What Does Product Placement Advertising Law Must Comply?

pizza hut product placement advertising

Most people are aware of product placement advertising law when it appears on some TV shows, movies, or Youtube videos. It could be just a 2-second scene that you may think putting all the scenes together is no big deal. But the truth is, that blink-of-an-eye moment has to go through a long procedure so that they comply with the regulations assigned by the FTC (Federal Trade Commission). 

Have you ever wondered what kind of restrictions those need to oblige? In this post, we’ll guide you through the regulations of product placement advertising on online platforms.

What is product placement advertising?

what is product placement advertising?

Product placement is a type of marketing in which brands pay content creators to place their product on the set of a film, television show, or music video. Product placement advertising is classified into three types: screen placement, script placement, and plot placement.

Product placement advertising is not a new concept. In fact, it has been used since the 1990s, and the results are undeniable. Sometimes intentionally (for commercial gain), and sometimes unintentionally (for characterization purpose). Typically, the audience will not be informed of the purpose of the product placement advertising.

Psychological factors are one of the main reasons why multiple brands use product placement. First, people instinctively want to avoid commercials because they are annoyingly selling. When advertising is integrated into a scene, it becomes natural and unobtrusive. Sometimes, if the scriptwriter cleverly incorporates the product into the scene, the influence is much stronger.

Furthermore, you can’t exactly skip the commercial when it’s in a movie. So, whether you like it or not, you have to watch the entire commercial.

What is the product placement advertising law today?

Prior to the AVMS Directive amendment, the principle was that product placement was prohibited on all audiovisual media services when broadcast – except in a very limited number of cases. The amended AVMS Directive reversed the principle and exceptions, allowing product placement for all audiovisual media services in all circumstances. Indeed, the amended AVMS Directive states in its recitals that the previous general prohibition did not provide legal certainty for media service providers.

It is important to recognize the significance of this new principle because the revised AVMS directive has a very broad scope and applies to any social networks, video sharing platforms, or live-streaming services that are considered to be audiovisual media services in any case.

What are the requirements for lawful product placement?

subway product placement advertising

Product placement programs must meet the following three formal conditions, which are enforced by each Member State’s television and radio regulatory body:

  1. Their content and organization within a schedule, in the case of television broadcasting, or within a catalog, in the case of on-demand audiovisual media services, shall not be influenced in such a way as to affect the media service provider’s responsibility and editorial independence;
  2. They shall not directly encourage the purchase or rental of goods or services, particularly by making specific promotional references to those goods or services;

Furthermore, Member States must ensure that product placement in the context of audiovisual commercial communications provided by media service providers meets the following criteria:

  • Product placement is RECOGNISABLE AS SUCH.

In other words, the viewer must be made aware of the presence of product placement through appropriate identification at the beginning and end of the program.

However, the amended AVMS directive does not identify any specific means of ensuring compliance with this principle – unlike product placement on television, where the pictogram “P” is supposed to inform viewers of the existence of product placement for one minute at the start of a program and after each advertising break, as well as during the end credits.

In the case of YouTube, one of the most popular social media platforms for product placements, a content declaration mechanism exists that invites the user to fill out information to identify the audiovisual commercial communication nature of the video in question. Once filled out, this declaration is supposed to cause a notice to appear on top of the video.

  • Product placement does NOT USE SUBLIMINAL TECHNIQUES.

To put it another way, product placement should be considered illegal advertising if it does not provide adequate information.

In the case of television, in the event of unauthorized advertising, the editor in question is subject to formal notices from the CSA to comply with the regulations and, if necessary, financial penalties.

Sanctions can sometimes include the suspension of a program.

  • Product placement does not:
  1. Discrimination based on sex, racial or ethnic origin, nationality, religion or belief, disability, age, or sexual orientation;
  2. Encourage behavior that is harmful to one’s health or safety;
  3. Encourage behavior that is detrimental to environmental protection.

In particular, product placement shall not cause physical, mental or moral harm to minor consumers. To this end, it should not:

  1. Directly encourage minors to buy or rent a product or service by taking advantage of their inexperience or trustworthiness;
  2. Directly encouraging minors to persuade their parents or others to purchase the advertised goods or services;
  3. Take advantage of the special trust that minors have in their parents, teachers, or others.
  4. Place minors in perilous situations for no apparent reason.

Ongoing Restrictions around Product Placement

Prohibitions related to the programme in question

There are four exceptions to the principle of product placement in view of the programme in question:

  1. News and current affairs programmes ;
  2. Consumer programmes,
  3. Religious programmes ;
  4. Children’s programmes – as children are generally unable to recognise commercial content.

Prohibitions related to the products involved

Some products are not eligible for product placement, per-se, namely:

  • Cigarettes and other tobacco products, as well as electronic cigarettes and refill bottles, or product placement from companies whose primary activity is the manufacture or sale of these products;
  • Specific medicinal products or medical treatments available only on prescription in the Member State in which the media service provider is located.

Conclusion

Whether you’re a marketer or a brand manager, it’s crucial that you know how product placement advertising is regulated to stay compliant. Ignorance is not bliss when it comes to advertising law; make sure you familiarize yourself with the relevant rules so your business can stay out of trouble. 

FAQs

Is there any product placement policy at the FCC? Is it mandatory for program producers and broadcasters to disclose placement deals to viewers? The straightforward answer is yes. Product placement is considered “embedded advertising” by the FCC and is subject to the FCC’s “sponsorship identification” rule.

Because the FCC’s rules do not apply to movies and the FTC does not require disclosure, product placement in films can occur without any indication that an advertiser paid for the product to appear.

If the product does not fit the context or is forced on the viewer, product placement is not an ethical way of advertising. In the worst-case scenario, it would be so-called false advertising, which is when an advertisement is hidden within a TV show and the consumer is unaware of it.

When viewers see a specific brand or product used throughout a television show or film, they subconsciously notice the brand and are more likely to purchase that product. From an advertising standpoint, product placement is a manipulative tool that increases sales.

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