UK: Ofcom Launches Consultation on Product Placement

On 28 June 2010, Ofcom launched a consultation into an amended Broadcasting Code (the "Code") which, when implemented, will allow for product placement in UK television programmes for the first time.  The Code sets out in detail the specific circumstances in which product placement is to be permitted, and contains various restrictions as to the types of products which may be 'placed' in programmes, the types of programmes which are eligible for product placement, and the requirements on broadcasters to 'signal' to viewers where product placement is used in a programme.

Most of the provisions of the Code largely reflect the content of the Audiovisual Media Services Directive 2010 (the "Directive"), which, in April 2010, was implemented into UK law and provided the legal basis for product placement to be allowed in UK television programmes.  However, the Code provides further detail as to how product placement will work in practice, and clarifies issues such as how sponsored programmes will be affected (i.e. those paid for in part or full by a third party), thematic placement, non-commercial product placement and placement in news or specialist factual programmes.

The consultation ends on 17 September 2010, after which Ofcom intends to publish a statement containing further information as to the implementation process.  A separate consultation into product placement on radio broadcasting has also been launched.

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Full Article

On 28 June 2010, Ofcom launched a consultation into an amended Broadcasting Code (the "Code") which, when implemented, will allow for product placement in UK television programmes for the first time. The Code sets out in detail the specific circumstances in which product placement is to be permitted, and contains various restrictions as to the types of products which may be 'placed' in programmes, the types of programmes which are eligible for product placement, and the requirements on broadcasters to 'signal' to viewers where product placement is used in a programme.

Most of the provisions of the Code largely reflect the content of the Audiovisual Media Services Directive 2010 (the "Directive"), which, in April 2010, was implemented into UK law and provided the legal basis for product placement to be allowed in UK television programmes. However, the Code provides further detail as to how product placement will work in practice, and clarifies issues such as how sponsored programmes will be affected (i.e. those paid for in part or full by a third party), thematic placement, non-commercial product placement and placement in news or specialist factual programmes.

The consultation ends on 17 September 2010, after which Ofcom intends to publish a statement containing further information as to the implementation process. A separate consultation into product placement on radio broadcasting has also been launched.

Definition of product placement and permitted genres

Product placement is defined in the Code as:

"the inclusion in a programme of, or of a reference to, a product, service or trade mark where the inclusion is for a commercial purpose, and is in return for the making of any payment, or the giving of other valuable consideration, to any relevant provider or any person connected with a relevant provider, and is not prop placement".

The Code contains various restrictions as to the types of programme in which product placement is to be permitted. These 'permitted genres' are, exhaustively, "films, series made for television (or other audiovisual media services), sports programmes or light entertainment programmes", whilst for the avoidance of doubt, product placement is specifically prohibited in news, children's, religious, consumer advice, current affairs or specialist factual programmes. There is little guidance in the Code as to the scope of some of these definitions (for example, as to what constitutes a 'light entertainment programme'), however it has been established that 'single dramas' fall within the definition of 'films', and that children's programmes are classified as any programmes which are for viewing "primarily for persons under the age of sixteen" (though there is no information in the Code as to how this will be ascertained).

Prohibited Products

In addition to the prohibition of any placed products in certain programme genres, the Code also contains strict prohibitions on the placement of certain products in any programmes. For example, the placement of any alcohol, products high in fat, salt and sugar ("HFSS foods"), medicinal, tobacco or gambling products is expressly prohibited, as is any product, service or trade mark that is not ordinarily allowed to be advertised on television (for example, placements made by political bodies, for guns or for obscene materials).

Restrictions on promotions and undue prominence

The Code provides that any references to placed products, services and trade marks must not be 'promotional', and provides a list of factors which are likely to be relevant when determining whether such promotions are being made. For example, any "encouragements to purchase (direct or indirect), price information, endorsements (either explicit or implicit) or [the inclusion of] slogans associated with the placed product", are likely to fall foul of the provisions of the Code. Again, there appears little by way of guidance as to the scope of some of these definitions, for example, as to what is likely to constitute an 'implicit endorsement'.

