Bringing product placement out into the open

Los Angeles Times

David Lazarus

June 29, 2008

I love TiVo. The ability to skip TV commercials is right up there with microwave popcorn as one of those life-altering advances that make the world a better place.

Not surprisingly, though, broadcasters and advertisers have responded to TiVo and other digital video recorders by boosting the number of paid product placements in shows -- a practice known in industry circles as "embedding" ads.

With the line between entertainment and marketing growing increasingly blurry, the Federal Communications Commission last week proposed tighter regulation of product placement.

"We need to make sure we're updating our rules for the way consumers are using technology and the way programmers are responding," FCC Chairman Kevin J. Martin told me. "We're hearing from consumers that it's harder and harder for them to distinguish" what's in a show for entertainment purposes and what's advertising.

Most product-placement disclosures now come fleetingly in the closing credits. The FCC is proposing to make those more prominent, as well as including notifications both before and after a show.

Product placement grew 33.7% last year, bringing in $2.9 billion for the producers of movies and TV shows, according to PQ Media, a market researcher. The practice is expected to grow 23% this year to $3.6 billion.

According to Nielsen Co., NBC's "The Biggest Loser" is the hands-down heavyweight in the field, with 3,977 placements in the first quarter of 2008. That includes mentions of a particular product or sponsor.

Fox's "American Idol" was second with 3,291 placements, followed by a couple more NBC shows, "The Apprentice" (1,646) and "Deal or No Deal" (1,603).

The price of each placement is negotiated separately by producers and advertisers.

A coalition of 23 advocacy and consumer groups wrote to the FCC this month urging commissioners to crack down on the practice, especially in shows watched by kids.

"The hijacking of content by marketers makes a mockery of TV ad limits, threatens public health and undermines parents' ability to monitor media and marketing influences," the groups warned.

Tara Walls, who oversees "entertainment marketing" (read: product placement) at PR powerhouse Rogers & Cowan, said there was no reason to tinker with current rules.

"Let's give consumers a little credit," she said. "They're smart. They can read the end credits.

"When consumers see Coke on 'American Idol,' " Walls added, "they know that Coke paid to put it there."

That might be true in such egregious cases of in-show marketing. But what about when a TV character casually interacts with a product that was included in a scene at a marketer's request, or a show that's chockablock with embedded stuff?

In a letter to the FCC last week, the western division of the Writers Guild of America called for real-time notification whenever product placement occurs in a scene. It said a text message, or crawl, should appear at the bottom of the screen alerting viewers to the fact that a paid ad has appeared in the program.

"Since crawls are used with relative frequency, and viewers are accustomed to this practice, such a crawl would be no more intrusive than the warnings required for pharmaceutical ads or the network identifiers, or 'bugs,' that are now a mainstay of our TV visual field," said division President Patric Verrone.

Remember "Pop-Up Video" on VH1? That's how I'd like to see the disclosure made. Every time a promoted product appears, a little box would open naming the product's manufacturer.

This would make the disclosure perfectly clear and at the same time reveal each product placement for what it is: a corporate intrusion on what was supposed to be an entertainment experience.

The FCC's Martin said he understood the value of real-time disclosure, "but I'm not sure consumers want a pop-up every time there's a product placement."

On the other hand, he admitted he was an avid user of his cable company's DVR technology and routinely zips past commercials.

"I think it's awesome," Martin said. "But I recognize that I want to continue having high-quality programming."

For that reason, he said, a degree of product placement is probably necessary to bring in revenue for broadcasters.

John Ellis, chief marketing officer for Los Angeles-based NextMedium Inc., which operates an online marketplace for buying and selling product placements, said viewers don't mind the practice. In fact, he said, they like it.

"Consumers enjoy seeing content with real brands," Ellis said. "Consumers respond to real brands."

He said the next big step will be shooting shows in front of green screens, allowing broadcasters to sell placement rights after an episode is finished and virtual sets to be digitally inserted based on advertisers' wishes.

After that, perhaps five or 10 years down the road, will come interactive technology to let TV viewers highlight a product on the screen and instantly receive more information.

Imagine "Sex and the City" with this sort of technology. As Sarah Jessica Parker cycles through designer outfits, viewers could obtain details about specific dresses or shoes, and even where to buy them.

That could be kind of cool. The danger, of course, is that TV shows would become little more than virtual catalogs for advertisers, which in turn would sponsor only those programs that allowed them to display their wares.

That'll be something for the FCC to consider down the road. For now, greater disclosure of who's paying for what will have to suffice. As Martin put it, "I believe it is important for consumers to know when someone is trying to sell them something."

For the record, no paid promotions were included in the writing of this column. Yet.