LONDON (AdAge.com) -- Struggling U.K. commercial broadcasters breathed a sigh of relief in September, when regulators officially sanctioned product placement.
But now the sigh has become one of frustration. Regulators have recently announced that junk food and alcohol are excluded from the new rules, banning many potentially lucrative placement deals with household-name brands, which are also among the most sophisticated marketers.
"It doesn't come as a surprise that product placement will be tightly regulated," said Daniel Knapp, an analyst at Screen Digest. "We can see that from the heated public debate -- on the one side, broadcasters who are desperate to stay afloat, and on the other side, consumers wary of the looming epidemic of obesity and alcoholism -- the government, as a mediator, had to find a compromise. Here it will be modest, and not as 'in your face' as it is in the U.S."
British consumers are notoriously squeamish about product placement. Brought up on the noncommercial BBC, they are convinced that brands want to sabotage their favorite shows with inappropriate and intrusive appearances that detract from the plotline and turn everything into a hard sell. They are comfortable with watching fake brands and pixelated logos if they help to keep commercialism at bay.
Even marketers aren't convinced by product placement, preferring the informal "prop placement" system currently in place. Their trade body, the Incorporated Society of British Advertisers, argues that paid-for product placement would lead to the double disadvantage of higher costs for advertisers and more complaints from the viewing public.
"Prop placement" is effectively unpaid product placement, but with the restriction that brands may not be given "undue prominence" in a show. Most of this is done through agencies, which make their money by charging fees to marketers, but aren't allowed to charge program makers for anything beyond transportation or nominal rental costs.
Mr. Knapp estimates that -- with the junk food and alcohol restrictions in place, and the diversion of funds away from advertising and into product placement -- product placement will bring in no more than $95 million a year to the U.K. commercial-TV broadcasters, which include cable and satellite channels as well as free-to-air broadcasters such as ITV and Channel 4.
ITV is disappointed at the restrictions on product placement, having hoped the off-limits unhealthy foods and alcohol would be allowed later in the evening, as TV ads for those products are. A spokeswoman said, "While we do not necessarily agree with the restrictions placed on certain categories, it is a step in the right direction, as it will deliver additional revenue for investment in original content in the U.K."
Bob Wootton, ISBA's media and advertising director, said the restrictions are an affront to the self-regulation system. "The U.K. has some of the most stringent and effective advertising regulation in the world, [it] offers consumers high levels of protection," he said. "Product placement is now a reality and will underwrite broadcasters' ability to portray real life in their programs. Quite how this new discriminatory set of disproportionate and unnecessary bands will facilitate that remains to be seen."
A European Union directive sanctioned product placement in 2008, and the U.K. government has been tussling with how to interpret the directive ever since. Denmark is now the only EU country that doesn't allow product placement or plan to do so.