Whether you binge-watch your favorite TV show, see that new movie everyone’s talking about, or scroll through your Instagram feed, chances are you’ll see ads. But the ads these days aren’t so obvious; they aren’t just the 30 second clips that pop up mid-show, the previews before the movies, or the ad posts between your friends’ pictures. Brands are turning more and more to product placement as a more subtle form of advertising.
Did you think ET actually liked Reese’s Pieces? Hershey agreed to spend $1 million promoting ET to have their product displayed prominently in the film. (As a matter of legal opinion, we suspect ET is more of a M&M kind of alien).
While product placement is certainly nothing new, the prevalence of social media makes it even harder to determine whether something is genuinely an organic use of a product or whether it’s a brand paying for advertising by exposure.
This begs the question, what kind of rules are there around product placement? How are consumers supposed to know if they are or aren’t being marketed to while watching Monday Night Football and drinking a beer made without corn syrup? The Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) focus specifically on these issues, and have different rules and enforcement for broadcast TV and radio, feature films, and social media.
When it comes to TV and radio, the FCC has something called “sponsorship identification rules,” (47 U.S.C. §§ 317, 508) which basically says that if a program producer, broadcast station, or a station employee receives anything of value, directly or indirectly, in exchange for causing material to be broadcast, the sponsorship and the identity of the sponsor must be disclosed on-air. These rules require program producers to notify the broadcaster if they have a deal to include any sort of product placement in a program, which allows the broadcaster to then make the necessary on-air disclosures.
The FTC, however, has said that under the FTC Act, product placement doesn’t require the disclosure that the advertiser paid for the placement in traditional media forms (i.e. TV, radio, films).
Practically, the FCC seems more concerned about the sponsorship identification rule as it applies to more traditional formats of advertising, rather than applying it strictly to product placement in TV and radio. Thus, there is typically minimal disclosure required when products are placed in TV shows and radio broadcasts; a simple statement at the end of the broadcast stating the broadcast was sponsored by a particular brand suffices under the FCC’s rules. If you’ve ever watched to the end of an episode of “The Price is Right,” you’ll see “Promotional Consideration provided by” and then a long list of brands.
Since the FCC rules do not apply to movies, and the FTC does not require disclosure, product placement in movies can occur without any sort of disclosure that an advertiser paid for the product to appear. In some ways, this makes sense, as viewers know that the show or film is entirely created content – no one thinks that the actors’ lines are their personal opinions, so viewers are also likely to internalize that the set and props are fabricated for the show, whether it be because a brand paid for it or because of a creative decision on the part of the directors or writers.
When it comes to social media, however, the FTC has created a much more robust framework for product placement. In an influencer campaign, a company must include clear, conspicuous, and prominent disclosure of any material connection between the endorser/influencer and the advertiser whose product is endorsed in close proximity to the representation. Basically, this means that social media posts with sponsored content have to contain some sort of disclosure (i.e. #ad or #sponsored) above the fold – consumers should be able to see the disclosure without having to click “see more.”
Unlike the FCC sponsorship identification rules, the FTC has been more aggressive in enforcing this requirement and has issued a number of warning letters and even instituted enforcement actions against both brands and influencers who have neglected to disclose product placements. Again, this rule makes logical sense when you think about it – because of the nature of social media, consumers are less likely to be able to differentiate between organic content where an influencer simply happened to have a particular product with them in a photo and branded content where the influencer included a specific product in a photo because they were paid to do so.
As the FTC is faced with new issues surrounding product placement in social media, it continues to grow and refine its framework of rules surrounding product placement. Only time will tell whether these rules will have a spillover effect into traditional media forms – but for now, TV and film can rest easy on whichever brand of mattress pays the most.
Pfeiffer Law Corp is a law firm with an emphasis on social media and entertainment law.
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