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IBIMA Publishing Journal of Research & Case Studies http://www.ibimapublishing.com/journals/JMRCS/jmrcs.html Vol. 2013 (2013), Article ID 561655, 13 pages DOI: 10.5171/2013.561655

Research Article Product Placement: A Booming Industry in Search of Appropriate Regulation

Tara Al-Kadi

Journalism and Mass Communication, the American University in Cairo, Cairo, Egypt

Correspondence should be addressed to: Tara Al-Kadi; [email protected]

Received 22 December 2012; Accepted 22 December 2012; Published 24 March 2013

Academic Editor: Miltiade Stanciu

Copyright © 2013 Tara Al-Kadi. Distributed under Creative Commons CC-BY 3.0

Abstract

Product placement is a booming practice that, in some cases, seems as the viable alternative to traditional . The paper discusses the growth of the promotional technique of product placement. The size of the product placement industry and its penetration of different mediums are closely examined. This is followed by a detailed comparative analysis of product placement practices around the world and investigation of the factors that help shape country-specific regulation.

Keywords: Product placement, advertising, regulation .

Introduction divergent international regulatory policies associated with this practice. The aim is to Product placements are best illustrated provide marketers with a realistic through examples. Williams et.al (2011) assessment of product placement’s potential supply readers with a long list including and limitations. blasting off in a Big Boy statue rocket, promoting Checkers and Product Placement Definitions and Rally's Hamburgers in the comedy Talladega Examples Night s, MSN appearing in Bridget Jones' Diary , and the Forrest Gump script utilizing The of product placement is better the Bubba Gum Shrimp Co. . This appreciated when one analyzes the numbers relatively new technique is widely used and associated with this marketing phenomenon. prevalent in almost all mediums. Various According to the Reed Business Information studies indicate that product placement is (2002) in the Die Another growing as a viable alternative to advertising. Day , spent $35 million The following is a thorough examination of to replace BMW as the official auto supplier product placement literature which sheds for the James Bond . In the same film light on the history, financial value, and British Airways flies James Bond and Omega ______

Cite this Article as : Tara Al-Kadi (2013), " Product Placement: A Booming Industry in Search of Appropriate Regulation," Journal of & Case Studies, Vol. 2013 (2013), Article ID 561655, DOI: 10.5171/2013.561655 Journal of Marketing Research & Case Studies 2

is prominent on his wrist. In total, Die writers being paid by agents to use Another Day contained product placements certain in scripts emerged as a for 20 consumer brands. In addition to film serious concern about . product placements have found their way into , songs, books and video The definition of product placement has games. According to Kim and McClung (2010) evolved over the years. Earlier examples of product placement is on the rise in the video product placement were more focused on the game sector. For example, in 2004 Electronic mediums of film and television. Gupta and Arts Inc. (EA), an internationally renowned Gould (1997) described product placement video game publisher earned an estimated as the integration of brands into in $1.5 million in revenue from five in-game return for money or some form of . product placement deals with advertisers. Product placement is defined by Similarly, Gutnik et al. (2007) state that Balasubramanian (1994) as a paid product spending on in-game product placement was message aimed at persuading audiences estimated at $300 million in 2007, with through the planned inclusion of a branded projections of $1 billion in spending by 2010. product into a movie or television program. With time more up to date and all Product placement may deceptively appear encompassing definitions of product as a recent technique born in the last thirty placement were developed. Wenner (2004) years. Researchers like Karniouchina, Uslay, describes product placement as the use of a and Erenburg (2011), believe that product brand by an actor in a film or television, or placement originated in the 1970s. This is the incorporation of a brand in the mainly because product placement shot to background of a scene. It may also involve the fame after the use of Reese’s Pieces chocolate use of a brand , a shot of a brand’s brand in E.T. the Extra Terrestrial film, in , or even the airing of a brand 1982 (Yu, 2006). However, Newell (2006) commercial in the background. Kim and traces the development of product placement McClung (2010) believe that the meaning of and demonstrates that product advertising product placement has evolved as various has been intertwined with motion pictures promotional techniques developed and and television communities since the 1890s. become more sophisticated. Generally, He cites as an example the1895 the Lumiere product placement refers to the brothers’ film The Card Game in which there incorporation of brands in film, television is a product placement of a by Frank programmes, music videos, games, plays or Claire, the Lumiere brothers’ father in law. books for promotional motives in return for Additional early examples of product financial or other privileges (Kim and placement include, Thomas Edison's film McClung, 2010). A recent interesting view Streetcar Chivalry in 1905 which takes place defines product placement as the merge of in a commuter full of posters for Edison’s entertainment and advertising by plugging a products and photos promoting his product within engaging media content. industries. By the 1930s it was a common (Williams et al., 2011) The expansion of practice to have "tie-ups" in which products product placement into new social media and were offered rent free in return for publicity interactive games is gaining more attention . (Newell et al., 2006). Not only were there According to Kureshi (2010) product early examples of product placements, but placement research in traditional media like there were also early effort of product television and film is decreasing as product placement regulation. According to Newell et placements appear in newer media like al. (2006) the first instance of product , video, digital, online, and placement regulation appeared in 1949 when simulation games. a mention of Southern Comfort was deleted from a comedy show, because it appeared to Russell (1998) distinguishes between three be too commercial. At that time comedy types of product placement. The first is

