Is the total prohibition on product placement no longer proportionate to the potential detriment it seeks to prevent?
Whilst we have some concerns about how far the relaxation of the prohibition on product placement should go, we do feel that a total prohibition is 'no longer proportionate to the potential detriment it seeks to prevent'.
One, if not the primary, aim of the current rule is to prohibit or restrict commercial involvement in programmes - the separation principle. But, as Ofcom acknowledges in the Consultation document, there is already advertiser or commercial involvement in programmes in the UK.
Programme sponsorship is an accepted means of part-funding programmes and, according to Ofcom's own research, the 'least disliked of today's funding mechanisms' amongst viewers.
Prop placement (as currently permitted) appears to be popular with both programme-makers and audiences (paragraph 5.5 of the Consultation document). Viewers do not know whether or not the broadcaster or programme-maker has received payment for the use of particular goods or services as props in a programme nor do we think that they care (as long as the props add to the realism of the programme). If pressed to consider the matter, we suspect that viewers assume that the broadcaster/programme-maker already receives payment for this subtle form of 'free advertising'.
Likewise, the consultation document recognises that product placement already occurs within programmes or content broadcast on UK television (i.e. it already occurs in feature films, many of which are broadcast subsequently on television and, as product placement is permitted in the USA, many imported US series already contain examples of it). But we are not aware of any evidence that UK audiences are either concerned at its inclusion or mislead by it. In our view, adult viewers have become more media literate or possibly more sceptical since the advent of multi-channel television and are more able to differentiate between editorial and commercial content. Ofcom has, of course, relaxed the rules relating to programme sponsorship recently (e.g. to permit non-promotional, editorially justified references to the sponsor within the sponsored programme) and in the process has further diluted the separation principle in relation to sponsored programmes. It presumably did so because it was satisfied that viewers no longer require this level of protection and recognising that an outright prohibition is both a clumsy and 'disproportionate' solution to the potential problem.
Specifically we believe that the perceived detriments (the risks of misleading the audience, or 'advertising by stealth', and the threat to editorial integrity) can be addressed adequately by other means (please see our replies to Questions 3, 5, 6, 7 and 8 below).
Do stakeholders agree that product placement should not be permitted in:
a) news;
b) current affairs;
c) children's programmes?
a) Yes.
b) Yes.
c) We concur that product placement should not be permitted in programmes for pre-school children and those within the primary school age group. However, we believe that there should be some flexibility as regards programmes aimed at children within the secondary school age range. If not, we anticipate problems in practice.
For example, on what basis would it be possible to distinguish between a drama series aimed specifically at secondary school age children and broadcast within a recognised children's programming slot or bloc (which presumably would not be entitled to attract product placement), a drama series aimed specifically at secondary school age children but broadcast outside a recognised children's programming slot or bloc, a drama series of general appeal but likely to attract large numbers of older children and a 'family - friendly' drama series shown in an early evening slot (which would presumably be entitled to attract product placement) especially if they all addressed the same sort of themes and contained similar material (from a taste and decency perspective)? We fear that any such distinction would be somewhat artificial and difficult to apply/police and justify in practice.
Likewise, programmes for children aimed at children eleven years old and over tend to focus on competitions/prizes, film and product reviews, fashion, sports and other topics or interests which are problematic from a product placement point-of-view. So, for example, if the rules are relaxed in relation to (general) sports programmes, then it could become difficult to acquire footage from sports programmes for inclusion in children's programmes if the rules are different for the two genres (for your information, S4C broadcasts various children's sports programmes currently which rely on content and specifically footage from (general) sports programmes, e.g. a rugby skills programme which incorporates clips and footage taken from S4C's general rugby coverage as well as a children's sports series, 'Stamina', which introduces older children to different sports and which utilises bought-in clips from other (general access) sports programmes and channels).
