Does the FCC Think We’re All Zombies?

Americans know paid product placement when we see it

It wasn’t the first paid product placement, but it may have been the most famous. Back in 1982, film director Steven Spielberg and his production executives approached Hershey’s with an offer to feature the candy company’s Reese’s Pieces products in a scene in E.T. The Extraterrestrial in return for a fee.

The film, of course, went on to be a blockbuster. Reese’s Pieces saw an increase in sales of 65 percent the month the film was released, according to a contemporary account in Time magazine. The tale was all the more compelling because Hershey’s was the second company the producers approached. Mars turned down a similar offer for the use of M&Ms, giving media industry pundits a handy “old vs. new” angle to hammer. And in media, no one wants to be “old.”

Now, 26 years after E.T. found adventure in following a trail of candy-coated nuggets of peanut butter and chocolate, the Federal Communications Commission finds product placement appalling, at least on TV, the one segment of media where it still has a modicum of regulatory power. The FCC already requires programmers to disclose paid product placements, but these notices can be easily missed in the speedy credit rolls that appear at the end of most television shows. Certain that American viewers are being duped by “Trojan Horse” advertising, the FCC is opening a formal proceeding aimed at creating new rules that would require greater disclosure.

The practice has grown extensively in broadcasting since digital video recorders (DVRs) have made it easier for viewers to bypass conventional commercial breaks. According to the Nielsen Co., product placements on broadcast TV shows rose almost 40 percent in the first quarter of 2008 compared to the same period in 2007, and product-placement spending increased 34 percent to $2.9 billion in 2007 from a year earlier, according to PQ Media, a market-research firm in Stamford, Connecticut.

Reality shows like The Biggest Loser, American Idol and The Apprentice get the most placements, according to Nielsen, although scripted shows see their share. Michael Scott, the clueless manager of the Scranton branch of Dunder-Mifflin Paper Co. on The Office, hosted a staff party at the restaurant Chili’s, and the computer network at Jack Bauer’s Counterterrorism Unit on 24, at least up to its most recent season, is powered by Cisco Systems technology.

The assumption of course, is that Americans are too dumb to know when they are being pitched. We can be thankful the FCC seems to have balked at the demand from consumer groups who want a “paid advertisement” notice to appear on the screen every time a brand name product does. But still, commissioners are considering the requirement of voiceovers, akin to what we here at the end of political advertising, informing us of any paid placements.

Do really we need a new set of extensive regulations so we know that, yes, Coca-Cola, paid the Fox Network to have Simon Cowell sip its soda while making snarky comments on a contestant’s talents? If by some reason, the viewer feels the urge to drink a Coke while watching the broadcast, has any harm been done? A thirsty viewer is just as likely to have a Pepsi, or a bottle of fruit juice in the fridge. Trouble is, those who seek to regulate advertising tend to see people as mindless lumps of clay–zombies whose behavior is shaped by Madison Avenue. The notion that individuals are capable of rational choice gets no regard. Sure, sometimes they might be persuaded, influenced or inspired by a TV character, that’s why product placement is popular. But that only goes so far. Coca-Cola may sell a few more cans of soda, but I have yet to hear of any 24 viewer who green-lighted the purchase of a multimillion dollar corporate data network from Cisco on the basis that the company was the choice of a fictional defense agency. And I’m not sure how well it reflects on Chili’s when it’s endorsed of one of television’s most dim-witted characters.

But then again, the FCC lately has not been giving Americans must credit for common sense. Convinced that it knows what’s best for viewers, its nannying has grown relentless, especially under the watch of current Chairman Kevin Martin. Martin, for example, continually presses cable companies to offer a la carte services, that is, giving consumer the choice to pick and choose only the specific channels they want. Although Martin says such packages are in consumers’ interest, several studies, including one of the FCC’s own, conclude that such offerings would lead to higher prices and a decrease in channel choices.

Martin’s FCC again showed its tin ear for the public interest when it was only government agency to give a sympathetic hearing to the National Football League when- although the NFL was demanding 80 cents per cable subscriber a month for what amounted to eight football games per season-it asked federal and state lawmakers to force cable companies to bundle the NFL Network into its standard line-up.

Study after study shows Americans are hip to paid product placements. That fact itself leads to some self-regulation. If producers and networks overdo it, they could find themselves out of favor, especially with the highly-targeted 18-29 set. There’s always a risk that paid product placement could fast get old. And in media, no one wants to be old.