FCC Invites Comments on New Product Placement Regs

As the amount of money advertisers spend on product placements has increased in recent years, the FCC has begun a formal inquiry into whether product placements and other forms of embedded advertising should be more clearly labeled as such.

According to PQ Media, the FCC points out (via Consumer Affairs), the amount of money spent on television product placement increased an average of 21.5 percent per year between 1999 and 2004. Product placement grew 33.7 percent last year, for a total of $2.9 billion in television and movies. It is expected to grow 23 percent this year, to $3.6 billion.

A number of advocacy and consumer groups wrote to the FCC this month urging commissioners to regulate the practice more rigorously, especially during children’s shows.

“As these techniques become increasingly prevalent, there is a growing concern that our sponsorship identification rules might fall short of their ultimate goal: to ensure that the public is able to identify both the commercial nature of any programming, as well as its source,” said FCC chairman Kevin Martin. “I believe it is important for consumers to know when someone is trying to sell them something.”

The agency is seeking comments on whether greater disclosure is needed, and how it should be done. One possible way would be for networks to note the placement via lettering that covers 4 percent of the screen and lasts for four seconds, according to MediaPost. How that would work for programs that incorporate a product into the plotline of a show remains unclear.

Currently, product-placement disclosures tend to be listed fleetingly in the closing credits, writes the Los Angeles Times.

Data from Nielsen shows that NBC’s The Biggest Loser is tops in product placement, with 3,977 placements in Q1 2008. Fox’s American Idol comes next, with 3,291 placements, followed by NBC’s The Apprentice, with 1,646, and NBC’s Deal or No Deal (1,603).

Nielsen reported in 2007 that purchase intent during “highly enjoyable” programs increased 145 percent for product placements, 120 percent for commercial spots and 97 percent for the two combined.

NBC is aggressively in seeking product placement partners. The network recently hired product placement firm NextMedium to find partners specifically for second-year show Life (on NBC), and for the USA Network show Psych.