EUROPEAN REGULATORS RETHINK PRODUCT PLACEMENT RULES

Broadcasters Expect Freer Reign for Brand Integration

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NEW YORK -- The British version of Mark Burnett’s The Apprentice proved a ratings hit for BBC2. But there was one thing missing: the brands.

While a rival network broadcast NBC’s brand-filled version, European laws have long prevented producers from placing products in local programming.
When 'The Apprentice' ran in the U.K., the integrated brands were stripped out of the shows.

It’s a situation that has not only placed strict limits on companies across the continent, but also on producers like Mr. Burnett who have been eagerly eying the region to sell their brand-backed shows.

That may soon change.

Freer reign expected

The European Commission looks likely to give both broadcasters and marketers a freer reign when it comes to product placement.

The European commissioner responsible for information, society and media, Viviane Reding, won’t make any public comment on the subject, though she is currently in the midst of reviewing changes to the Television Without Frontiers directive that governs TV on the continent.

While Ms. Reding’s office in Brussels told Madison & Vine she would not talk about the issue until after November, she did give a speech in Liverpool, England, last month hinting at her views.

In the speech Ms. Reding said: “I am determined to find the best possible, future-proof balance between a light burden on industry, in order to boost Europe’s competitiveness and to encourage successful cross-border services on the one hand, and on the other hand the pursuit of undisputed public policy objectives.”

She continued: “Let me be clear: I am convinced that nascent markets and services should have the biggest possible freedom to develop. That is why, for example, I have convinced the national telecom regulators in the EU to have a 'light touch' approach on voice over IP [Internet protocol]. This 'light touch' should also be the rule for new audiovisual content services. And it works: See how these issues are being dealt with here in the U.K., with the Association on Television on-demand entrusted with the duty to self-regulate video-on-demand services.”

Alan Gould, CEO IAG Research which tracks product integrations in the United States, said: “In terms of program integrations I think the changes will be slow and tested. Just as advertising sensibilities are different in every market, so are the sensibilities over how brands get integrated into shows. The push behind branded entertainment will come from the marketers. They’re having the same problems reaching consumers in other countries as they do here as new technologies expand.”

'Surreptitious advertising'

Under the Television Without Frontiers rules, product placement is not outright banned, but “surreptitious advertising” -- placements that mislead the public about its nature.

The move could be a major breakthrough for marketers looking to do global deals with producers such as Mark Burnett Productions or Reveille, whose shows are currently formatted for other countries -- often without the appearance of brands in them.

In the U.K. version of The Apprentice, producers had to be careful about product placement. For instance, the inclusion of Harrods, a department store, was allowed since it is viewed as a British institution.

Changes in the product placement rules could allow TV show producers to broker worldwide deals with global marketers -- such as Unilever and Procter & Gamble Co. -- instead of one-off country-by-country pacts.

”It will be a huge breakthrough for marketers and entrepreneurial producers,” said Ben Silverman, CEO of Reveille (The Biggest Loser, The Restaurant).

Sticker shock

One potential drawback: sticker shock. With multiple territories and more viewers on the negotiating table, marketers would likely have to pony up millions more than they’re already used to in integration fees. That could limit integrations in high-profile shows to only advertisers with the biggest budgets.

Already Mark Burnett Productions has sold local versions of its hit show The Apprentice in Germany, the U.K. and Italy, among other territories. The company has already discussed the possibility of cross-border deals with marketers it would not name.

The news that the E.U. might be ready to allow a freer interpretation of the laws governing product placement comes as U.K. regulators are also looking at rule changes.

Charles Allen, CEO of ITV, the main commercial channel in the U.K., spoke at the same conference as Ms. Reding and said: “Of course, there are legitimate concerns about the preservation of editorial quality and integrity once you let commercial brands inside programs. But U.S. shows like 24, Desperate Housewives and Lost have demonstrated, through their successful links with brands such as Ford and Sears, that there is a place for sensible and well thought-through product placement in the commercial TV marketplace.

Product placement disclosure

“The directive could therefore clearly be read by a Member State as allowing a broadcaster to accept financing in exchange for product placement so long as the viewer was aware this was happening, i.e., this was acknowledged in the program's credits. The case for this reading of the legislation would also appear to be strengthened by the fact that the European Commission in its April 2004 Interpretative Communication explicitly adopted the principle of 'in dubio pro libertate' ['All that is not prohibited is permitted'] as its starting point interpreting the directive.”

Mr. Allen cited Austria as a country that has taken the most liberal approach to product placement by both its public and private broadcasters. Spain and Italy also have relaxed policies about brands in programming. Mr. Allen indicated recently that he believed Ms. Reding was ready to loosen regulations regarding product placement.

U.K. TV regulator Ofcom is to review product placement before the end of the year.

It issued a statement to the U.K. press stating, "Editorial justification [for the inclusion of a brand in a program] will depend on the nature of the program and there may be certain types of program -- sports and music coverage -- where there is a general acceptance that brands will feature. … The way in which a brand is presented or referred to in a program should not be the subject of negotiation or agreement with any supplier."

The British regulator clarified the U.K. rules governing product placement after the BBC was accused of taking money in return for placements. The U.K. Sunday Times reported in late September that a company had paid to have their products featured on screen. The regulator said brands had to be justified editorially and that “the supplier should have no say in the way their product is presented on screen.”
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