Has the Government spoken too soon about product placement?

When culture secretary Andy Burnham last week pronounced the Government was against introducing product placement, despite several years of “positive noises” from regulator Ofcom, the effect was so profound ITV’s share price dropped almost 3%.

The announcement, which marked Burnham’s first major speech on broadcasting as Department of Culture, Media and Sport secretary, shocked the industry. Burnham says his department will consult over proposals to allow product placement in TV shows, under the incoming European Union Audio-Visual Media Services (AVMS) directive, but his position is clear. He believes that product placement would “contaminate” programming.

“There is a risk that product placement exacerbates this decline in trust [in television] and contaminates our programmes,” he said. “As a viewer I don’t want to feel the script has been written by the commercial marketing director.”

Some are disappointed that Burnham refuses to draw a line under the industry’s failings over viewer trust amid a slew of controversies surrounding phone-in votes and competitions; some even suggesting paid-for product placement enhances transparency. Others are disappointed that the Government is colouring a consultation before it has begun.

Ofcom’s ‘sympathies’

“It seems pretty clear where the Government stands,” says one executive, who says that previously Ofcom had been making “positive noises” around the relaxation of product placement rules since 2005. During that time, the government’s chief of strategy Stephen Carter, was Ofcom chief executive and “sympathetic” towards product placement.

Brinsley Dresden, head of advertising law at Lewis Silkin, says Burnham’s announcement smacks of “throwing the baby out with the bathwater”. He says: “The whole point of the proposals has been that, while sacrificing the principle of the separation of editorial and advertising, it is allowing the principle of transparency, with product placements flagged up at the beginning or end of the show.”

Such a principle would allow viewers to clearly see that money has changed hands in return for having products included. Specialist agencies already place products in programming in order to give “reality” to a programme, although no money is allowed to change hands. US imports, like Desperate Housewives and American Idol, airing on UK screens are, however, already litter-ed with paid-for placements. And although Ofcom estimates that revenue from product placements would be small, around £35m in five years time, Dresden says it is independent producers that would be hardest hit by its absence.

A ‘disappointing’ choice

Meanwhile, the Incorporated Society of British Advertisers, calls Burnham’s viewpoint “disappointing”, saying this is the perfect chance to define non-spot activity such as product placement, sponsorship and ad-funded programming – the latter two of which the government invests heavily in. Both ISBA and ITV managing director of brand and commercial Rupert Howell scoff at suggestions that editorial quality will be compromised by cash.

Yet Hugh Burkitt, chief executive of the Marketing Society, takes a different view. He agrees with Burnham that advertising and editorial should be kept separate and questions whether advertisers and agencies have “overvalued” the notion of product placement.

Regardless, the hard line is expected to drive advertisers to the internet, where the AVMS rules are less clear. The directive, which replaces the Television Without Frontiers directive next year, is aimed at displacing those grey areas. Yet what constitutes “television like” services is open to considerable interpretation. Dan Smith, advertising law specialist at Wragge & Co, suggests that while amateur user-generated content, such as the majority of YouTube material, will be safe, TV catch-up and download services will fall under the directive – as could programming such as Bebo’s Kate Modern.

If so, such bite-sized, TV-like soaps would have to change their business models, which rely on big brands funding their production in return for being integral to plot.

In the meantime, advocates of product placement will hope to overturn Burnham’s hardline stance in the forthcoming consultation.

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