From the Little Orphan Annie radio show sponsored by Ovaltine in the 1930s and 40s to the Texaco Star Theater of the late 1940s and early 1950s to this summer's second season of Pepsi Smash on The WB television network, the presence of advertisers and brand names in popular entertainment has again come full circle. This latest iteration of the branded entertainment phenomenon is penetrating every form of media. In print, marketers such as Abercrombie & Fitch are blurring the lines between catalogs and magazines. On the Internet, Sony Electronics is taking the concept of advertorials to the next level with web-based articles written by Sony and its advertising agency that appeared on such editorial sites as www.nationalgeographic.com and www.wired.com - not as advertisements, but as content. Similarly, BMW is expanding the boundaries of advertising formats on the web with the www.bmwfilms.com website, where the short films featuring BMW automobiles are the attraction, not an advertising distraction.
But nowhere has this practice become more prevalent or controversial than on television. Befitting its status as America's dominant mass media, the recent resurgence of branded entertainment in television has been hailed as an opportunity to engage consumers in a different and meaningful way by marketers and has provoked anger and complaints by media watchdogs who object to the commercialization of American culture.
At the center of the current debate over the legitimacy of branded entertainment is Commercial Alert, which has petitioned the Federal Trade Commission (FTC) and Federal Communications Commission (FCC) to initiate rulemaking to regulate product placement practices in television programming. Commercial Alert's proposal would require real-time "pop-up" notifications of any product placement arrangement in television programming. Yet this proposal would have First Amendment implications which extend far beyond the issue of notifications. It would fundamentally alter a form of communication which has traditionally been accorded the deference of core First Amendment speech.
What Is Branded Entertainment?
Branded entertainment in television, sometimes referred to as product placement, product integration or strategic entertainment, can take many forms. Its recent resurgence coincides with the rise of reality television, where a lack of scripts and a focus on "real world" situations lend themselves to the integration of products and brand names. At its most basic, branded entertainment can take the form of passive product placement, such as the prominent depiction of the Coca Cola name and marks in the program American Idol, or the American Eagle apparel that each cast member on the patriarch of reality programs, The Real World, wears. In other cases, the product is integrated into the "storyline" for the program, such as the use of the American Express card by the proprietor of The Restaurant. Sometimes, branded entertainment appears as a form of sponsorship, with marketers like Pepsi attaching their names to programs such as Pepsi Smash in much the same way Texaco did over fifty years ago. Meanwhile, other marketers are attempting to combine various of these elements, as Ford Motor Company attempted through its participation in the No Boundaries television program, which shared its title with the tagline for Ford's truck and SUV lines, and prominently featured Ford vehicles in this outdoor-themed reality program.
What Is The Fuss About?
Those, such as Commercial Alert, who oppose these various forms of branded entertainment or seek more stringent disclosures, maintain that product placement is so ubiquitous that television programs are becoming comparable to infomercials, without incorporating the sponsorship disclosures required of infomercials. Furthermore, these advocates argue, television programs not only neglect to identify their sponsors, the current product integration practices "fail to identify the ads themselves, and instead pretend that the ads are merely part of shows."1 Without adequate disclosure, these advocates argue that product placement is "an unfair and deceptive advertising practice. It is inherently deceptive, because it is often below viewers' threshold of awareness." In an effort to thwart this "affront to honesty"2 and uphold "fair dealing,"3 many who object to the prevalence of product placements are calling for regulations to require real time pop-up disclosures indicating that product placements are paid advertising. To be effective, Commercial Alert notes that the disclosures must be of a size, and remain onscreen for a length of time, such that the audience will certainly notice and understand them.
