Warning: Coke, Though Refreshing, Is A Sponsor of This Program

The FCC's large-print solution to fine-tuned advertising

Not content to save us from global warming, catastrophic cooling (said to result from global warming; don't ask), poisonous food, unsafe workplaces, dangerous water sports, and lawn darts, the federal regulatory apparatus in Washington now has a bright, shiny new cause: It wants to save us from product placement.

When Peter Parker shot out his webbing and snagged that can of Dr. Pepper a few years ago in Spider-Man, it seems that impressionable movie audiences across the country suffered deleterious consequences—perhaps in the form of forgetting how much they loved Mr. Pibb. Jonathan Adelstein, a member of the Federal Communications Commission, is particularly outraged at what he sees as product-placement manipulations by TV networks. Because "the public needs to know when they're being advertised to," Adelstein told The Wall Street Journal, he wants the FCC to investigate the practice and require a lengthy, large-font disclosure notice during every TV show with paid placements.

Other policymakers and observers have been hyperventilating about the proliferation of product placement since February, when the Federal Trade Commission declined to require disclosure of product placement as a remedy for what activist groups such as the Naderite Consumer Alert consider fraudulent trade practices. "The FTC has essentially endorsed the deceptive and dishonest practices of the product placement industry," said Consumer Alert executive director Gary Ruskin, "and turned its back on children who are suffering from an epidemic of marketing-related diseases like obesity and type 2 diabetes." Paid placements in TV shows, movies, and other entertainment aren't just intrusive and manipulative, say these scolds, but cost taxpayers billions of dollars a year by jacking up Medicare and Medicaid costs as mesmerized consumers smoke, drink, and get fat.

The FCC's Adelstein argues that his commission and the FTC have different purposes and burdens, so the FCC has "no choice but to enforce" existing law against advertising payola. But if product placement is a new problem—and it is neither new nor a problem—then his proposal to require lengthy, prominent disclosures is an outmoded way of dealing with it. Audiences will ignore the disclosures the same way they're increasingly ignoring (or TiVoing past) commercials—the same behavior pattern that's driving the move toward product placement in the first place.

There is no question that product placement is a rapidly growing element in the marketing mix. According to surveys by PQ Media, companies will spend about $4 billion in 2005 to place products in various media, roughly double what they spent in 2001. The consumer conglomerate Procter & Gamble, traditionally one of the biggest buyers of TV commercials for products such as Tide and Pampers, just announced that it is cutting its purchase of ad time this year by 5 percent on broadcast networks and by a whopping 25 percent on some cable channels. Some of these dollars are shifting to product placement. But contrary to the rhetorical assertions of self-styled consumer advocates and their political patrons, this is not uncharted territory. In a sense, marketing professionals are going back to the future by making use of a technique that has been around about as long as advertising itself.

In ancient Rome, major winemaking regions apparently compensated poets such as Martial and Horace to work brand names into their writing. Advertorials arose shortly after general-circulation newspapers and magazines did. And by today's standards, the product-placement deals during the Golden Age of radio would be seen as thoroughly shameless.

One of the first successful "soap operas" was CBS' Today's Children. While it did begin its run with two General Mills soap brands as its sponsors, the program quickly became a key marketing vehicle for Pillsbury, whose sponsorship was certainly not limited to formal ad spots. The central character of Today's Children was Mother Moran, the matron of an Irish-American clan who spent much of her airtime in the family kitchen. Producers made cake-baking a frequent plot device, as were kitchen-table conservations about the latest innovations from Pillsbury. In one story, Moran wrote to a "Mrs. Pillsbury" for help with kitchen aids and was later treated to a tour of Pillsbury's Minneapolis facilities. In another, her granddaughter Lucy used Pillsbury brand names in writing a paper for school entitled "The Story of Bread." On a rival show sponsored by General Mills, the company's trademarked character Betty Crocker made guest appearances to promote bread-making.

Radio listeners during the 1930s and 1940s saw explicit placement of companies and products into their radio shows as anything but an intrusion. According to surveys conducted at the time, they preferred product placement to clearly distinguished advertising spots because the latter took "time away from the story." Product placements also were seen as a way to make programs more accessible to ordinary people by bridging the gap between reality and fantasy.

That didn't make the audiences mere zombies, ready and waiting to buy whatever they saw or heard about. Just as product placement isn't new, neither is knowing banter about the practice by performers well aware of consumer skepticism. There's a great scene in Wayne's World where Wayne and Garth, winking at the camera, repeat a string of ad slogans. It's even funnier when you appreciate it as a gesture to past comics and movies that did the same thing. For example, Jell-O was a longtime sponsor of Jack Benny's radio show. The program began and ended with a straightforward promotional message for Jell-O by the announcer, Don Wilson. But the middle "commercial" consisted of Wilson working his way into whatever comedy routine was underway and, not very gracefully, slipping in a mention of Jell-O. Benny and the other cast members would then typically offer up some good-natured jokes at Jell-O's expense before continuing the show. They were entertaining and advertising at the same time.

The Republic survived product placement during radio soap operas and The Jack Benny Program without an epidemic of obesity. (Remember "there's always room for Jell-O"? How irresponsible!) Consumers aren't idiots. They may well prefer brand placements during their favorite TV shows to watching seemingly endless blocks of commercials, but they'll rebel if the placements become too distracting. "We must embrace the consumer's point of view about TV and create advertising consumers choose to watch," said Jim Stengel, a Proctor & Gamble marketing officer, when asked to explain the company's shift of strategy.

That's exactly right: In a free market, companies must act over time in the way most likely to maximize their profits, which tends to discipline them against harming or annoying their own consumers. Unfortunately "consumerists" who thrive on litigation and politics face very different incentives.

John Hood is president of the John Locke Foundation in Raleigh, NC, and the author of Selling the Dream: Why Advertising is Good Business, just out from Praeger.