FTC May Change Rules for Product Placements

by lisa ~ November 2, 2009

Nov. 2, 2009 - Beginning Dec. 1, the Federal Trade Commission (FTC) will require bloggers to provide “clear and conspicuous” disclosures when they receive payment for endorsing products online. Now there is a growing movement to make product placements on TV more obvious as well.

Next month’s changes will affect testimonials and celebrity endorsements and other so-called stealth advertisers in the U.S. too; this represents the first changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising since 1980.

Although shows aired on broadcast networks must also disclose instances when “promotional consideration” has been provided, the notices are anything but clear and conspicuous. According to the Washington Post, “There are no disclosure rules for most cable and satellite networks, including channels geared to youth. The resulting lack of transparency invites covert marketing, stealth targeting of children and paid propaganda.”

Meanwhile, the U.K.’s current Culture Secretary is reconsidering its ban on product placements, according to The Telegraph. Its Office of Communications (Ofcom) will likely draw on American policies despite the unique government-supported nature of the British system. If the period of study finds the change palatable to the public, Ofcom “is unlikely to encounter much opposition from either advertisers or broadcasters; the first keen to reach viewers, the other desperate to find other sources of revenue,” The Telegraph reported.

It’s possible the FTC will take steps to broaden product placement disclosure for TV, both for broadcast and cable formats, within the next several years. Companies looking to maximize their marketing reach should act now, before the rules change.

The recent experience of Canadian coffee chain Tim Hortons, which infiltrated the New York City market earlier this year, shows the incredible reach of this marketing tactic. During its third quarter earnings call for analysts, a company executive bragged about the success of a recent product placement experience. An episode of the CBS sitcom “How I Met Your Mother” featured two main characters in a scene set in a Tim Hortons restaurant - a scene that reached over eight million viewers. To read the transcript of the earnings call, click here.

While information is hard to come by, Nielsen tracks numbers of product placements while iTVX.com is an excellent source for examples.

Lisa Tibbitts is the principal of Tibbitts Creative, a public relations and marketing service that emphasizes corporate communications. She has an extensive background in financial services and an MBA in marketing. Follow her on Twitter: http://twitter.com/FinancialPR.

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