NETWORKS’ USE OF PRODUCT PLACEMENT VIOLATES LAW, WATCHDOG SAYS
Media watchdog Commercial Alert filed complaints this week with the FCC and FTC, arguing that broadcasters were violating federal law by failing to prominently identify product placement techniques as advertising. “Advertisers can puff and tout and use all the many tricks of their trade, but they must not pretend that their ads are something else,” Gary Ruskin, exec. dir of Commercial Alert, wrote in the complaint to the FCC. Commercial Alert said networks, by failing to prominently identify product placements as advertising, “broadly and systematically” violate the Communications Act.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
U.S. communications law has a long history of requiring broadcasters to identify their sponsors, Ruskin said. “Broadcasters not only fail to identify their sponsors; worse, they fail to identify the ads themselves, and instead pretend that the ads are merely part of shows,” he said. Commercial Alert asked the FCC and FTC to investigate the situation and prodded FCC to adopt clear rules requiring broadcasters to identify a paid product placement as advertising when it occured. If an actor holds a can of soda with the lable visible and the broadcaster gets paid for it, Commercial Alert wants the broadcaster to scroll a message across the screen or in some other way alert viewers that they were being pitched. “Without such disclosure, the elaborate intertwining of programming and product placement should be considered an unfair and deceptive advertising practice” because it is “often below viewers’ threshold of awareness,” the complaint said. Ruskin said current FCC rules requiring broadcasters to identify paid sponsorships only once during a program were insufficient in light of product placement.
All major networks declined to comment on the complaints, although one executive said the networks and programmers strictly followed ad identification requirements: “We follow them to the letter.” Gary Belis, spokesman for the TV Bureau of Advertising, said he believed TV viewers recognized product placement and accepted it. “TV viewers are very intelligent and sophisticated and they bring a certain level of skepticism when watching network programming,” he said. The network official said Commercial Alert was “just making a lot of noise because they want to change existing policy.”
Ruskin said he wasn’t challenging existing policy, but was seeking clarification on the increased use of product placement. “Such violation has become the new way of doing business,” he said: “It is time for the Commission to acknowledge this new reality, and address it.”
Earlier, Consumer Alert filed a complaint at the FTC against 8 major Internet search engines for disguising ads in their results. In June 2002 the FTC responded with a letter to search engines warning them to “clearly delineate” search engine results influenced by paid advertisers. Ruskin said TV product placement had many similarities, and his complaints used the same legal arguments. “We won in that case. I think we can win in this case, too,” he said.
The FTC based that move in large part on a survey indicating that 60% of Internet users had no idea companies paid search engines to have their listing displayed prominently in search results. -- J.L. Laws