• by David Goetzl , June 30, 2008

The Federal Communications Commission has begun a formal inquiry into altering its regulations governing product placement. The agency is seeking comment on whether greater disclosure of so-called "embedded advertising" is needed--and if so, how this should be done.

One possible outcome is that networks may have to note the placement via lettering that covers 4% of the screen and lasts for four seconds.

In its notice, the FCC wrote that as product placement becomes more widespread, FCC rules must "protect the public's right to know who is paying to air commercials or other program matter on broadcast television, radio and cable." But it added that the rules must be considered in light of "the First Amendment and artistic rights of programmers."

FCC regulations currently do not cover cable, so extending them to that medium would be notable. But most of what the FCC is exploring could be a game-changer.

For example, one issue under consideration is whether the FCC should mandate disclosures during a program simultaneously as a paid-for sponsorship on the screen. Also up for debate is whether disclosures should be required before or--more radically--before and after a show that includes product integrations.

Networks seem to abide by current regulations requiring disclosure "during the programming," by placing them within the credits.

The FCC is also looking into disclosures similar to what the current rules call for with political ads, in which a candidate must make it clear that the message is from a particular campaign via lettering that covers 4% of a screen's height and stays there for four seconds. The FCC is seeking input as to the size of the lettering and length of air time.

"Reality TV should mean informing viewers about who is secretly pitching to them in the TV shows they are watching," said FCC Commissioner Jonathan Adelstein. "The true reality is that news and entertainment alike are practically being turned into undisclosed commercials. Many current practices fly in the face of viewers' legal right to know who is pitching to them."

Some may argue that the current FCC rules that require some disclosure of product placement tactics are weak; decisions are left to the "reasonable, good faith judgment" of the broadcaster.

Other concerns include whether rules governing "embedded advertising" in children's programming are sufficient. Should there be more disclosure when a radio host reads a paid-for spot, in which he or she personally endorses a product?

Commissioner Michael Copps said: "It is my strong initial belief that embedded advertising in children's programming is already prohibited because it would run afoul of our existing requirement that there be adequate separation between programming content and advertising."