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screen placement which contains a visual McClung (2010); Gutnik, Huang, Lin, and component such as an outdoor sign of a Schmidt (2007); and Homer (2009)} brand in the background of a scene. The forecasts the product placement business to second is script placement with an audio be growing and booming. On the other hand, component such as mentioning the brand Karniouchina et al. (2011), have disagreed name. Finally, she identifies plot placement with this prediction. They warn that product or connection to the plot. This occurs when placements will not continue to boom, but the brand is an integral part of the plot like will have diminishing effects with time, the car in James Bond films (Russell, 1998). which will consequently curb their growth rates. According to Wenner (2004) the concept of The rise to fame of the product placement product placement originated from the need technique did not only originate as a to have realistic television and film settings powerful promotional tool for brands. and props. Typically, producers assessed Product placement was also launched scripts and listed product placement because of its perceived lucrative financial possibilities which were then communicated value to filmmakers and broadcasters in need to companies with the relevant brands. of funding their dream projects. Lehu (2007) However, the process has evolved in recent explains that a state of increased competition years. Product placement agencies are more in the filmmaking industry requires higher proactive nowadays. Most of them initiate initial investments to secure a good crew, communication with TV and movie well-known actors and a good director, in the producers to discuss product placement hope that this would generate the expected prospects. box-office revenues. In this manner product placement contracts have become a crucial The Size and Financial Impact of the source of finance whether through direct Product Placement Industry funding or through providing the necessary film props free of charge. Product placement spending certainly draws attention to this booming business. Homer Regardless of whether the deals were driven (2009) states that the global business of by producers seeking to reduce production product placement was approximately US cost by acquiring free props or services, $7.5 billion in 2006 and estimated to beat the studios and manufacturers willing to create US $14 billion high by 2011. However, cooperative marketing arrangements that although the numbers are big, researchers simultaneously sought to move product and seem to have a discrepancy in their figures. sell tickets, producers seeking to raise For example, Lehu (2007) mentions that in revenue in a pay-for-show advertising model, the US product placement spending rose or even television program staffers willing to from US $190 million in 1974 to US $3.458 accept outside income, the business of billion in 2004. On the other hand, A report product placement has been an integral and by PQ Media (2008) found that product active portion of for more than a placement spending in the United States century.(Newell et al., 2006). reached $2.9 billion in 2007. According to this report product placement was projected Apart from the conspicuous of the to reach $5.6 billion in 2010 with a growing United States in the product placement at a rate of 34% annually between 2007 and industry, the industry is booming in many 2010. other countries including Latin American ones. In general, the continent’s renowned Despite their varying figures, most of the telenovela () production industry research reviewed {Lehu (2007); Nelli is financed in part by revenues from product (2009); Beale (2011); PQ Media (2008); placements. According to Russell and Stern Reed Business Information (2002); Kim and (2006) Brazil’s product placement industry is

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the most prominent in the region. Brazilian Devanathan, 2006). Also in the same year in soap opera production is partially subsidized Mohabbatein Coca-Cola verbal mentions by government funding, but product signs are eminent in background setting placement is the main source of funding. (Nelson and Devanathan, 2006).

