Just as the EU aims to liberalise product placement on our screens, the USA appears to be moving towards a more restrictive regime for brandowners placing their products into programming. So who has the right idea? Carla Basso examines the facts.
Topic: Product Placement
Who: Federal Communication Commission
When: August 2008
Law stated as at: 31 August 2008
We recently reported on the consultation paper issued by the UK Department of Culture, Media and Sport, which includes a review of whether or not the UK should liberalise the current prohibitions on product placement in UK programming. The government have clearly staked their position in advance: apparently we must maintain programme standards and integrity above all else, and prevent any erosion of the distinction between programming and advertising to the detriment of viewers.
The underlying argument appears to be that we Brits would simply never accept the level and extent of embedded advertising that is standard practice in America. By way of example, according to Nielsen Media Research, there were 117,976 individual product placements on the US's 11 largest TV channels in the first three months of this year.
American Idol judges are strategically placed behind Coca-Cola cups. The US version of the Office has references to "HP" sauce, and reality TV show "The Biggest Loser" contained no fewer than 4,000 product placements over 16 episodes. And it's not just US dramas and entertainment shows that contain embedded advertising – McDonald's has a tie-up with Fox 5 News in Las Vegas to place cups of its branded iced coffee before presenters of a morning current affairs show.
But it appears that even in the US, the tide has finally turned against "Trojan horse" advertising. In America, branded entertainment is regulated by the Federal Communications Commission ("FCC") and the Federal Trade Commission ("FTC") and a raft of self regulatory guidelines also apply. Back in 2003, the advocacy group Commercial Alert complained to both the FCC and FTC, claiming that the current disclosure requirements on paid product placement were not being complied with, and calling for clearer disclosures and identifications to keep consumers more informed.
Unsurprisingly, advertiser groups such as the Freedom to Advertise Coalition opposed, arguing freedom of speech considerations, and that current rules sufficiently protected consumers.
More recently, in June this year 23 pressure groups together wrote to the FCC asking them to investigate, lobbying for tighter controls. The Writer's Guild of America West and the Screen Actors Guild have also called for more disclosure from broadcasters about brand integration.
Whilst advertisers asked the FCC to make a Notice of Inquiry ("NOI") – effectively a stalling tactic which requires an information gathering process before any rules are made – advocacy groups called for a Notice of Proposed Rule Making ("NPRM") which would allow the FCC to move to address the problem by drawing up new rules. Treading a political path, in June the FCC issued both. The NPRM proposes a revision of the rules which would make the disclosure of embedded advertising more obvious to consumers, with identifications in a particular size and on air for a set time. It also asks for comments on whether additional restrictions should apply to children's programming and whether disclosure rules should be extended to cable programming. The NOI asks for further information on related issues such as whether existing sponsorship rules are effective, whether changes are necessary, and how freedom of speech issues might impact upon any changes.
Why this matters:
Now that revenue for spot advertising is decreasing due to the fragmentation of audiences caused by the increasingly wide range of new TV services, funding from product placement and other "alternative" advertising will become increasingly important. If the UK product placement market ultimately remains closed, then brand-owners will look at more liberal overseas markets such as the US. Although the FCC appears to acknowledge that over-regulation would damage the free-to-air television industry, sponsors and advertisers need to keep a watch on these new developments and proposed rules, and (as in the UK) make their voices heard in the consultation process.