Select Committee on European Union Third Report

CHAPTER 6: Product Placement

The 2005 proposal

142.  As a part of the general drive of the text to allow broadcasters to seek advertising revenue from beyond the perceived dwindling traditional source of spot advertising the proposal initially sought to liberalise the rules on product placement.

143.  Jim Murray from the European Consumers' Organisation (BEUC) warned us that "commercial communication is more and more a part of our daily culture" and that the proposed rules "would add greatly to the exposure to commercial communication." (Q 361)

144.  By contrast, Jeremy Beale from the Confederation of British Industry (CBI) welcomed the move to relax the rules on advertising as a recognition of something which "is happening globally anyway." (Q 51)

145.  There was a degree of uncertainty about the significance of product placement to advertising revenue. Mr Blowers from Ofcom told us that "product placement market opportunity is somewhere in the £25 million to £100 million range, whereas in 2005 the value of the spot advertising market was something like £3.5 billion" and that Ofcom do not see product placement as "an inevitable and necessary substitute for spot advertising revenues." (Q 145)

146.  Mr Beale also highlighted the rather contradictory element that the provision on editorial control would introduce to the proposal, in that the draft Directive assumed that an editorial versus commercial divide would always be apparent. Given the text's explicit focus on commercial rather than non-commercial audiovisual media services, this raised fundamental questions. (Q 51)

147.  The Government were concerned that the Commission's proposals for identifying programmes with product placement would interfere with acquired programming in an unjustified and impracticable way, not least by focusing on a payment not only to a broadcaster or "media service provider" but to anyone in the value chain. (p 69)

148.  Matteo Maggiore, from the BBC, highlighted the potential difficulties for a broadcaster to "ascertain whether an acquired programme, which had not been commissioned, contained any product placement" as it would require an impossibly in-depth understanding of the editorial process behind the programme production. (Q 16)

149.  There has been some divergence within the European Union over the current status of product placement. Magnus Brooke from ITV told us that currently "product placement is not technically allowed" in the United Kingdom and that "the UK takes the view that the current Directive does not allow product placement, per se, for example the paid inclusion of particular products or particular brands in programmes." However he continued to tell us that this "is not a view which is universally shared, I have to say, and the Austrians, for example, take the view that product placement within programmes is allowed under the current Directive." (Q 289)

The Council's text

150.  The post November Council text reverses the initial attempt of the proposal to liberalise the rules on product placement by imposing a blanket ban and allowing for Member States to derogate from the ban in certain respects.

151.  Article 3(f) of the revised text states that "Product placement shall be prohibited". It does allow for Member States to derogate from the ban "in cinematographic works, films and series made for television, sports broadcasts and light entertainment programmes" and "in cases where there is no payment but only provision of certain goods or services for free with a view to their inclusion in a programme". This derogation cannot apply to children's' programming.

152.  Even if Member States were to derogate from the ban, programmes including product placement would not be allowed to impact on "the responsibility and editorial independence" of the broadcaster; nor would they be allowed to "directly encourage the purchase or rental of goods or services" or give "undue prominence to the product in question". A further provision is that viewers must be clearly notified of any product placement when they watch such programmes.

153.  There is a blanket ban on any product placement for tobacco products, or for companies whose principal activity is making or selling tobacco products.

154.  Under the revised text, sites such as YouTube may not be covered because the content they make available is likely to be categorised as "user-generated" rather than "on demand" services. Nevertheless there is empirical evidence of large commercial enterprises using such sites to advertise to users, as was the case with the "unpimp your ride" campaign on YouTube for Volkswagen, which erodes this regulatory distinction.

The European Parliament's revised text

155.  Under the Parliament's amended text, product placement would be explicitly banned in "news and current affairs programmes, programmes for children, documentaries [and] advisory programmes". As with the Council text, Member States would be able to derogate from the ban, and thus still allow product placement only "in cinematographic works, films and series made for television and sports broadcasts", or in instances when there is "production aid where there is no payment but only provision of certain goods or services for free with a view to their inclusion in a programme."

156.  We fully understand that were product placement to be permitted, there would be concerns about the danger of it interfering with editorial content.

157.  At the moment, product placement is only a very small part of advertising revenue. The figures appear to show that television advertising is currently stable, thus product placement cannot be considered necessary to the viability of television companies. If this were to change in future, we believe that the issue of product placement must be revisited.

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