Market Watch

Ofcom Clarifies Product Placement Rules

January 04, 2011

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From March 2011, paid-for placement and references for products and trademarks will be permitted in television programmes produced and broadcast in the UK.

Following the liberalisation of European legislation (Audiovisual Media Services Directive) and after a consultation of stake-holders, media regulator Ofcom has published detailed guidelines on Paid Product Placement (PPP) in December 2010. These new guidelines will be incorporated into Ofcom's Broadcasting Code. As expected by industry observers, they include a host of restrictions. For instance, PPP will remain banned from children's and news programmes and in the context of certain types of products (all products banned from spot or sponsorship plus sensitive products such as gambling and unhealthy food products). Softer restrictions will also apply: PPP insertions 'must always be editorially justified' and must not feature in an unduly prominent way within programmes. Finally, a logo will appear for a minimum of three seconds at the start and end of programming that contains product placement.

Analysis
Ofcom is also liberalising some of the TV sponsorship rules to make it consistent with new PPP opportunities. Sponsors will be able to place products in programmes they are sponsoring, and sponsors' logos may appear during programmes. Sponsorship and paid-for references to brands and products are also being liberalised on radio. However, commercial radio broadcasters are disappointed that sponsorship remains banned from news programmes.

Screen Digest's dialogues with mediabuying agencies suggest that the clarification of insertion rules and contractual rules around PPP may create renewed interest from agencies and advertisers in 2011. The coming of age of virtual placement technologies, provided by software companies such as MirriAd, is also likely to be a driver for PPP. Indeed, a key obstacle for traditional product placement has been the long lead time between pre-production decision and broadcast, especially for drama and sitcoms. With digital placement, PPP can be negotiated and inserted in the post-production phase, making it much more flexible and cost-efficient.

One category of stake-holders, British advertisers represented by ISBA, was initially reluctant on the introduction of PPP, feeling that it might cannibalize traditional prop placement by simply monetizing what is today a cash-free transaction. But they are now satisfied with the new rules and safeguards, that should allow PPP and prop placement to co-exist.

Considering the cautiousness of advertisers, Screen Digest believes it will take many quarters before PPP brings any significant incremental revenues on top of existing sponsorship revenues.

Screen Digest will soon publish a specific study on the PPP situation and the opportunities created by regulatory relaxation in the UK and Western Europe.

Find Out More > iSuppli | Screen Digest Advertising Intelligence Service

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