minutes of the commission’s meeting.

Criteria for the selection of operators of advertising data

The criteria that the Commission for the Selection of Operators of Advertising Data will rely upon to check the eligibility of selection participants are quite extensive. Aside from the standard requirements that a participant shall not be undergoing liquidation or bankruptcy and its activities shall not be suspended under the procedure envisaged in the Administrative Offences Code of the Russian Federation, as well as the requirement of timely payment of taxes, there are some requirements that are, in our view, unique, such as:³

• a selection participant shall be a Russian legal entity directly or indirectly controlled by the Russian Federation (a constituent entity of the Russian Federation, a municipality) and/or a national of the Russian Federation or a person or entity controlled by them together or separately;⁴
• a selection participant shall not belong to the same group as another operator of advertising data, pursuant to the antimonopoly laws of the Russian Federation;
• the authorized (share) capital of a selection participant shall be no less than RUB 200,000,000;
• a selection participant shall conclude, in accordance with the laws of the Russian Federation in the field of communications, telecommunications services agreements providing for the services of data transmission and Internet access through telecommunications networks with the speed of no less than 1 GB per second, with no less than two different telecommunications operators;
• a selection participant shall own a website where the information on that selection participant must be published;
• the charter of a selection participant shall confine the activities of that selection participant to those of an operator of advertising data;
• a selection participant shall obtain a confirmation from operators of advertising systems and/or advertising distributors, whose total annual volume of services for the distribution of advertisements aimed at attracting consumers of advertising present in the territory of the Russian Federation or services of organising such distribution is no less than RUB 2,500,000,000, to the effect that they are prepared to enter into agreements with that selection participant allowing for the provision of online advertising information to the competent authority through that selection participant if and when the latter acquires the status of operator of advertising data.

For the software used by operators of advertising data, the requirements are further specified in Order of Roskomnadzor No. 64 dated April 11, 2022.

If a selection participant meets all the selection criteria, they shall prepare and submit an application to take part in the selection of operators of advertising data. The content of the application, as well as the list of documents to be attached thereto, are set forth in paragraphs 5 and 6 of Resolution of the Government of the Russian Federation No. 966 dated May 28, 2022.

Submission of information

The following information shall be submitted to Roskomnadzor:⁵

• information on advertisers, advertising distributors, operators of advertising systems, in

  General information
  name TIN (Taxpayer Identification Number); PSRN (Primary State Registration Number); address; information on persons and entities entering into Internet advertising agreements; information on inconsistencies identified within advertising data provided by advertisers to operators of advertising data or data on online advertisements submitted directly to the competent authority (if any); information on the established instances of failure by advertisers to comply with the requirements of online distribution of advertisements (if any);
  Information to be provided with respect to individual persons or entities
  Advertiser	Advertising distributor	Operator of an advertising system
  _	information on the means of online distribution of advertising distributor’s advertisements (the name of website and/or webpage, and/or information system, and/or software (if any), their IP address, domain name, webpage index or other identification information);	information on the information system and/or software designed and used by the operator of the advertising system to organise the online distribution of advertisements through information resources owned by third parties, including: IP address, domain name, webpage index or other information identifying the information system and/or the Internet software designed and used by the operator of the advertising system to organise the online distribution of advertisements;
  	information on the installation of advertising distributor’s software providing Internet access to advertising, with a view to installing said software on the hardware of end users present in the territory of the Russian Federation	information on the installation of software owned by third parties and used by the operator of the advertising system to provide Internet access to advertising, with a view to installing said software on the hardware of end users present in the territory of the Russian Federation;
  		information on the information resources owned by third parties and used by the operator of the advertising system to provide Internet access to advertising (the name of website and/or webpage, and/or information system, and/or software (if any), their IP address, domain name, webpage index or other identification information)

• information on advertisements, including:
  • general description of the object of advertisement (in Russian);
  • the main type of advertising campaign, to be determined on the basis of its pricing structure;
  • the form of distribution of advertisements, including all types of banners, texts or text and graphic content, all types of videos, audios, live audio and/or video streams;
  • advertising period;
  • characteristics of the target audience based on their sex, age, geography of residence (presence), other social and demographic characteristics allowing to differentiate among its members (if such information is available);
  • information on Internet advertising agreement(s). Key information on the agreement concluded with the final advertiser (that is, the first agreement in a chain) is to be submitted. Agreement price need not be disclosed.

