Friday, September 19, 2008 - The Progress & Freedom Foundation Blog

PFF filing in FCC product placement / embedded advertising inquiry

In late June, the Federal Communications Commission (FCC) opened a Notice of Inquiry and Notice of Proposed Rulemaking regarding "Sponsorship Identification Rules and Embedded Advertising" (MB Docket No. 08-90). Basically, it's an inquiry into the product placement and embedded advertising practices on television. Some at the FCC want such practices regulated.

PFF filed comments in the matter today. Ken Ferree and I argue that that FCC regulation of such advertising practices would be unnecessary and unwise. "If the Notice demonstrates anything," we argue, "it is that a majority of the current Commissioners live in a world wholly alien and unfamiliar to most Americans; indeed, a world long forgotten if it ever existed." We continue:

The Notice alludes menacingly to new, "subtle and sophisticated means" of commercial messaging, to "sneaky commercials" (quoting a senescent order topped with nearly fifty-years of dust) and to "vindicat[ing]" the policy goals of the Communications Act - as if the FCC must exact vengeance on those who would try - horror of horrors - to sell goods and services to the American public. The melodramatic tone of the Notice is intended, of course, to set the stage for the Commission's latest effort to micromanage the free marketplace of ideas, i.e., the media. Only by portraying "embedded" advertising as something new and nefarious can the Commission hope to justify a new portfolio of intrusive and burdensome speech regulations in the name of preserving the "public's right to know who is paying to air commercials or other program matter on broadcast television and radio and cable."

And, as we make clear in the filing, we don't buy the argument that the public are nothing more than mindless sheep:

Motivating the effort to expand the FCC's regulation of private speech is a view that the Commission must protect the public from "stealth advertising" and "secret" advertisements that "prey upon unsuspecting minds." One would think that before such loaded and sinister characterizations were used, the Commission might demand some evidence that the public is both 1) unaware of the commercial nature of product placements or other embedded advertisements and 2) that some positive harm flows directly from any such lack of awareness.

In fact, however, there can be little doubt but that viewers and listeners understand that when "American Idol" judges drink from Coca Cola cups, promotional consideration was exchanged; when a radio host talks about the great dinner he ate at Ruth's Chris Steak House, the restaurant is a sponsor of the show; when contestants on "The Biggest Loser" are taught how to make desserts with "Jell-O" gelatin, the association is not serendipitous. When brand names are used in program material, the public generally understands that some form of commercial sponsorship is involved. Indeed, it is hard even to imagine that the American public could be as ignorant or naïve as a majority of the Commission appears to believe they are.

Indeed, we argued, "With respect to embedded commercial material, the Internet has spawned a variety of instantaneous feedback mechanisms allowing average Americans to serve as media watchdogs, policing product placement and taking steps to point out when placements have become excessive, or even silly." For example, product placement and brand promotion in movies and television is now closely monitored by a wide variety of websites, such as and Also see the "Product Placement" entry at Wikipedia. Thus:

the "harm" posited by the Notice is an imaginative fiction - a fiction driven entirely by the paternalistic view that an enlightened few, who happen to be ensconced on the 8th floor of a federal building in Southwest D.C., see the truth while the public at large is made up of mindless sheep being duped at every turn by advertisers. In fact, of course, those who hold this view are themselves victims of the so-called "third-person effect": "People tend to think that other people are fooled by what they themselves understand perfectly." [quoting W. Phillips Davison, 1983] A rich literature exists on the myriad ways in which the third-person effect has predicated calls for speech controls and media regulation.

But what's the harm, a skeptic might ask, in a little more FCC regulation here? It's three-fold: (1) It's another blow to First Amendment rights. (2) It unfairly singles out the already over-regulated broadcast media sector relative to its many unregulated competitors. (3) It could have a detrimental economic impact on the health of that struggling sector, which relies entirely on advertising to maintain its "free" content offerings. As we go on to conclude in our filing:

Ironically, the "remedies" suggested in the Notice not only are unnecessary, overbroad, and over-burdensome given the absolute paucity of evidence that embedded advertisements pose any kind of risk or harm to the public, they would in fact have a deleterious effect on the health of free media in America. As a result of the rapid introduction and growth of new media outlets, traditional media operators, and particularly free broadcast media, are struggling to remain relevant and profitable. An era of media abundance for consumers is an era of hyper-competition for suppliers; traditional media operators and their business models are under enormous strain. Yet the burdensome disclosure regulations posited in the Notice are targeted directly at traditional media platforms, while new media outlets over which the FCC has little or no authority would remain free to sell advertising in whatever form they choose.

Not only would such an approach be inequitable, it would sap the very lifeblood of free, traditional media - commercial advertising. At a time when VCRs, DVD players, digital video recorders, video on demand, video on the Internet are making stand-alone commercial spots obsolete, embedded advertisements and product sponsorship may become the only methods of continued support for free, over-the-air broadcasting. Further, enhanced government regulation of speech on traditional platforms will only serve to accelerate the migration of program content to new, unregulated platforms.

In this case, therefore, the proposed remedies are worse than the purported disease. In the name of protecting consumers from "hidden" advertisements, the FCC is contemplating rules that likely would destroy the financial health and well-being of the free broadcast medium and unfairly handicap cable services vis-à-vis new media platforms. Indeed, because of the steady progress of media technology, the very rationale for FCC content regulation of broadcast and cable programming has become superannuated. Advertisers and consumers have moved on and are adapting to the 21st Century media marketplace -- the Commission should, too.

Our filing can be downloaded from the PFF webpage here and I have embedded the filing below in a Scribd reader if you care to take a quick look:

Product Placement - Embedded Advertising Filing (PFF) - Upload a Document to Scribd

posted by Adam Thierer @ 10:41 AM | Free Speech , Mass Media