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On 17 November 2008 ITV and Pact, the trade body for independent producers, announced their agreement on a code of conduct for product placement on television. There are rumours that Channel 4 is also poised to sign up and Pact says that it has a list of broadcasters who are supporting the code that it will submit to the DCMS. There is plainly a growing determination amongst production companies and broadcasters to persuade the Government that the additional revenue predicted to be generated by product placement does indeed justify “abandoning the long-held principles of European and UK broadcasting”.
Background
Product placement – payment to a broadcaster or producer to feature products in a programme – whilst not expressly prohibited by the Television Without Frontiers Directive has long been considered to be contrary to EU law which requires clear separation of advertising from programmes and prohibits surreptitious advertising, advertising which uses subliminal techniques and any sponsorship which affects the editorial independence of the broadcaster in relation to programme content or scheduling. The blanket prohibition is expressed in Rule 10.5 of Ofcom’s Broadcasting Code. However, under the new Audio visual Media Services Directive whilst members states must legislate for a general prohibition on product placement they may allow it in certain genres of programme.
Although it has not taken a final decision, the Government made it clear in a Consultation published in July 2008 that its preferred approach was to decline the invitation to permit product placement in certain types of programming. The Government suggested that allowing product placement in the UK would risk damaging viewer and consumer confidence in the integrity of UK-produced programming. In this respect it made no distinction between television broadcasting and video-on-demand programming.
It should be noted that the consultation envisages the preservation of prop placement i.e. the loan and provision of clothing, cars and other equipment to broadcasters at a reduced price or free of charge. However, the new directive requires the Government to put in place a “significant value” threshold. Provision of anything above that value would fall under the product placement provisions. How such value is to be calculated is still open to debate.
ITV and Pact
The Government has cast doubt on the financial value of product placement to the TV industry and its approach appears to be coloured by concerns over consumer trust which has been damaged by the quiz TV and premium rate problems. The industry plainly believes that the likely revenue is sufficiently attractive and that controls can be put in place to protect against a loss of consumer trust. In the press release announcing the Code, ITV claimed to be amongst a growing list of supporters, including the likes of Virgin and Discovery, which want to find a regulated means of taking advantage of product placement as a legitimate new revenue stream. Pact’s own position was made clear in its response to the DCMS consultation. Amongst other things it made the point that the loss of investment into new UK programming through UK restrictions on product placement would not just be detrimental to UK programme makers, who would remain at a significant competitive disadvantage compared to imported programming. According to Pact, UK audiences, who have a strong desire to see new, domestically-produced programming, as opposed to repeats and imports, would also suffer. Pact also points out that a recent report by Ipsos MediaCT showed that 79% of consumers said it would not make "any difference to their viewing of a programme if products had paid to appear in it".
The Code
ITV emphasises that the code demonstrates the responsible approach industry would take if product placement were permitted. The key features of the code include:
- Transparency: an easily recognisable visual indicator, such as an industry-wide logo, to be displayed at the beginning and end of a programme and as the programme resumes after a break. Pact is recommending a generic symbol such as that for parental guidance.
- Presence not promotion: the programme producer will decide how any products are incorporated into the content, where it is editorially justified, ensuring no undue prominence.
- Editorial independence: product placement opportunities will first be identified by the production team when a script has been finalised. Brands will then be approached by a non-editorial team and commercial terms agreed.
In its 2005 Consultation on issues related to product placement Ofcom anticipated a relaxation under the then proposed AVMS Directive of the rules on product placement. If Ofcom was marginally less emphatic on the revenue implications, it was clear enough nonetheless that a total prohibition on product placement appeared to the broadcast regulator “no longer proportionate to the potential detriment it seeks to prevent”. The industry plainly feels strongly that, particularly in such chastened times, it should be able to take advantage of all funding opportunities. The Government, in splendid isolation, begs to differ but perhaps it might be persuaded by this collective demonstration that a prudent approach to product placement is workable.
Nicola McCormick
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Simkins' early warning bulletins are for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court. Please note that past bulletins included in the Archive have not been updated by any subsequent changes in statute or case law.
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