TV shows shouldn’t be forced to disclose every time they include paid product placements, a top Federal Trade Commission staffer said Thursday.
The FTC declined to take formal action on a request by Commercial Alert that it require product placements to be disclosed.
Mary Engle, the FTC’s associate director for advertising practices, told the activist group that there’s nothing inherently deceptive about product placements that should trigger a requirement that programmers tell viewers that Coca-cola, Budweiser or McDonald’s paid to have their products appear or be named in a show.
She added however, that the commission will continue its policy of judging on a case –by-case basis whether some product placements are deceptive.
TV programmers have been watching the case to see if the FTC would toughen its policy toward product placements.
Producers are increasingly turning to placements as an alternative source of revenue. Many believe that advertisers will buy fewer commercials because increasingly prevalent digital video recorders allow viewers to zap through them.
Engle noted that advertisements are required to be identified when a viewer might be led to believe, wrongly, that a product is being endorsed by an objective third-party, rather than a paid spokesman.
One example of a forbidden practice Engle cited was an infomercial produced with actors portraying consumer reporters giving a glowing report on Blublocker sunglasses. The program was produced in a format similar to 20/20 and viewers could easily have been misled into believing the report was an independent new program endorsing the glasses.
Recent instances of product placements such as American Idol judges drinking Coca-cola or Regis Philbin mentioning that Who Wants to be a Millionaire? contestants will be dialing fiends for help via AT&T long distance, don’t make any claims about the products’ desirability, she said. “Despite the variety and frequency of product placement and grand integration into programming, your complaint does not suggest that product placement results in consumers giving more credence too objective claims about the products attributes,” Engle wrote in a letter to Commercial Alert, a Ralph Nader-connected group, in response to its request for an investigation into product placement.
Even product placements during kids shows won’t require disclosure unless claims about the product are being made that would deceive an ordinary child. “In that regard, product placement seems no different from ordinary advertising,” Engle wrote.
Gary Ruskin, executive director of Commercial Alert, said it still has a complaint pending at the FCC and will also push for a product placement disclosure act on Capitol Hill. “As TV programs look more like commercials our case will get stronger and stronger.”
Association of National Advertisers Executive VP Dan Jaffe was pleased with the decision, saying the FTC had "strongly and correctly reaffirmed the existing rules in regard to product placement."
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