Nelli (2009) states that following the US and In Korea a screen quota system that aims at Brazil, Italy is considered the third fastest increasing local production to face foreign growing product placement market globally. competition, has meant that additional American style high budget box office hits It is estimated to have crossed $123 million needed be produced. To illustrate Sung et al. after 2009. He argues that product (2008) state that the while the average placements have been providing significant Korean film cost $1 million in 1996, it rose cost-savings and economic benefits to to an average of $4.2 million in 2004. They moviemakers, which have replaced funding add that without using product placement, it previously received from the government. He becomes very difficult to cast popular Korean claims that projections for the following year actors. Product placement was first used in estimate Italy’s product placement industry the 1992 film Marriage Story . The film was to reach $123.0 million. officially sponsored and partially financed by Co. Following the debut Product placement is also growing in the UK. of Korean product placement in 1992 the Although traditionally limited to film and frequency of product placements grew only recently permitted on television, many exponentially. This was strongly felt when producers welcome this new revenue stream. several years later in Swiri (1998), the third The funding is essential for the production of most successful film in Korean box-office new programs and films, because filmmakers history approximately 30 different brand and broadcasters are not capable of being the placements from various product categories sole financers. Beale (2011) believes that were used. (Sung et al., 2008) product placement could easily translate into £150 million per year in revenues for British The power of product placement lies not only television. Various UK industry professionals in the growing size of this business on a are eager for the newly legalized product global scale but also in the diminishing placement and believe that what is key is returns of other traditional sources of ensuring that product placement produces revenue needed for the production of films, new revenue (2011b) television programs and other media. Another relevant point is to examine who As in the UK, India’s filmmakers have become stands to financially benefit from product reliant on product placement in the massive placement. Here it is interesting to learn how industry. Nelson and Devanathan product placement revenue will be split (2006) state that Indian films are generally between advertisers, program producers and self-financed. The authors note the growth of broadcasters. product placement in India with local as well as multinational sponsors. A prominent Lehu (2007) explains that the product example of this is in Coca-Cola product placement financial contract is either a placements. In the 1991 film Taal the lead straight contract based on a payment in couple romance over a bottle of Coke. exchange for placement of product or an (Nelson and Devanathan, 2006). In 2001 agent-commissioned contract with the agent Coca-Cola sponsored two major Bollywood getting a percentage of the overall value of films. The soft company paid the contract. He adds that the cost of placing US$670000 for its brand to be placed in the a product in a movie varies based on the film Yaadein thereby covering around or movie genre, the actors involved, the about 20% of production costs (Nelson and duration of use of the brand on the screen,

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and the potential impact of its use or the particularly broad. Admittedly, it is one of the number of audiences reached. more difficult genres to sell to potential advertisers. This being so it is not always a The Impact of Declining Advertising question of audience volume, but of the Revenue foreseeable quality of the audience" (Lehu, 2007) The value of product placement as a source of funding is better appreciated when one In this manner, the potential power of examines the declining income generated by product placement stems from its ability to advertisements. When advertisements replace traditional advertisements as a generate less income, broadcasters and financially lucrative promotional tool that filmmakers have less to fund the production cannot be skipped or eliminated from film of films and television programs. Esser scenes and program segments. (2009), Basso (2009) and Lehu (2007) describe the declining revenue of Despite the seemingly inverse relationship advertisements due to a general audience between the growth of product placement repulsion created by ad clutter and the and the growth of advertising, product growth of advertising skipping techniques. placement is gaining momentum in regions Esser (2009) adds that relying on advertising where advertising is still booming as a main funds is not as effective as it used to be, marketing technique. For example, because of the tremendous number of advertising which may be on the decline channels that exist nowadays, and thus globally, is still booming in the Middle East . decreased viewership per channel, as well as Gouaaybess (2008) claims that advertising in ad skipping techniques. This has led the Arab world is growing rapidly . She states producers to turn to other sources of funding that ads have become the only credible such as subscription fees or sponsorship. alternative, for both political and economic Basso (2009) refers to a sharp decline in reasons noting that there is a great financial advertising revenues in the UK due to opportunity for Arab operators created by fragmenting audiences and the increasing the growth of the advertising market. She use of ad-skipping technologies and services describes the relationship of advertising and such as personal video recorders and broadcasting in the Arab region as growing SkyPlus. Lehu (2007) notes that from a together in harmony. Hammond (2004) also communications point of view the alludes to the exaggerated growth of the fragmentation of audience has drastically advertising industry through , TV lowered advertising effectiveness in both TV commercials. Similarly, Sakr (2007) confirms and cinema. He also refers to the rising that advertising is a main source of funding in popularity of TiVo and DVR which lure the Middle East. She notes that advertising audiences by eliminating advertisements revenue finances content to an extent that from films and TV shows. When this happens, the interests of advertisers influence advertisers stop paying for the content which program development and scheduling. as a result is no longer financed. He distinguishes between the impact of lowered Despite the above findings, product advertisement profits on television and film placements in the Arab world continue to stating that the dramatic rise in the cost of grow side by side along with advertising. ads on TV and the increased number of Movies and television shows have become channels challenges the effectiveness of embedded with product placements of , advertisements on television. In film, , , brands, soda , as however, the problem is exacerbated because well as restaurants and cafes. The reason for in addition to the overall decline of this simultaneous boom is purely financial. advertising power, in cinema ".... the Many indicators reveal a deep need in Middle spectrum of genres and types of films is Eastern media for additional funding sources.

