The EU Looks Like Making TV Happy By Allowing Product Placement Within Strict Rules

Philip Stone September 29, 2005

Product placement is worth about $2 billion a year to US television and allegedly it’s worth $0 in the European Union, because it is prohibited for the most part. That European exclusion may soon come to an end, but with restrictions so the public knows what is going on.

The EU currently is revising its Television Without Frontiers Directive and as part of that it is tackling the issue of how European television could take advantage of product placement that, in reality, already has reached European shores via American imports, and, perhaps, illegal placements in European-produced shows..

EU Media Commissioner Viviane Reding told the European Broadcast Convention last week:

“ My opinion on this issue is that one should be honest towards consumers. Product placement is a reality, but we lack clear rules. Consumers should have the right to know what kind of content they are watching. Our goal should be to increase consumer information, while acknowledging that product placement is a form of advertising, and that it should not interfere with editorial independence. Furthermore, having clear rules for product placement would secure new revenues for Europe’s audiovisual industry, contribute to boost our creative economy and thus to reinforce cultural diversity.”

Her ideas of fully informing the television audience of what is going on is at odds with the way it is done in the US. There the Federal Trade Commission specifically ruled earlier this year that advertisers did not have to tell viewers that their products were “placed” in programs for advertising purposes. Since that decision much pressure has been put on the Federal Communications Commission to review product placement, but as of yet it has not done so.

Mrs Reding expanded on her thoughts when she spoke a few days later at the German Association of Newspaper Publishers where she said she could see product placement in entertainment series, fiction and films, but she would ban such placements in news and information programs.

Television networks throughout Europe claim there are major new revenues to be earned if product placement were allowed.  In the UK, for instance, senior executives at the commercial ITV, which is under big stock market pressure to increase revenues, say they know they could earn a minimum of €75 million for placing products on some of their shows.

Trans national companies have already discovered that product placement within US television shows is a good way to get their message across in other countries, too. For instance, the hit NBC series ER is shown throughout Europe. Recently it showed Dr. Carter sitting at the ER computer to check medical files As he sat before a very large monitor the camera panned down to clearly show in very large letters on the back of the monitor the Dell logo. The camera must have lingered on that shot for a good five seconds – it seemed an eternity.

Mrs Reding says product placement is already here

 

Thus Dell got its product placement not just for American audiences, but elsewhere, too, so when Ms. Reding says it is already here in Europe she is right –so why not let the Europe enjoy the financial benefits, albeit within required rules.

Her priority seems to be that there be procedures in place so viewers will know via statements, probably at the beginning of a program, that certain products were shown on the program in return for a fee.

A lot of studies out of the US show that product placement can be a very effective form of advertising but that viewers are not stupid. They understand what is going on and those placements that are done in the most professional manner usually get the best results.

While European television bosses will be very happy to get this new advertising, it seems newspaper owners are not so pleased. At that German newspaper convention where Ms Reding spoke, the publishers said they opposed TV product placement as it would result in a loss of credibility for TV and it could creep into newspapers and magazines (it does already in the US).

But to be truthful, the main reason for opposition is more fundamental than that. With the overall advertising spending pie not increasing very much over the past few years, and with advertisers already diverting funds to the Internet the last thing newspapers need is to lose even more newspaper advertising money to television product placement.

The terms for product placement in Europe need to be agreed rather quickly.  The situation in Europe today reminds one a lot of Prohibition in the US in the 1920s (alcohol sales were banned, so people got their alcohol illegally). Although the “hidden” ads are not now allowed there are scandals galore of producers in Europe allegedly accepting product placement against the rules.

UK TV regulator Ofcom, in its new Broadcast Code this summer, kept its ban on broadcasters linking sponsorship or advertising to programming and that no product could receive “undue prominence.” When Sky Television in a sports program appeared to be heavily promoting a particular pair of basketball sneakers Ofcom issued a stern warning not to do it again.

The BBC is checking into claims that a producer of a new cooking show said he would give an alcoholic drink prominence on the show in exchange for travel. It is also checking claims that media agencies were paying up to €60,000 to place products within programs. The BBC said it had clear guidelines about product placement (it’s not allowed). “We take any breach of these guidelines extremely seriously.”

In Germany, product placement scandals caused uproar in what should have been a quiet summer. Bavaria Film’s general manager and production head were fired for alleged product placement, two sports reporters at ARD channels HR and MDR were accused of taking bribes to promote products in their programming and at Studio Hamburg the production head was fired after he was placed under investigation for product placement.

All of that caused the managing directors of the 11 ARD member stations this month to adopt new strong measures prohibiting product placement.

But it is only once product placement is legally allowed within the EU that the real battle begins – who gets that product placement money? The program producers, or the broadcasting station? Stay tuned.

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