Time limits for the submission of information

Reports on online advertisements must be submitted within one month following the calendar month in which the advertisement was distributed online. Creative work, however, must be registered before being published. Communication shall be exclusively via electronic means with the use of document templates automatically generated in a user’s personal account.⁶

Therefore, if, for instance, a business has prepared an advertising campaign, but, for some reason, the campaign has been cancelled or suspended ahead of schedule, there will be no need to submit the information to Roskomnadzor, as only the data pertaining to distribution must be provided.

Regulatory authorities

There are two governmental authorities that will monitor compliance with these new rules of online distribution of advertisements: Roskomnadzor and the FAS of Russia. Where necessary, Roskomnadzor will cooperate with the FAS of Russia to determine whether the information distributed online must be qualified as advertising.

Access

Roskomnadzor shall grant access to its information on online advertisements to the FAS of Russia and the Federal Tax Service, as well as to advertisers, advertising distributors, operators of advertising systems, and advertising intermediaries. At the same time, Roskomnadzor will not give any notices of sharing information with the FAS of Russia or the Federal Tax Service.

Liability

Operators of advertising data, advertisers, advertising distributors, and operators of advertising systems are responsible for the completeness, reliability, relevance, and timeliness of the submission of information to Roskomnadzor.

Advertisers may delegate their obligation to report to Roskomnadzor to an advertising distributor or an operator of advertising systems. If there are any persons or entities in the chain between an advertiser and an advertising distributor, then, as part of their agreements, operators of advertising systems and the advertising distributor may entrust their obligation to report to Roskomnadzor to one single person or entity, but only insofar as the information on the advertiser and their agreements is concerned. In that case, they will still be personally liable for the submission of information concerning themselves.

At present, there is no special liability prescribed by the laws. Hence, the liability for violations of the new Law shall be under Article 14.3 of the Administrative Offences Code of the Russian Federation (Breach of the Advertising Laws) and shall be a fine of up to RUB 2,500 (for individuals) and from RUB 100,000 up to RUB 500,000 (for legal entities).

Advice for businesses in view of the new regulations

In view of the new regulations, we recommend reconsidering the company’s practices and the launch of Internet advertising campaigns, including in terms of incorporating the new regulations in the relevant by-laws and advertising agreements, in particular, in order to:

• determine the employees responsible for liaising with Roskomnadzor on the issue of the distribution of online advertisements;
• decide how to provide necessary information to Roskomnadzor;
• allocate the responsibilities between advertisers and the advertising distributors and operators of advertising systems engaged, as well as the assignments related to technical support of the submission of information to Roskomnadzor;
• decide on the forms of monitoring compliance with the responsibilities and assignments allocated between the parties (for instance, in terms of reporting forms, time limits, liability).

In addition, Roskomnadzor promises to create an industrial platform to teach market participants to cooperate with operators of advertising data.

Although the new regulations described here will, without a doubt, cause extra costs for participants of the online advertising market, the idea to regularize native advertising and the so-called “personal opinions” of key opinion leaders and influencers is commendable, as it benefits from positive global practices in the field of native advertising regulations, ensures transparency in the relations with consumers on the Internet and helps differentiate between advertising and bloggers’ candid advice.

¹ Resolution of the Government of the Russian Federation No. 948 dated May 25, 2022
² Resolution of Roskomnadzor No. 62 dated April 11, 2022
³ As approved by Resolution of the Government of the Russian Federation No. 966 dated May 28, 2022
⁴ Control is understood as a possibility to define decisions of a legal entity through direct or indirect (that is, through another legal entity or a number of legal entities, including those incorporated outside the Russian Federation) ownership of more than 50% of the total votes corresponding to voting shares (participation shares) comprising the authorized (share) capital of that legal entity
⁵ Instruction of the Government of the Russian Federation No. 1362-r dated May 30, 2022
⁶ Resolution of the Government of the Russian Federation No. 974 dated May 28, 2022