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This is where techniques like product subsidies are required; however, such an placement may be useful . Sakr (2007) states option means that media content will be that advertising industry in the Middle East linked to political agendas, which faces particular challenges that hold it back. undermines credibility and ultimately profits. She notes that the region's advertiser concerns regarding television include a lack Product Placement Regulation of reliable data. In addition, Sakr also refers to a discrepancy of rates charged for different Linking the Perceived Role of Television to shows, with rising rates for some shows that Product Placement Regulation mask the overall decline in advertising profit caused by competition and fragmented There are several noticeable factors that audiences. Sakr (2008) warns that describe international product placement advertising is sometimes deceptively policies. First, the regulation of product appealing. She believes that although placement tends to exist mostly in television, advertising is currently an important source as opposed to film. This is confirmed by of funding, it presents an insufficient source Kuhn, Hume and Love (2010) most existent of revenue for new Egyptian broadcasters, for product placement policies centre on example. A main reason for this as identified television broadcasting leaving product by Sakr (2007) is the oligopolistic media placement in film and music unregulated ownership. This oligopoly has generally resisted data from audience research which Television is generally watched by more they found inconvenient (Sakr, 2007). There viewers and is a more censored medium is a desperate need for additional funding in compared to film. Russell (2009) notes that Egypt’s broadcast industry. The Egyptian TV is an important agent of socialization. In Television and Union (ERTU) had terms of media policies and regulations, the deficit of $70 million in 2006 (Sakr 2007). emphasis is usually on the television Moreover, Sakr (2007) adds that Western medium, because of its perceived role as an style reality shows have grown in the region educator and influencer on society. When it mainly to secure the needed funds through comes to product placements in particular, sms text messages and phone calls. With television is expected to protect against respect to advertisements and the Egyptian commercial contamination of media content. cinema industry the situation is more As noted by Newell (2009) TV differs from complicated than television. In film film, because it is constrained by regulation, advertisements alone may not be a sufficient and professional ethics. It is viewed as a solution. Sakr (2008) states that traditionally defender of public interest and has the task low production costs and a large population of making policies and regulations for the have helped create a boom in the Egyptian common good. cinema industry. However, currently low movie budgets do not attract talented actors. Furthermore, a key television-related The need to secure ticket has also led observation is that product placement films studios in Egypt to own chains of regulation tends to serve the broader cinemas. She suggests that an efficient plan political and economic goals of the regime for funding movie production would be "to regulating it. Following this logic, for finance films from within media example, in free market economies that value conglomerates that can ensure wide and less government interference, product effective through being vertically placements tend to be loosely regulated in integrated up and down the supply chain." favour of the larger commercial model in (Sakr, 2008) In a way the situation is similar which the country operates. to a catch 22. Sakr (2008) states that in Egypt the overall the decreasing profitability of Having said that, it is important to note that local media may suggest some government overall there is a gradual move worldwide

