Product placement rules scare commercial channels

Commercial television channels which are losing viewers to on-demand ‘pay-TV’ companies fear that their revenue will be damaged by new rules on advertising being proposed by the European Parliament. MEPs are proposing strict controls on product placement, an alternative funding model for so-called free television channels, which could have a significant effect on the industry.

Product placement has been developed in the US as a way of funding television channels which have to contend with the flight of advertisers to new platforms such as the internet.

"This is a very touchy question," said Bertrand Cazes, European affairs adviser at EGTA, the association of television and radio sales houses. "Some are scared that advertisers who would normally spend on product placement will spend less." Sales houses contribute to the financing of ‘free’ television channels by selling available advertising space. "Product placement is an additional item within the sales house offers made to advertisers," said Cazes.

The European Commission’s far-reaching proposals for regulation of the broadcasting sector, the Audiovisual Media Services directive, are currently under examination in Parliament. Centre-right MEP Ruth Hieronymi, who is preparing a report on the subject for the Parliament’s culture committee, is proposing that product placement should be allowed only on sports and fiction programmes and that during transmission viewers should be warned every 20 minutes that products or brands are being advertised.

Product placement is a hidden advertising technique consisting of the inclusion of, or reference to, a product, a service or a brand within a programme. The Commission’s original proposals were in favour of allowing embedded placements in all programmes, with announcements only at the beginning and the end. The Commission was also in favour of allowing product integration, an advertising method that Hieronymi wants to ban outright, where references to products and brands are actually included in the script.

"The Commission was opening the door to advertising everywhere," said Muriel Danis, media officer at BEUC, the European consumers’ organisation. We’d like to see a total ban," she said. "We’re not against unpaid production aid where there is no undue prominence. The problem is when companies pay to have something in a programme." Production aid refers to instances where companies lend props for free.

BEUC’s stance is backed by organisations such as the Federation of Scriptwriters in Europe and the International Federation of Journalists (IFJ). Marc Gruber, the IFJ’s European director, welcomed the stricter proposals, but expressed reservations about compromises made on commercial breaks.

Parliament is now proposing that commercial breaks be allowed every 30 minutes rather than every 35 minutes as the Commission had proposed. "This means there will be two commercial breaks every hour. As journalists, news producers and [programme] creators, we don’t welcome the evolution."

Playing down the overall significance of reforms on the industry, Cazes criticised stakeholders’ tendency to make a scapegoat out of advertising issues, in particular product placement. "A lot of great principles like editorial independence are being raised when we talk about it," he said. "We think some rules are sensible, but that others are definitely not. We agree viewers must be properly informed, but is it necessary to disturb them every x number of minutes? We’d like more flexibility on how we inform viewers."

Parliament’s culture committee will vote on amendments next month (23 October). The new version of the draft framework will be voted in plenary in December.

Commercial television channels which are losing viewers to on-demand ‘pay-TV’ companies fear that their revenue will be damaged by new rules on advertising being proposed by the European Parliament. MEPs are proposing strict controls on product placement, an alternative funding model for so-called free television channels, which could have a significant effect on the industry.