Do stakeholders consider that if product placement was introduced, a phased approach should be adopted that, in the short term at least, prohibited product placement from use in:
a) factual programmes;
b) drama;
c) any additional genres?
a) No. Factual programmes are a broad category comprising factual entertainment programmes as well as documentary and current affairs programmes. We see no reason why factual entertainment programmes and especially lifestyle and/or 'how to..' (as opposed to 'what to buy') programmes should not contain product placement under appropriate conditions. There is no prohibition at present on factual (entertainment) programmes being sponsored and, in so far as these programmes can be sponsored, we see no reason why they should be precluded from product placement. These are programmes which routinely attract prop placement and accordingly broadcasters and the makers of these programmes are well versed in ensuring that the use of any products or services within such programmes are justified editorially and do not amount to undue prominence. Please see our comments below.
b) No. We are very surprised that Ofcom is proposing that product placement should be phased in for drama programmes in the light of Ofcom's own research (see paragraph 5.5 of the consultation document) which suggests that drama is one of the genres where it is most likely to be accepted and expected by viewers. Furthermore, this consultation has been instigated in part because of Ofcom's recognition that commercial broadcasters' key sources of funding are facing increasing pressures. Drama as a high cost genre would probably benefit more (proportionately) from a relaxation in the rules on product placement than any other genre.
Again, we see no reason why the relaxation of the prohibition on product placement in dramas should not take place from the outset (i.e. at the same time as the rules are relaxed for other genres) as long as appropriate constraints are in place. Drama is another genre where prop placement occurs regularly and without misleading the viewers or antagonising them. In relation to both factual programmes and dramas, we would suggest that product placement could be permitted in relation to both genres by a further small relaxation in or extension to the rule on prop placement (only) i.e. that goods or services could be referred to or included in programmes and not only could they be acquired at no or less than full cost but also that the broadcaster should be entitled to receive payment for their inclusion provided (1) their inclusion within the programme was justified editorially and (2) the goods or services did not receive undue prominence (i.e. in the words of paragraph 5.11 of the Consultation document: where the inclusion of the goods or services 'enhances the realism of the programme, is relevant and is not too prominent').
c) As indicated above, we consider that it is appropriate for Ofcom to retain the prohibition on product placement in relation to those genres or categories of programming which are precluded currently from being sponsored but, thereafter, in relation to all other genres or categories of programming, the decision whether or not to allow product placement within particular programmes should be a matter for the relevant broadcaster to determine. So, for example, in S4C's case, because of the nature of our services and in particular the composition of our likely and target audiences, we are unlikely to sanction or permit any form of product placement within our religious programming at least in the short term. But this should be a matter for each broadcaster to decide in its own discretion (taking into account whether or not product placement is likely to prove acceptable to its audience or not) rather than a matter upon which Ofcom needs or ought to 'legislate'.
If product placement were permitted in these genres at the outset how feasible do stakeholders believe it would be for Ofcom to re-impose restrictions on these genres at a future date? Although, in theory, there is no reason why Ofcom should not be able to re-impose restrictions in relation to these genres at a later date if the relaxation of the rule proves more problematic than envisaged, we suspect that in practice it would prove very difficult to 'turn back the clock'.
For example, dramas often have lengthy gestation periods and it may take some time before material shot at the beginning of the production process reaches the screen. It would be unfortunate and unfair if material shot at a time when product placement was permitted could not be broadcast subsequently because of a reversal in the rules.
Likewise, it would be unfair on broadcasters if programmes (especially expensive programmes such as dramas) which were produced and first broadcast at a time when product placement was allowed could not be repeated because of the re-imposition of the prohibition in relation to these genres. It might be possible to edit out the product placement with certain programmes (without impairing the relevant programme significantly) but this would not always be the case and thus, as a bare minimum, a transitional 'amnesty' would be required.
Furthermore, the uncertainty generated by the possibility that the prohibition on product placement could be re-introduced at a later (presumably unknown) date would seriously undermine all attempts to attract additional funding by means of product placement in relation to these genres.
It is also likely that it will be very difficult to rein back advertisers should the prohibition be re-introduced once they've got used to placing their products within these programmes.
Finally, any attempt to re-impose the restrictions at a later date would oblige Ofcom to 'swim against the tide' - not only would Ofcom have to renege on its stated objective of seeking to deregulate wherever possible but it would also be a backward step in seeking to find a mutually-acceptable solution to the problem of a drop in the income of commercially-funded channels. Nevertheless, we don't think that it is necessary to contemplate this scenario, as a relaxation of the prohibition in relation to these genres is, in our view, appropriate and timely and the risks or perceived detriments of relaxing the rule can be avoided or mitigated by the imposition of appropriate controls or constraints.
