End of Ban Opens Estimated $50 Million Annual Market

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The deal: With the power of 30-second ads in Europe dwindling, marketers are pushing for the lifting of tight restrictions on product placements as an alternative.

The result: The European Commission and Ofcom have recently declared in favor of a change to the restrictions, potentially opening up the market for product placement as early as April.

LONDON -- U.K. marketers are gearing up for a relaxation of rules on product placement and branded entertainment after Ofcom, a U.K. media watchdog, backed the European Commission’s proposal to open up the market.
British marketers are hoping for revised rules that would allow for product placement and branded entertainment.

Product placement in the U.K. is limited by a rule that branded products must not receive “undue prominence” in a program and that no financial transaction can take place. The EC and Ofcom have both recently declared in favor of a change to the restrictions.

The EC is currently revising its “Television Without Frontiers” directive and a draft revision, published in December, supported a more lenient view on product placement. When the revised directive is published -- probably in April -- the whole continent will be opened up to product placement.

'Cautious approach'

An Ofcom spokesman said, “Our mind is not completely made up but in light of the evidence of our own research we support a cautious approach to the introduction of product placement.” Ofcom is still consulting viewers and the industry, and looking at how any new rules should be implemented.

A recent paper issued by Ofcom stated, “In both principle and practice, Ofcom believes that a cautious approach to the introduction of product placement to the funding mix of U.K. commercial television has merit.”

Ofcom has estimated that the British market could be worth up to $50 million within five years. Observers expect the rules to change by April this year but the publicly funded BBC will not be affected by the outcome.

Sally Weaver, planning partner at WCRS’ Element -- a joint venture with Naked -- said, “We are having deeper and deeper conversations with clients including BMW, but the rules are still too strict to take it further at the moment.”

30-second TV spot challenged

Ofcom acknowledged that PVRs and audience fragmentation has challenged the traditional 30-second TV spot, making it important to explore alternative revenue streams for the future funding of programming.

The EC's paper includes a proposal to ditch the ban on “surreptitious advertising” that has -- without banning it outright -- limited product placement on European TV.

Austria, Czech Republic, Spain and Italy already have more relaxed rules than other European countries, and Ofcom is keen for the U.K. to catch up ahead of the proposed changes.

Steve Read, managing director of product placement specialist 1st Place, which has been in business for 15 years and works closely with OMD Fuse on clients including Volkswagen, said, “I don’t think we will go as far in the U.K. as in the U.S., but once the first couple of big money deals have happened it will be a case of ‘form an orderly queue.'”

Banned from children's shows

Ofcom suggests that product placement could be allowed as long as an announcement was made at the start of the program. It would be banned from children’s shows, news bulletins and documentaries. Tobacco and prescription drugs would not be allowed.

U.K. consumers are traditionally hostile toward product placement, but Ofcom’s research found that “product placement was generally well-received when it enhances the realism of a program, is relevant and is not too prominent.”
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