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PRODUCT PLACEMENT

• ECTA 26th Annual Conference
• Deauville, June 2007
• Irene Braam
• Director Government Affairs
• Bertelsmann AG

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Table of Contents

• What is Product Placement
• History of Product Placement
• Product Placement - Facts and Figures
• Legal Situation in the US
• Legal Situation in Europe
• IP Owners Rights

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WHAT IS PRODUCT PLACEMENT?

• The intentional usage of a third partys
  intellectual property right in any non-commercial
  communication space designed for entertainment.
• A way to advertise and establish trademarks.
• BUT ALSO
• An additional source of income for movie and
  television production.

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WHAT IS PRODUCT PLACEMENT?

• Product placement (PP) appears in plays, films,
  television series, music videos, reality shows,
  video games and books.

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II. HISTORY OF PRODUCT PLACEMENT

• Since the 1980s, PP became more common.

PP can be traced back to at least 1944 when in
the thriller Laura, one of the main
characters drinks an imaginary brand of whiskey
called Black Poney. Following the movie the brand
was launched in real life.
In 1945 Joan Crawford brought Jack Daniels to
the silver screen in the movie Mildred Pierce.
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II. HISTORY OF PRODUCT PLACEMENT

• At the beginning PP was mostly used in movie
  productions but with the television screen
  entering family homes PP found its way into
  popular television programmes such as soap
  series.

• In recent years PP is also used in reality
  shows,
• computer and video games and is likely to
• be used in other non traditional and new media.

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III. PRODUCT PLACEMENT FACTS AND FIGURES

• WHY PP HAS BECOME A POPULAR MEANS TO PROMOTE AND
  MARKET BRANDED PRODUCTS
• Television and movie producers have started to
  look for other ways of financing their
  productions as costs have increased
  significantly.
• The development of ad-skipping technologies such
  as the PVR and accelerating audience
  fragmentation have led major marketers to look
  for other ways to advertise.
• PP enables the advertiser to key-target a
  specific audience.
• PP is relatively a cheap way to market and
  promote a brand but can have significant impact
  The 1982 movie E.T the Extra-Terrestrial,
  increased sales of Reeses Pieces by as much as
  80 percent.

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III. PRODUCT PLACEMENT FACTS AND FIGURES

• PRODUCT PLACEMENT IS A WAY OF ADVERTISING
• PP integrates the advertiser's product into a
  television show or movie thereby giving clear
  visibility without focussing on the branded
  product.

PP should not be confounded with productor brand
integration whereby the advertisers product is
central to the programs plot line or sponsoring
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III. PRODUCT PLACEMENT FACTS AND FIGURES

• One can identify three major types of PP
• PP arranged by the advertisers in return for a
  financial compensation.
• PP arranged by the advertisers but without
  financial compensation as the product serves as
  compensation- so-called barter deals.
• PP not arranged by the advertiser but nonetheless
  included with the aim to strengthen the plot or a
  character no financial compensation is given in
  return.

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III. PRODUCT PLACEMENT FACTS AND FIGURES

• PP DEVELOPMENT IN FIGURES
• According to the 2007 PQ Media Study companies
  worldwide paid nearly 3.4 billion last year to
  have their products appear in movies and
  television programmes.
• The spending on PP in 2006 was up 37 percent
  compared to the previous year
• PP spending is expected to rise a further 30
  this year according to PQ Media.
• PQ Media cites 18 to 34 year olds as a key
  audience for PP due to their lack of brand
  loyalty and for their channel surfing.
• More than 50 of the PP spending is found in 4
  marketing categories
• transportation, clothing accesories, food
  beverages and travel leisure
• Other categories such as electronics
  technology, toys sporting goods and media
  entertainment are expected to increase their PP
  spending in the coming years

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IV. LEGAL SITUATION IN THE US

• PP has been largely unregulated due to the fact
  that it has its roots in the movie industry which
  has been an unregulated industry by tradition
  except for PP which appears on broadcast
  television or radio and which is covered by the
  Federal Communications Commission (FCC).
• The FCC does not prohibit product placement in
  radio and television broadcasting.
• BUT
• Section 317 of the 1996 Telecommunications Act
  requires on-screen disclosure of product
  placement arrangements.
• All matters broadcast by any radio station for
  which any money, service or other valuable
  consideration is directly paid, or promised to or
  charged or accepted by, the station so
  broadcasting, from any person, shall, at the time
  the same is so broadcast, be announced as paid
  for or furnished, as the case may be, by such
  person

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V. LEGAL SITUATION IN EUROPE

• CURRENT STATUS (1)
• The current EU legal framework (1989 Television
  Without Frontiers Directive) does not explicitly
  address PP but contains an implicit prohibition
  if it is considered to be surreptitious
  advertising.
• PP is therefore covered by the EU-wide definition
  of surreptitious advertising if three cumulative
  conditions are met
• it must be shown that the television
  broadcasters action is deliberate
• the broadcasters action must be intended to
  produce an advertising effect and
• there must be the risk of the public being misled
  as regards the purpose of mentioning or showing
  the product.