Do stakeholders agree with Ofcom's provisional view that the use of product placement in programmes should be:
a) clearly identified; and
b) clearly identified at the start of any programme in which it is contained?
a) Yes. We accept the argument that a deviation from (or dilution of) the long-held 'separation principle' will lead to a reliance instead on transparency to inform audiences about the nature of advertisers' involvement in programming. In fact, this insistence on transparency could be of benefit to broadcasters commercially: clearly identifying the placement will provide the advertiser with greater prominence/promotion, which is more likely to attract advertisers rather than deter them. The downside, however, is that by making the association so transparent, advertisers may be drawn away from traditional spot advertising to product placements deals (especially in an era of p.v.r's and increased competition), to the ultimate detriment of the broadcasters.
b) No. We await Ofcom's proposals as to what form such notification of the presence of product placement should take (and in particular how such notification or identification at the beginning of the programme will interact with any sponsorship credit at the beginning of the same programme) but, pending the same, we would prefer for the identification of product placement to be included in the end credits. We fear that an obligation to clearly identify the placement especially at the beginning of the programme is likely to deter potential sponsors who currently enjoy exclusive associations with popular programmes or strands. In addition, we are concerned that identifying the presence of product placement at the beginning of the programme would draw too much attention to it (especially if we followed the (tacky) American model: 'This show was brought to you by...') and consequently that it would detract from the viewing experience. Rules or guidance will be required as to when and how such identification of a placement should take place. Will there, for example, be a cap or restriction on the number of advertisers who can be mentioned or will only placements above a certain value deserve identification?
In many instances, the product placement may occur well in to the programme (e.g. a lengthy single drama). Similarily, in the case of a magazine-type programme, identification may be more appropriate at or close to the time of the actual product placement (e.g. the commercial break immediately preceding the placement). Provided that the placement is identified clearly, would it not be better to leave it to the broadcaster/programme-maker to decide from an editorial point of view when and where best to identify the placement? As mentioned above, we would be happy for the relaxation of the prohibition on product placement to take the form of a further extension to the rule relating to prop placement (i.e. that broadcasters could receive payment for including or referring to goods or services in their programmes but that the goods or services could only be included if justified editorially and provided there was no undue prominence). In the case of prop placement, the identification occurs by crediting the relevant supplier(s) in the list of closing credits. Provided that the same conditions are met (i.e. editorial justification and no undue prominence), then the rules should be consistent and the same form of identification should apply to both (i.e. a closing credit).
Can the current concept of undue prominence be retained in a regulatory environment that permits product placement?
The current definition of 'undue prominence' essentially consists of two limbs: the requirement for editorial justification and the restriction that any representation or reference to goods or services should not be promotional whether intentional or not. In our view, the requirement for editorial justification should be retained (to avoid the 'clumsy or heavy-handed integration of products and services' into programmes thereby alienating audiences as mentioned in Section 6.27 of the Consultation document).
We also believe that a restriction similar to the second limb of the current definition should be retained in relation to product placement, albeit that (i) the rule should be a less stringent version of it for cases of product placement (e.g. one which prohibits unduly or overtly promotional placements) and (ii) the 'threshold' or test of what constitutes unduly prominent in relation to product placement should vary from genre to genre (e.g. the obligation for the placement to be realistic, relevant and not too prominent should be greater for a drama than a magazine or review programme).
a) Is it sufficient to rely on the editorial responsibility of broadcasters to regulate the potential excesses of product placement?
No. Although we are confident that the PSB channels can be relied on to avoid the potential excesses of product placement, we are not so confident that the same applies to all multi-channel services. Furthermore, even in the case of PSB channels and despite their best intentions, it is foreseeable that advertisers will exert considerable (financial) pressure on broadcasters 'to push the boundaries' as much as possible. In order to assist broadcasters to withstand this pressure, we would welcome the 'back-up' of appropriate regulatory constraints.
In addition, of course, no broadcaster produces all its required programming in-house any longer and certain broadcasters, such as S4C, produce very little of their programmes internally. Until such time as the thorny issue of who gets to make product placement deals and the other commercial arrangements have been resolved, it is possible that individual production companies in the absence of published regulatory constraints could enter into excessive or unacceptable product placement deals unbeknown to the broadcaster and which might not come to light until too late. We would accordingly welcome a code or extended guidance within the general broadcast code on this topic.
