Product Displacement

FCC vs. free broadcasting

Thanks to TiVo, DVDs, the Internet, and other technologies that increase consumer choice and control, TV viewers are freer than ever from the intrusion of annoying ads. Not surprisingly, product placement in TV shows is on the rise. The net value of the product placement market rose by 48 percent, to $1.5 billion, from 2004 to 2005, the last year for which figures are available.

Product placement comes in two varieties. There is plain placement, where an identifiable product, such as a car or soda, is used by a character. And there is product integration, where the item is part of the plot, as in the Smallville episode where a character acquires superpowers after eating kryptonite-infused Stride gum.

In response to the rise of product placement, the Federal Communications Commission (FCC) is considering new sponsorship regulations. Among the ideas it's mulling: requiring both visual and audio notices that a product appearance is a paid ad, not just at the beginning or end of a program, but as the product appears. Regulators seem to think the audience wants ads to be more intrusive.

Adam Thierer, in a comment to the FCC on behalf of the Progress and Freedom Foundation, notes that the commission has yet to offer evidence "that the public is…unaware of the commercial nature of product placements or other embedded advertisements" or that "some positive harm flows directly from any such lack of awareness." Thierer argues that new regulations could threaten the survival of free broadcasting, already struggling in the face of myriad other entertainment choices that don't rely on ads, by making sponsors less eager to fund it.