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V. LEGAL SITUATION IN EUROPE

• CURRENT STATUS (2)
• Up till now PP is taking place in a grey area of
  the law
• This situation is worsened by widely differing
  national regulatory approaches
• Most EU countries do not have any legislation on
  PP and consider PP as surreptitious advertising,
  some leave the assessment to the broadcasters
  themselves and any legal decisions to the
  national courts
• Some Member States authorise PP, under certain
  conditions and others dont
• Example
• In Germany PP is prohibited but is permitted to
  make products available provided no payment is
  made to get them used (known as
  Produktbeistellung).
• UK has a ban on PP while in Austria PP is
  authorised under certain conditions

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THIS GREY AREA HAS LEAD TO THE USE OF FAKE
PRODUCTS
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WHILE PP IS AN EXISTING REALITY ON EUROPEAN
TELEVISION AND ON ALL OTHER PLATFORMS
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AND WHILE EUROPEAN ADVERTISING CONTENT IS BEING
DRIVEN AWAY FROM EUROPEAN TELEVISION
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V. LEGAL SITUATION IN EUROPE

• RECENT DEVELOPMENTS
• According to the EU Commission, the discrepancy
  between the EU MS creates legal uncertainty and
  puts the European industry at a disadvantage in
  comparison with the US market.
• EU Commission attempted therefore to clarify the
  position in the new Audiovisual Media Services
  (AVMS) directive (proposal December 2005).
• 24 May 2007, the EU Media Ministers adopt a
  Common Position thereby backing the new
  Audiovisual Media Services Directive

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V. LEGAL SITUATION IN EUROPE

• With this new directive the EU allows for the
  first time product placement.
• Article 1 (k) of the AVMS directive defines PP as
  any form of audiovisual commercial communication
  consisting of the inclusion of or reference to a
  product, a service or the trademark thereof so
  that it is feautured within a programme, in
  return for payment or for similar consideration.
• According to article 3f of the AVMS Directive PP
  is authorised in films, televised series, sport
  emissions- and light entertainment programmes
• UNLESS a Member State decides otherwise
• No PP is allowed in children programmes, news and
  current affairs programmes, religious programmes
  and documentaries

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V. LEGAL SITUATION IN EUROPE

• The use of PP is subject however to certain
  conditions
• The viewer should be informed about the fact that
  a programme contains PP by a signal at the start
  and the end of the programme and after commercial
  breaks (In respect of acquired programmes Member
  States have the option to waive the
  identification requirements)
• The content and the scheduling of PP programmes
  shall not be influenced in such a way as to
  affect the responsibility and editorial
  independence of the media service provider
• They shall not directly encourage the purchase or
  rental of goods and or services
• No undue prominence shall be given to the product
  in question
• No PP of tobacco and specific medicinal products
  is allowed.

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VI. THE IP OWNERS RIGHTS

• PP WITH THE IP OWNER CONSENTING
• In the early days of PP, the IP owner did not
  restrict or review the use of their property in
  the movie or television programme
• The IP owner should protect his rights and take
  the following issues into account when entering
  into a contractual relationship
• PP can influence the personality of a trademark
  how and when is the trademark exhibited?
• The IP owner should retain the right to review
  and approve the final version of the use of the
  intellectual property
• PP is still perceived as a way of advertising and
  in absence of specific legislation therefore
  subject to the norms and general principles that
  regulate the promotion of goods and services

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VI. THE IP OWNERS RIGHTS

• PP WITHOUT CONSENT OF THE IP OWNER
• US
• Although the use of the trademarks of other
  parties that is likely to cause confusion,
  mistake or to deceive as to the origin or
  sponsorship or approval of is or her goods by
  another, are an act of infringement of the
  trademarks in question according to the Lanham
  Act, 15 U.S.C 1127, 114 and 1125 (a) such an
  infringement is often difficult to establish
• Fair use and Freedom of Speech llimit further
  the IP owners possiblities to succesfully attack
  the unauthorised use of the IP for PP
• EU
• The IP owner has the exclusive right to use the
  trademark but there are no clear rules in case of
  unauthorised rules of IP in PP cases

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The End

• Thank you for your attention!