On the other hand, we would favour 'light touch regulation' in this area. We commend Ofcom's revision of the rules on broadcast sponsorship as a good example to follow in this context: the revised rules offer sufficient regulation to provide both broadcasters and advertisers with a degree of certainty as to what is acceptable and what is not but without being overly prescriptive. They provide a framework in which commercial deals can be structured. It is acknowledged in the Consultation document that now is an appropriate time to consider product placement in view of the pressures on advertiser-funded channels. This being the case, light touch regulation is imperative for product placement to become a meaningful tool to enable broadcasters to secure an alternative source of revenue.
b) Do stakeholders believe that Ofcom should initially at least, apply regulatory constraints to the way in which product placement appears in programmes e.g. prohibiting scripted references to attributes of products, limiting the length of time products, logos, brand names etc can appear?
Obviously, from a commercial perspective, the fewer constraints the better for maximising potential revenue. Nevertheless, we do believe appropriate regulatory constraints should apply at least initially (although what those constraints should be requires further consideration). We agree with the exclusion of scripted references to attributes of products but are not convinced that a set time limit on the display of products, logos, brand names etc would be the most appropriate method of curbing any potential excesses. A revised concept or definition of undue prominence (as indicated above) might be a more flexible tool. Certainly we believe that the constraints would need to be tailored to or make allowances for the different genres, i.e. what is acceptable in a magazine or music or sports programme should be different to that which is acceptable in a drama. Such 'regulatory constraints' could also deal with related issues, such as whether an advertiser could have product placement within a programme which it is also sponsoring.
Should 'calls to action' be permitted around placed products or services e.g'red button' interactivity;' buy now' exhortations from presenters?
No. We feel strongly that 'calls to action' should not be permitted within programmes themselves as to do so would damage the editorial integrity of the programmes. Likewise, we favour retaining the prohibition on presenters from making 'buy now' exhortations on all channels other than on specific shopping channels, as permitting the same would also diminish the independence and integrity of presenters.
We do not object, however, to the use of 'red button' interactivity for this purpose as long as any such 'call or action' was at least two 'clicks' away from the programme (i.e.that the initial banner appearing in the programme should only be allowed to invite viewers to obtain further (non-commercial) information about the programme or its contents but, having 'clicked' on such banner and exercised the option to obtain such further information, the viewer could be presented with a further option to find out more about the products or services placed in the programme and even with 'calls to action' at this stage).
Multi-channel homes are, of course, already familiar with shopping and bidding type channels, gambling channels and pay per view services, all encouraging 'red button' interactivity (and the expenditure of money) by viewers within their programmes.
Do stakeholders agree with Ofcom's provisional view that:
a) products and services prohibited from advertising cannot be placed in programmes?
b) Only products and services that would be permitted to be advertised in breaks around a particular programme may be placed in the programme?
Yes
Are there additional products not currently prohibited for advertising that should be excluded from use in product placement e.g. over the counter medicines?
We cannot think of any but trust that Ofcom would concur that broadcasters should retain the discretion to refuse to 'place' any goods or services which the broadcaster regards as inappropriate or unacceptable in the context of the relevant programme.
Are there other provisions of the Advertising Codes that should be extended to product placement e.g. creative treatments, substantiation of claims?
It is difficult to answer this question without clear guidance as to what form of product placement will or may be permitted. In so far as the rule permitting product placement takes the form of an extension to the rule permitting prop placement, then we do not think that the other provisions of the Advertising Code should be necessary (especially as they do not apply currently to prop placement). We believe that the other rules in Ofcom's Broadcast Code (e.g. the rules on fairness which should prevent broadcasters from broadcasting misleading or unsubstantiated claims, and the rules in Sections One and Two on dangerous behaviour (and specifically paragraph 2.4 which prohibits material "which condones or glamorises dangerous behaviour which is likely to encourage others to copy such behaviour")) provide adequate protection in this regard. If, however, a more radical form of product placement is permitted (e.g. if the rule on undue prominence is waived completely and/or 'calls to action' are permitted), then we could accept that the provisions of the Advertising Code should apply.
Is the market best placed to determine the commercial parameters that should govern product placement negotiations?