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towards decreased regulation in favour of started to favour free market economies commercialization. As Artz (2007) notes Europe gradually shifted from the public global media today is dominated by broadcasting model in favour of commercial entertainment and capitalism private commercial television. Private has expanded from Europe and the Americas channels in Europe were created at different to the rest of the world. The following times, based on country pressures such as comparison of the US and UK and Arab media the need to create more jobs and lure broadcasting models illustrates all of the additional advertisements. In addition, local above points. channels desperately needed to compete with the emergent channels of their The main difference between American and neighbours. With time independent European broadcasting models lies in the European production companies not linked perceived role of television. Traditionally, to broadcasters grew in number and power. European countries have expected television to play a public service role. This idea helps In a way one may blame the US for being self- explain the reasons and rationales for certain serving by pushing the commercial model European broadcast regulations. On the other globally. As Esser (2009) notes the growth of hand, the American broadcast model tends to channels also meant increased reliance on US fulfil a role that compliments and supports a imports. EU became commercial society based on free trade and eminently concerned about the threat of opening up new markets for goods and Americanization of its media and sought the services. This is also explains why protecting internalization of production and the commercial speech is an American media creation of more interactive media content. priority, as seen in the US Product Placement To combat the perceived threat of Regulation section below. Americanization, quotas for European and independent productions, subsidies, tax The American broadcasting model can be incentives and other policies have been better understood by the research of Russell formulated to maintain European cultural (2006) who compares differences in the role diversity. According to Artz (2007), "The and expectations of the television soap deregulation and privatization of the media operas in the US, Brazil and New Zealand. She conform to the strategic plan of emerging notes that the American soap opera industry transnational capitalist class, which insists on is not expected to have an educational or the removal of any public accountability or social welfare role. Its aim is to entertain and restriction on the accumulation of profit. " sell. Since the government is not involved in funding, the social welfare role is eliminated. Rice (2008) takes this notion further and However, in Brazil and New Zealand the need refers to the spread of American media for government funding dictates that soap imperialism, Conglomeration and opera content must be more educational and consolidation within media-culture socially responsible. industries has meant that a smaller and smaller number of larger and larger (global As in Brazil and New Zealand, European but largely U.S.-based) corporations have countries envisioned a social and educational come to dominate not only American media, role for television. According to Esser (2009) but media around the world. Work in this in Europe public-service ideology influenced tradition points to the uneven, unequal, and the development of television with the aim of generally unidirectional flows of media benefiting society and protecting democratic products-from North to South, from the principles. Television was expected to United States to the rest of the world. They produce objective, diverse and accessible highlight threats posed by these global content of a high quality. With the collapse of corporate media outfits and this uneven flow: the communist system and as global trends threats of displacing native or national

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cultures; eroding the foundations of or of regulation in this area (Kuhn et al., 2010) potential for democracy and the public At the other end of the spectrum lie Denmark sphere; spreading a lowest common and Israel. Denmark is the only EU country denominator-debased and homogenized that does not allow product placement or culture; and, imposing American, capitalist plan to do so (Hall, 2010). Similarly, Israel interests on all others; a form of media completely bans product placement on imperialism (Rice, 2008). television and limits any form of advertisements to broadcast spots.(Schejter, Product Placement Regulation Models 2004)