On the other side of this argument are media organizations, advertising coalitions and lawyers traditionally concerned with First Amendment issues. The Freedom to Advertise Coalition ("FAC"), which represents advertisers and media, and the Washington Legal Foundation, a public interest law and policy center, are two organizations which sharply oppose the central argument in Commercial Alert's petition. The FAC asserts that "product placement can be an essential ingredient in the story being told through a program."4 Products often become an important part of the story by communicating traits of a character or era that simply could not be demonstrated so effectively via dialogue. Advocates of this position claim Seinfeld would not have been the same without the Yoo Hoo, Bosco, Snapple, Drake's coffee cakes, and the ubiquitous boxes of brand-name cereals that occupied a permanent position on his kitchen shelf. Nondescript boxes of generic flakes and puffs would not have been quite as effective in silently communicating Seinfeld's boyish and bachelor tendencies. Similarly, Drake's, a brand not available in Hollywood, conveyed a sense of place on that program as much as the diners, subways and taxicabs in which the characters spent their time.
The views outlined by these organizations represent starkly different visions of how product placements should be viewed. Yet they represent only the beginning of a much larger debate over the scrutiny which will be applied to communications in which marketers are involved, regardless of the scope of that involvement.
What Does It Mean?
The proposal advocated by Consumer Alert would dramatically alter television programming. WLF fears the proposed rule would impair or even effectively sound the death knell for product placement on television. The large and conspicuous pop-up disclosures Commercial Alert envisions will certainly be disruptive. The FAC has called them "extreme," "impractical," and bordering on "ludicrous."5 The pop-ups may, the FAC asserts, make television "virtually impossible to watch."6 As such, networks may elect to forgo product placements altogether. However, this may have an equally detrimental effect on the quality of programming. For those who produce television programming, product placements have become a valuable offset against the rising costs of production. The loss of this offset could have a significant impact on production budgets, reducing the amount spent on programming or altering the mix and type of programming available. Moreover, networks would lose a valuable resource in keeping advertisers in the television marketplace, spending their money on the thirty second commercials that pay for the rest of the programming.
The likelihood of the Commercial Alert proposal being adopted by either the FTC or FCC is probably low. In 1992, however, the FTC denied a similar industry-wide rulemaking petition brought by the Center for the Study of Commercialism ("CSC"). In its petition, the CSC requested that the FTC require movie studios to disclose paid product placements at the beginning of each movie. In its response, the FTC stated that "[d]ue to the apparent lack of a pervasive pattern of deception and substantial consumer injury attributable to product placements É an industry-wide rulemaking is inappropriate..."7 While it declined to promulgate the proposed rule, the FTC stated it would address situations where product placement purportedly led to consumer injury on a case-by-case basis.
While it is possible that the passage of time may lead to a different result, Commercial Alert has not identified any specific consumer harm as a result of the product placement strategies that it protests. As a basis for its allegations, Commercial Alert points to numerous sources indicating the increased use and effectiveness of product placement. However, the petition does not tie product placement to any specific consumer injury, and, as WLF has pointed out, provides no reason to overturn the FTC's prior determination. Mere complaints that product placement is effective as a form of marketing does not lend support to broad, vague allegations of harm to consumers. Moreover, the method of disclosure suggested by the CSC is far less disruptive to programming than the real-time pop-up disclosures recommended by Commercial Alert.
Even lesser remedies, such as more comprehensive (though not real-time) disclosures, will likely need to demonstrate more tangible consumer harm than has been articulated to date by Consumer Alert and those who support its position.
Beyond Product Placement
The current battle over product placement disclosures is only one area in which the debate over the place of marketers in the national dialogue is taking place. There has been a growing effort to characterize any communication which has a marketer as its source as being entitled to less First Amendment protection than those originating from other sources. In addition to the product placement debate, the Nike v. Kasky8 case demonstrates that this heightened scrutiny is occurring in other media as well.
