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FTC/FCC Complaint Challenges Product Placement


The Ralph Nader-backed group that was first to file the complaint that triggered Federal Trade Commission action against deceptive Internet search engine advertising is now taking aim at the burgeoning practice of product placement in TV programming.

Seeks disclosure

Commercial Alert, a Portland, Ore.-based nonprofit consumer watchdog group, today filed a similar complaint with the FTC and Federal Communications Commission, charging that TV networks are deceiving the public by failing to disclose product placements. The complaint names ABC, CBS, NBC, Fox, Walt Disney, United Paramount and WB Television networks.

The complaint calls for FTC and FCC investigations and new rules to require TV networks and stations to disclose to their audiences all product placements in their programming.

A CBS spokesman said the network was aware of the complaint but declined to comment. A Fox spokesman said the network does not comment on litigation. Calls for comment made to several other networks as well as several agencies directly involved in product placement deals were not returned at press time.

'Misleading format'

"Advertising has to be distinguished as infomercials, not a misleading format," said Commercial Alert's executive director, Gary Ruskin. "Part of our argument is that there should be separate context. Television enterprises have to disclose when ads are ads. There are rules for Internet searches and for magazine advertising."

Nearly three years ago, the consumer advocacy group filed the original complaint that made almost the same argument against the practice by Internet search engines of adjusting search results to favor advertisers who had purchased the rights to certain terms or phrases. Ultimately, the FTC issued a warning letter to the larger online search engine companies, urging them to label advertising search results so they clearly stand out from editorial search results. Search engines now routinely follow this procedure.

'Props without charge'

Mr. Rushkin's group would now like to see TV networks running concurrent identification of product placements when they occur, preferably at the start of a program. One problem, he said, is that many marketers say that no money is exchanging hands, they are merely providing props without charge.

"If I were a reporter, I'd want to find out more about these 'free' product placements," Mr. Rushkin said.

Gaining traction

The Commercial Alert complaint and challenge comes as the product placement business is gaining increasing traction throughout the marketing, advertising and entertainment communities, which are all undergoing dramatic changes. The shift has partly resulted from market fragmentation and advertisers' difficulties in reaching mass audiences through traditional 30-second commercials. Faced with rapidly rising TV prices and declining viewers, marketers have turned to product placement and branded entertainment concepts. Advertising Age considered this trend so significant that last year it established a separate publication, the weekly Madison & Vine newsletter to cover the emerging business.

While product placements have been around since before the '50s, placement agencies in their current guise are highly sophisticated at packaging together marketers, prop masters, networks, producers and even talent agencies. Many would argue that their role has made it easier for producers to finance their shows.

Media buying agencies

Media buying agencies are also increasingly involved in extracting additional value for major clients of network and cable channels by securing mentions and placements in shows. Commercial Alert's complaint includes a number of articles about product placement deals that are part of larger sales agreements. One of these is NBC's agreement with Avon to weave cosmetics story lines into soap operas; another, Fox Sports' deal with Snapple, Labatt USA and Ford Motor Co.'s Lincoln Navigator.

Ironically, product placement has become so prevalent that even the federal government is involved in pursuing such marketing services. The U.S. Treasury, through its public relations agency, WPP Group's Burson-Marsteller, hired Omnicom Group's Davie-Brown Entertainment and talent agency William Morris to help promote the new colorized $20 bills on a variety of TV quiz shows and late-night talk shows.

Commercial Alert's letter to the FCC requests an investigation into product placement on TV and petitions for rules making, while the FTC letter contains a similar request for an investigation and for creating guidelines that would require adequate disclosure of product placement.

Commercial Alert was started five years ago by Mr. Nader and Mr. Ruskin.

Posted on aef.com: October 3, 2003

 

Claire Atkinson, AdAge.com. September 30, 2003

Copyright © 2003 Crain Communications, Inc.. All rights reserved.