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Blasting Away at Product Placement

Nothing infuriates Corie Wright more than when a TV network and advertiser try to sneak a product pitch past viewers. Case in point: Elisa and Jack of 30 Rock fame discussing whether McDonald's (MCD) McFlurry is the best dessert in the world. "It's egregious and deceptive," says Wright, a lawyer and policy adviser for Free Press, a nonprofit activist group. "Product placements don't allow us to have the usual veil of skepticism we have when we watch a standard commercial."

Free Press is among a coalition of 50 groups waging war on product placements. The critics, who range from consumer advocates to pediatricians seeking to protect kids from sugary cereal, are calling on the Federal Communications Commission to implement tougher disclosure rules for what many activists consider stealth advertising.

Product placements are nearly as old as TV itself, but they have become ubiquitous in recent years—especially as recession-hit advertisers scramble for a cost-effective way to reach consumers. In the first half of this year, product placements in prime time rose 8% from the same period in 2008, says ratings tracker Nielsen. Fox's (NWS) American Idol alone had 580 product placements.

Other than rules that restrict how much advertising networks can put in kids' programming in a given hour, the FCC has few regs for product placements. Last year the commission, under pressure from Congress, asked for comments from the public on how it might regulate placements, but little has been done since. A spokeswoman for FCC Chairman Julius Genachowski says his first priority is implementing a national broadband policy and that product placement is on the "back burner for now."

RED LIGHTS ON SCREENS?That is not deterring protesters, who are meticulously tracking product placements as the fall TV season gets under way. They are troubled not just by products that appear in shows but also by so-called integrations, when products are actually written into plotlines. On CBS's (CBS) The Big Bang Theory, for example, Sheldon informs Penny that he needs access to the Cheesecake Factory's (CAKE) walk-in freezer.

Critics want the FCC to require networks to disclose placements. Their proposals range from forcing programmers to run text along the bottom of the screen when a product appears in a given scene to a flashing red light on the screen alerting viewers that an advertiser is pushing something. None of this sits well with TV programmers. "Seriously, what viewer is going to stand for that?" says a network executive, who, like many of his peers, was loath to speak on the record.

Advertisers aren't thrilled, either. Tony Pace, Subway's chief marketing officer, opposes disclosures, except at the end of a program. In shows such as Chuck and The Biggest Loser, Subway staffers collaborate with the producers to work the brand into the plot. In one Biggest Loser episode, the dieting contestants hiked from one Subway to another to get a meal as part of the contest rules. "We'd rather seem like a natural part of the show," says Pace, "rather than punch the viewer in the nose with a message like, 'Hey, this is paid for.'"

Clearly, the FCC's Genachowski faces a delicate balancing act: protecting the public on the one hand without undermining the already precarious economics of television.
Helm is marketing editor for BusinessWeek in New York.
Lowry is a senior writer for BusinessWeek in New York.

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