With regards to product placement As Ginosar and Levi-Faur (2010) explain regulation it is evident that policies vary “Product placement invites scrutiny. Policy across nations. While some states have very makers and regulators worldwide have strict product placement regulations, others responded differently... Some perceive (it) as have liberal or non-existing ones. For just another legitimate source of revenue; example, in Canada television regulation of others see it as synonymous with product placement tends to favour surreptitious advertising and so prohibit it commercial interests. Laws require that altogether.” (p 468) companies disclose all revenue from non- traditional advertisements, such as product Product Placement Regulation in the UK placement (Ginosar and Levi-Faur, 2010). In and Europe the United States, on the other hand, broadcasting regulation promises the When compared to the US, the European and protection of commercial speech, and usually UK models are stricter in their regulation of mentioning the sponsor’s name on program product placement. The main objective of the credits, suffices (Kuhn, Hume and Love, recent product placement policy in the UK 2010). The US product placement policy, and Europe is to adequately forewarn reviewed in details below, sets regulations audiences of the promotional content of the that are easily circumvented by commercial broadcast material and prohibit the indirect and marketing forces. According to Kureshi promotion of certain products. (2010) there are organizations which are actively seeking better regulation from the US European states tend to apply more strict federal commission for product placement. In regulations and are more socially-oriented Italy, has become common, although (February 9, 2010) For example, product disclosure is mandatory. Similar to other placement of tobacco on television are European states Italian regulation conforms banned. In Europe and in the UK, as a result to broader regulations. of specific EU directives, product placement According to Nelli (2009) product placement must always be editorially justified. European is permissible under Cinema Act 28/2004 by law bans the product placement of tobacco, Article 9(3), which requires product tobacco related products and prescription placements to be disclosed at the end of the only medicines in all programs (2011a) The movie when the closing credits are rolling. pertinent laws originated from EC Directive 89/552/EEC later modified by EC Directive According to Schejter (2004) While the US, 97/36/EC ‘Television Without Frontiers Canada, Europe and have differing Directive’ and later modified by EC Directive broadcast restrictions on product placement, 2007/65/EC ‘Audiovisual Media Services they all agree on categorizing product Directive’. Current laws, which the UK must placement as advertised messages. In comply with, apply to films, programs and contrast to the previous models, Mexico and their repeats broadcast from 25th July, 2005 Brazil have become the largest product (Basso, 2009). placement markets, due to the complete lack

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The Television without Frontiers Directive product placements, provided that no defined ‘surreptitious advertising’ as ‘the broadcaster regulated by directly representation in words or pictures of goods, benefited from them (Basso, 2009). The services, the name, the trade mark or the transition from a complete ban on product activities of a producer of goods or a provider placemens to a less restrictive policy of services in programmes when such included a phase where TV channels run on- representation is intended by the screen information campaigns to let viewers broadcaster to serve advertising and might know that some UK shows will soon permit mislead the public as to its nature. Such product placement, and to explain the representation is considered to be intentional meaning of the product placement logo. The in particular if it is done in return for new law states that product placement will payment or for similar consideration’. As a be used in films, including dramas, result, most (but by no means all) EU documentaries, soaps, entertainment shows member states, including the UK, interpreted and sports programs. these provisions as meaning paid for product placement was implicitly prohibited. However, the UK’s new product placement Nevertheless, placements in imported law, in tune with the EU’s regulations sets content are still required to comply with the tough restrictions. Product placement is current rules against undue prominence. As a prohibited in all children’s and result, the Coke branded cups placed on the programs and in current affairs, consumer judges’ desk in are pixellated advice and religious programs made for UK out when the series is shown in the UK. viewers (2011a) Brown (2010) provides (Basso, 2009, p. 178) more details specifying that the UK current product placement legislation bans programs In the UK the use of product placement has in the categories of foods high in fat, salt or been permitted on television with additional sugar, the national lottery, , infant restrictions to the original European baby milk, over-the-counter medicines, directive. In addition to the list of banned and other smoking products. products set by the EU, the UK law also prohibits product placement promoting Product Placement Regulation in the US alcohol, gambling, baby milk and junk food. (February 9, 2010) The UK law is based on a A major difference between UK or European list of regulations set by the Office of product placement regulations and American Communications (OFCOM).This body is ones is the list of banned products. Unlike responsible for various UK communications European laws US policies allow placement industry policies based on the of tobacco and alcohol. Ta (2008) notes that Communications Act 2003. OFCOM’s scope placements in the US are allowed for both includes the regulation of broadcasting and liquor and beer in television and cinema. the provision of television and radio services Also, tobacco companies and studios, until (Basso, 2009). The UK product placement recently, have used product placement in law, in effect since February 28, 2011, television and cinema despite explicit requires broadcasters to display a "P" logo voluntary bans on such promotions. for three seconds at the start and end of programs and after any advertising breaks As in the UK and Europe, the movie industry when any brands have paid to be featured ( , in the US has traditionally enjoyed a much 2011c). Prior to February 2011 product higher level of protection, when compared to placement was banned on content made for the broadcast media category. According to UK TV. Non-UK programs and imported films Ong (2004) placement in American movies were regulated differently. Programs are not regulated. Balasubramanian (1994) acquired from outside the UK, and films explains that this is generally because films made for cinema, were allowed to contain are allowed more independence under First

