Ad Groups Want to Block FCC Rule-Making on Product Placement

Say Agency Should Make Inquiry Instead of Taking Regulatory Action

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WASHINGTON ( -- Advertising groups are making a last-minute bid to head off the Federal Communications Commission's launch of a formal rule-making on TV product placement.

With the FCC vote due tomorrow, executives of the American Association of Advertising Agencies, the American Advertising Federation and the Association of National Advertisers are arguing in a letter to the commissioners that the "rule-making" should be downgraded to an "inquiry" because there is little evidence that product placement is either harmful or misleading. An inquiry, the groups said, would allow the FCC to examine the issue impartially.

"Initiation of this proceeding by rule-making rather than as an inquiry suggests a presumption by the commission that regulatory action is necessary," said the letter. "In a matter of this importance, we believe that the commission should not presume its conclusion in advance of the necessary fact-finding."

Absence of evidence
The groups said the Federal Trade Commission has declined to launch a similar rule-making, in the absence of evidence that product placement is unfair, deceptive or resulted in consumer harm.

FCC Chairman Kevin J. Martin announced plans for the inquiry in the wake of petitions from Commercial Alert, a consumer group, and pleas from U.S. Reps. Henry Waxman, D-Calif., and Ed Markey, D-Mass. The congressmen said product placement is increasingly "blurring" the lines between content and advertising, leaving viewers without any certainty on whether they are seeing commercial messages. Mr. Waxman heads the House Oversight & Government Reform Committee and Mr. Markey heads the House Energy & Commerce Committee's telecom committee.

Mr. Martin suggested, at a hearing in Chicago, that digital video recorders may be prompting networks to look at embedding more subtle and sophisticated ad messages in content and questioned whether current FCC rules offer adequate disclosure. Commissioner Jonathan Adelstein also has questioned the growing level of product placement.

The product-placement proposal is part of a longer FCC agenda expected to be considered tomorrow. The FCC is due to consider a major change in media-ownership rules that would allow for newspaper-broadcast cross-ownership in a market and a proposal to make it easier for minorities and women to buy broadcast stations and bar discrimination against minority stations.
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