Why does advertising need to be self-regulated?

Advertising plays an essential part in all market economies. It stimulates growth and innovation, encourages competition and increases consumer choice. It is a swift and efficient means of making consumers aware of product innovations and keeping them informed of the range, nature and quality of the products available to them. Advertising is an important element in maintaining or increasing market share and vital to the introduction of a new product or the improvement of an existing one.

To fulfil this important task, advertising must enjoy a high level of consumer trust and confidence; it must be legal, decent, honest and truthful. If consumers are misled by advertising, they will not buy again; if it offends them, they will not buy in the first place. Bad advertising, even though it may account for only a small percentage of the whole, will gradually undermine consumer confidence and all advertising will suffer. So it is in the interests of the advertising industry to ensure that advertising is properly regulated. Traditionally, there have been two ways of doing this; one is detailed legislation, the other is called self-regulation.