Product Placement

Blurred Car Headlight and Taillights Driving on a motoway from an overhead bridge

The digital media landscape is evolving fast, with technology and consumer interest developing at a pace that challenges regulatory bodies. One example is product placement – advances in technology mean that brands can “place” their products during broadcasting in new innovative ways – and ways which were not envisaged when Ofcom drafted its Broadcasting Code.

Product placement is no longer limited to your favourite soap star driving a particular car or drinking a certain soda. Brands can now engage with their consumers in far more interactive and flexible ways – but do they fall foul of the traditional rules set out in the Code and, if so, do the rules governing product placement therefore need to be modernised to reflect such technological changes?

In the past, agreements for placing commercial references within editorial through product placement were finalised in advance of content development. Now, technology enables advertisers to arrange for their brands or products to be placed virtually within content post-production (in a variety of ways), meaning the ad space doesn’t need to have been sold in advance, but also, it can be ‘chopped and changed’ – for instance to account for content being shown in different locations or if a new ad campaign is launched at a later date. Media owners can therefore exploit, and get paid for, the same space by different advertisers over and over again.

Mirriad – launched in 2008 – uses patented computer vision technology to create a new way to reach audiences by digitally embedding brands into content using predictive analytics which forecast the overall quality and quantity of brand exposure. In the UK Mirriad has worked with companies such as Unilever, Cadillac, Diet Coke and PG tips, who famously partnered with popular Channel 4 TV show Deal or No Deal to embed the PG tips logo onto the mugs the contestants drink out of during the show. It has also just signed a deal with Universal, one of the biggest music distributors in the world, to place ads into selected music videos. As brands seek to engage with today’s connected generation, where traditional advertising breaks no longer receive a defined window of exposure, they are turning to digital content creators to intertwine the products authentically within content. Mirriad’s tagline is “advertising for the skip generation” and it is one of a handful of companies ushering in the next phase of native advertising – “digital insertion” – a term we’re likely to hear more of. According to the Advertising Association and Warc, the surge in digital product placement has contributed to a record UK advertising spend of £4.7bn in the first three months of 2015. In fact, the BBC has announced that it will turn to product placement on its global news channel for the first time as it seeks new ways to fund its worldwide news operations. Only time will tell whether it goes for the more traditional approach or embraces the move towards digital placement.

Car manufacturer Lancia has taken this technology even further by launching a Lancia InteracTV app that allows fans of the brand to receive offers and promotions when they watch programmes that contain their digital product placements. The app does this by picking up on inaudible sounds that cannot be heard by audiences and sending viewers appropriate related offers. Lancia has developed this as a way to try and stay in step with an audience which is increasingly accustomed to using a second device, such as a tablet or a laptop, while watching TV. Other companies insert inaudible soundbites into content when various products are shown during editorial which take the consumer through to the relevant brand’s website to facilitate a purchase. New technologies like this are largely untested by the Code but it seems possible that they could technically fall foul of the rules because they might directly encourage the purchase of the product or could be seen as conveying a message subliminally or surreptitiously (i.e. the placement would not be “woven” into the narrative of the programme in question) – regardless of whether consumers are welcoming such interactivity.

Whilst regulators face increasingly difficult choices about the balance between consumer protection and the encouragement of innovation, broadcasters require a clear regime to enable them to give advertisers the control and certainty they need for the placing of products. Recent engagements by Ofcom with stakeholders in the industry suggest that there is some frustration surrounding the restrictive requirements of the Code. Ofcom’s responses to these engagements suggest that Ofcom is keen to support innovative use of product placement and to ensure that the industry is not put off by the product placement rules. As such, as the Code was developed to account for a more traditional placement of products, services and trademarks, the rules may need to be adapted to reflect the advancements made to technology. For now, though, broadcasters and brands should take comfort from the fact that Ofcom has always stated that the rules are intended to be applied in the “spirit as well as the letter” – and therefore hopefully they won’t be looking to rule that a certain placement has breached the Code purely out of principle.

By Jennifer McBride

Jennifer is an associate in our International Commercial Group, based in London. She advises on a range of commercial contracts in the IT, technology, sports and media sectors. Working with UK and international clients, Jennifer has advised on a wide range of commercial issues including drafting and negotiating outsourcing agreements, sponsorship agreements, supply of goods and services agreements, consultancy agreements, agency agreements, trade mark licences and IT agreements. She also advises on e-commerce, advertising and consumer law as well as brand management and enforcement issues.

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