If this concept continues to take hold, it would have a potentially overwhelming effect on the entire category of branded entertainment. If the mere existence of product placements require prominent, real-time disclosures to identify them as advertisements, what is the next level of scrutiny that will be applied to these transactions? If a specific brand of automobile is featured in a car chase in a television program as a result of a product integration transaction with the automaker, would a "Closed course. Professional driver" disclosure be warranted? If that vehicle is hit with gunfire or flips over, must the program disclose any modifications to, or optional equipment in, the vehicle in the program? If the character of a situation comedy regularly consumes a specific brand of alcohol as a result of a product integration transaction with the importer or distributor, would a "responsible drinker" disclosure be required? Would that person be prohibited from getting into an automobile, since it might be inherently deceptive to show someone driving safely after consuming alcoholic beverages?
While these suggestions may seem extreme, they represent exactly the type of disclosure obligations that marketers deal with in traditional advertising. Equating television programming that includes branded entertainment with traditional commercials, as Commercial Alert appears to be doing, leads us down this path and creates a substantial chilling effect on the ability of television producers to create storylines featuring real products and brands. Even if the FTC and FCC did not expressly take such an extreme position, any extension of the current product placement disclosure requirements would likely lead broadcasters to be much more conservative and render the entire branded entertainment category unnecessarily risky and irrelevant.
Some argue that this is precisely Commercial Alert's goal. They contend that it is not disclosure but the elimination of product placements that Commercial Alert hopes will be the end result of its efforts. While this is unlikely, it is important for the media and advertising industries to understand that this debate over disclosures has potentially far reaching consequences that could forever alter the longstanding relationship between brands and entertainment.
1 Letter from Gary Ruskin, Executive Director, Commercial Alert, Re: Complaint, Request for Investigation, and Petition for Rulemaking to Establish Adequate Disclosure of Product Placement on Television, to Marlene H. Dortch, Secretary, Federal Communications Commission (Sept. 30, 2003) [hereinafter referred to as "CA Letter to FCC"]; Letter from Gary Ruskin, Executive Director, Commercial Alert, Re: Request for Investigation of Product Placement on Television and for Guidelines to Require Adequate Disclosure of TV Product Placement, to Donald Clark, Secretary, Federal Trade Commission (Sept. 30, 2003) [hereinafter referred to as "CA Letter to FTC]. Both letters are posted at www.commercialalert.org.
2 CA Letter to FCC at p.12.
3 CA Letter to FTC at p. 3.
4 Letter from Darryl Nirenberg, Counsel, and Penelope Farthing, Counsel, Freedom to Advertise Coalition, Re: Opposition to Request for Investigation of Product Placement on Television and for Guidelines to Require Adequate Disclosure of TV Product Placement, to Donald Clark, Secretary, Federal Trade Commission (Nov. 12, 2003), [hereinafter referred to as FAC's Letter to FTC]; Letter from Darryl Nirenberg, Counsel, and Penelope Farthing, Counsel, Freedom to Advertise Coalition, Re: Opposition to Petition for Rulemaking Related to Disclosure of Product Placement on Television, to Marlene H. Dortch, Secretary, Federal Communications Commission (Nov. 12, 2003). Hereinafter referred to as FAC's Letter to FCC]. Both Letters are posted at www.ana.net/news/2003/11_12_03_fac.cfm.
5 FAC's Letter to FCC at p. 2.
6 FAC's Letter to FCC at p. 5.
7 Federal Trade Commission, FTC Denies CSC's Petition to Promulgate Rule on Product Placement in Movies, Dec. 11, 1992. See www.ftc.gov/opa/predawn/F93/scs-petit5.htm.
8 Nike, Inc. v. Kasky, cert. dism'd, 123 S. Ct. 2554 (2003). At issue is whether NIKE's responses to allegations of unfair labor practices abroad in the form of press releases and other communications, is subject to the same First Amendment protections as the statements of its foes in the international labor debate, or some lesser degree of protection.
Ronald R. Urbach is Co-Chair of and James L. Johnston is an Associate in the Advertising, Marketing and Promotions Department of New York-based Davis & Gilbert LLP. Martin Garbus is a Partner in the firm's Litigation Department.