Should product placement ever be permitted in the UK (and we acknowledge that ultimately this is a decision for the EU rather than Ofcom), then we are confident that the market would quickly set the parameters for the commercial arrangements between advertisers seeking to promote their goods or services through product placement on the one hand and those representing the programmes (see below) on the other. We do not anticipate that there should be any need for Ofcom to intervene in such commercial arrangements in the same way that Ofcom has no role in setting the commercial parameters for broadcast sponsorship deals or airtime sales.
However, the question of who gets to 'represent the programme' in such negotiations (i.e. who makes the deals and/or who approves them) is the key issue for us. We anticipate that it will prove to be a major bone of contention amongst the potential beneficiaries.
Independent production companies producing programmes for broadcasters under the recently adopted Codes of Practice will have a legitimate expectation that, as the owners of the programmes and the persons directly responsible for determining and producing the content of the programmes, that they should be the parties making the deals and benefitting from them. Likewise, contributors to the programmes (and particularly the script writers or editors who write in or accommodate the product placements within the programmes) will no doubt expect to reap some benefit from such arrangements.
On the other hand, for both regulatory and commercial reasons, the broadcasters must drive or at least manage the arrangements. We assume that the broadcasters will remain responsible both legally and from a broadcast compliance perspective for the content of its programming and thus will need to approve (even if they do not make) all such arrangements.
Ultimately product placement will only prove a viable and additional source of income to the extent that it does not cut across other income streams. Broadcasters will therefore need to be involved in the negotiations for the product placement to ensure that they do not conflict or interfere with other commercial arrangements, e.g. that the proposed product placement does not relate to a product which competes with the products of the proposed broadcast sponsor or those of an advertiser who has bought airtime specifically around the programme.
In the circumstances, we foresee that some kind of deal or compromise is going to have to be forged between these three key categories of contributors to the programmes, e.g. some kind of profit share. A different deal or arrangement could be negotiated for each product placement to reflect the respective bargaining positions of the broadcaster, the producer and the contributors in that individual case but this is likely to prove impractical and time consuming and, in practice, we suspect that this will have to be a matter for collective negotiation.
In the first place, the parties should be left to discuss and negotiate the issue through their usual channels. Nonetheless, in the light of the current impasse between the broadcasters and the producers over New Media Rights, we suspect that Ofcom may have to intervene or at least threaten to intervene to force a resolution if the parties are unable to agree a mutually satisfactory arrangement within a reasonable period of time.
Should any deregulation of product placement apply as appropriate to radio broadcasting?
No comment.
We suspect that the responses of the various broadcasters and their attitudes to the possible relaxation of the current prohibition on product placement will vary depending on various factors including to what extent they produce their own programming and how they are principally funded. S4C, as a broadcaster which is largely publically funded and as a broadcaster which commissions (as opposed to produces) nearly all of its own programming, has an ambivalent attitude: as we are not solely or principally dependant upon commercial income, our principal concern is protecting and maintaining the editorial independence and integrity of our programmes. We also fear that, should the rule be relaxed in the current broadcast environment, that independent producers could seize on this opportunity and strike product placement deals which are either or both unacceptable from a compliance perspective and/or which undermine other commercial arrangements made on our behalf.
At the same time, we cautiously welcome the consultation and the possibility that the current prohibition might in future be relaxed. If so, it may offer us an alternative tool or means of attracting commercial income which hopefully will supplement and complement the existing revenue streams, airtime sales and broadcast sponsorship deals. In fact, we would hope that product placement may provide a means of raising commercial income in relation to those programmes which for whatever reason have failed to attract a sponsor.
The concern, however, is that product placement will not attract additional advertiser spend but at best re-distribute it (away from spot advertising or broadcast sponsorship possibly to the detriment of broadcasters) or at worst reduce the broadcasters' share of it (especially if product placement deals are allowed to undermine broadcast sponsorship or airtime sales).
Finally, we note that 'BBC channels will not be affected by the outcome of this consultation' and that the BBC provides television services which are 'free of advertiser, sponsorship or any other commercial involvement' (viewers of certain BBC programmes might be surprised at and challenge the latter assertion). The BBC provides S4C with a significant proportion of its programming and, in the interests of consistency across our channels, we would expect those programmes to conform to the same rules and guidelines as the remainder of our programming. We trust that any revised guidelines or code issued in the event of the rule being relaxed would make the necessary distinction between BBC programmes on BBC channels and BBC programmes on other (non-BBC) channels.
February 2006