Further, the Code stipulates that references to placed products must not be featured in a programme in such a way so as to give the products "undue prominence". In determining whether a product is shown with undue prominence, broadcasters should consider the frequency of, and editorial justification for, references to the placed product.

Finally, 'thematic' placement, i.e. "the payment by a third party for the creation of storylines/scripts as vehicles for the purpose of featuring particular issues or references (including generic references) to the third party funder's aims, objectives, beliefs or interests", has been expressly prohibited by the Code. An example given by Ofcom as to how thematic placement might work in practice, is where an insurance trade association pays for the inclusion of a storyline in a soap that shows the negative consequences of not having home insurance, i.e. where a character loses all of his or her possessions in a house fire. Such a restriction was not expressly contained in the Directive, therefore this represents an additional measure imposed by Ofcom.

Signalling

Although a general obligation to 'signal' product placement is contained in the Directive (i.e. to ensure that broadcasters should make viewers aware that programmes contain product placement), Ofcom has introduced detail in the Code as to how this may be achieved in practice. Ofcom has proposed that, where a programme contains product placement, a universal neutral logo and audio signal should be used at the beginning, the end, and at the recommencement of any programme after commercial breaks. Further, broadcasters must make available to the audience a list of those products, services or trade marks that have been placed in a programme in a "brief, non-promotional manner", either in the programme's end credits, or on the broadcaster's website (provided that reference to the website is made at the end of the programme).

Sponsorship

Current Code rules prevent sponsorship arrangements (where the costs of a programme are funded by an advertiser with a view to gaining promotional benefits for that advertiser) from resulting in references to the advertiser's products within that programme. However, as a result of the prohibition on product placement being lifted, Ofcom has sought to relax the rules relating to sponsorship arrangements accordingly. As such, the Code now allows for sponsors to place products in the programmes they are sponsoring, and also, for sponsor credits to be shown during programmes (as opposed to before or after, as was the case previously).

Comment

Many perceive the introduction of product placement to be a long-overdue reform of UK broadcasting law, providing an advertising mechanism which has been shown to generate substantial additional revenues for advertisers in different jurisdictions. For example, the product placement model in the US in particular has proved to be a successful advertising tool for some time, however it is notable that the rules relating to product placement in the US are far less restrictive than those contained within the Directive and the Code. Indeed, it has been suggested that, due mainly to the overly onerous restrictions placed by the Government (through legislation) on the use of product placement in the UK, the reform of this aspect of advertising law may fail to provide the lucrative, and much-needed sources of revenue to key media stakeholders, at a particularly difficult time for the advertising industry.

Perhaps most significant in this regard is the perception of a seemingly over-restrictive and 'all-encompassing' nature of some of the provisions of the Directive, which have now been reflected in the Code. In particular, the tight restrictions in relation to HFSS Products and alcohol may have significant implications for many mainstream advertising brands. It is also worth noting that the rules on 'prop' placement (i.e. the editorially-justified inclusion of, or reference to, a product in a broadcast for no or less than full cost) remain relatively unchanged in the Code, which will allow those advertisers who have previously relied on this form of product promotion, to continue to rely on this going forward.

Further, the somewhat ambiguous 'permitted genre' definitions, and the requirements on broadcasters to ensure that no undue prominence is given to products during programmes, may cause practical difficulties. Also of note, and as conceded by Ofcom in the consultation document itself, the obligation on broadcasters to comply with signalling requirements in particular (i.e. showing an up-to-date listing of all products shown in a particular programme) may cause significant logistical hurdles for broadcasters going forward.

An issue which does not seem to have been addressed in this consultation (although has been raised in previous DCMS and Ofcom consultations on product placement) is the role of Ofcom going forward, in particular whether it will undertake a monitoring function, and whether the costs of such an undertaking will be borne by advertisers and/ or broadcasters. It is also unclear what impact, if any, the recent change in government will have on the implementation of product placement.

In any event, it will be interesting to monitor how Ofcom deals with the above concerns, and whether the consultation process manages to iron out some of these issues over the course of the coming months.

To read the full consultation document, please click here.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 05/07/2010.