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Amendment freedoms. “Given the complex Communication Commission (FCC) is the nature of telecasting and the finite range of body that regulates policies regarding wireless frequencies and cable channels commercial content. According to available, access is naturally restricted to a Balasubramanian (1994) product placements limited number of licensees; because in television programs and syndicated films telecasting is an effective means of one-way produced for television broadcast are communication with mass audiences, it offers required to comply with the FCC rules on the licensee enormous power to influence sponsorship identification. The FCC regulates them." (Balasubramanian, 1994, p 36). sponsored programming under the Communications Act of 1934 which requires In the US regulatory forces face a dilemma broadcasters to disclose to their viewers at which weakens their position as effective the time of broadcast if any content of the policymakers. On the one hand, product broadcast has been made in exchange for placement laws seem protective of viewers money, or services. The responsibility of the by requiring sponsorship identification. The broadcaster is to make sponsorship aim is to alert audiences to commercial disclosures (Lewczak and DiGiovanni, 2010). content they may not be aware of. This The law requires sponsorship identification motive would also justify creating more announcements to appear at the beginning restrictive product placement regulations. On and end of a program that lasts longer than the other hand, however, the government has five minutes. However, product placement in another obligation, under the First feature films produced for theatrical Amendment, to protect commercial speech. exhibition are not subject to the sponsorship Lewczak and DiGiovanni (2010) explain that identification rules. The policy of the US government is only allowed to sponsorship identification originally included regulate commercial speech under limited feature films, but in 1963, the FCC waived circumstances. The conditions are set by the this requirement when they are subsequently Supreme Court’s four-part Central Hudson broadcast on television. According to Section test. First, in order for the speech to be 317(a) (1) of the Communications Act, protected under commercial speech, it must sponsorship identification is not required in not be false or deceptive nor concern situations where the product sponsor offers unlawful activity. Second, there must be a economic incentives, as long as the use of the clear and strong government interest in product in the program is not “beyond an regulating. Next, it must be evident that the identification reasonably related to the use of regulation is directly linked to promoting such service or property in the broadcast" government interests. And finally, the (Balasubramanian, 1994, p. 36) Such policies regulation must not be extensive and lead to the perception that there is a lack of restrictions should not go beyond serving the effective regulation of product placement in government interest. Under this rationale, the US. any overregulation of product placements would infringe of first amendment rights. Clearly, the current product placement law contains many loopholes and needs to be However, acting on behalf of citizens the revisited. There are many ways in which government has a role in protecting viewers sponsors are avoiding the sponsorship from . Flint (2010) states that the identification law. Ong (2004) states that need for placement to be identified in TV ironically, due to the sponsorship programs is based on the rationale that identification rules imposed by the FCC, viewers should know who is trying to product placement on television are usually persuade them. Even when no money is unpaid for. Products that are furnished as exchanged for the placed products, backdrops for a TV program scene do not regulations require some sort of reference to have to be disclosed as long as they are subtle their provider. In the US, the Federal and not portrayed in an unreasonable

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implying commercial content. In addition, Available: Sutherland (2006) points to a major policy http://www.pqmedia.com/branded- contradiction linked to “payola” activities. entertainment-marketing-2008.html , which is basically when song [Accessed July 1, 2012]. producers pay radio stations to play their songs, is considered an illegal activity. In (2011a). "Product Placement Logo to be 2004 was fined $10 million for payola Shown on TV Screens," [Online]. Available: practices. Sutherland wonders how similar http://media.ofcom.org.uk/2011/02/14/pro practices like product placement and payola duct-placement-logo-to-be-shown-on-tv- may have different legal implications screens/ [Accessed February 4, 2012. (Sutherland, 2006) For all such reasons it was not surprising that, in 2008, under (2011b). "Product Placement: Who will be increased pressure from certain groups, the the Real Winners?," Televisual [Online]. FCC promised more obvious disclosures of [Accessed January 23, 2012]. product placement, the extension of regulations to , and additional (2011c). "Public Concern Over Product restrictions for children’s programming. Placement Still Remains," Marketing Week (Lewczak and DiGiovanni, 2010) [Online], 34. [Accessed January 23, 2012].

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Tara Al-Kadi (2013), Journal of Marketing Research & Case Studies, DOI: 10.5171/2013.561655