Writers Guild Wants to Push the Product Placement Envelope

by Adonis Hoffman

The Writers Guild of America has petitioned the new Chairman of the Federal Communications Commission to pass new rules on product placement.

Specifically, the WGA wants the FCC to regulate more strictly the disclosure of commercial products that are embedded in program content.

My view is this:

"Arguments for stricter rules for embedded advertising imply there is an underlying harm simply because a product appears in the show. We cannot forget the guidance the Federal Trade Commission provided on this issue when it ruled that when a product merely appears in the content without making a claim it is little more than a prop.

"If more clarification is needed, a statement at the end (or even the beginning of a program) noticing that some 'props' in the show were paid for, would seem to address the issue of transparency. Beyond that, there remains the issue of harm. Thus far, no one has made a clear or compelling case that consumers are harmed by products merely appearing in the content."

(c) 2009

Cheerios Combatting Cholesterol

FDA: Cheerios Claims Could Make It A Drug

Must stop promoting as reducing cholesterol by certain percentage or face seizure and injunction

See article at: Broadcasting & Cable

By John Eggerton -- Broadcasting & Cable, 5/12/2009 2:46:03 PM MT

The Food and Drug Administration has warned Cheerios that it will either have to stop promoting the cereal as reducing cholesterol by a certain percentage or face seizure and injunction against manufacture.

That is because if it continues to maintain that the cereal can lower cholesterol by 4% in six weeks, the FDA says, the government will consider the cereal a drug, and a new drug at that, which cannot be marketed at all without being submitted first for approval to the FDA.

That is according to a letter to the company on the FDA web site.

Cheerios maker General Mills stood by the claim, but said it would work with the FDA to address its concerns.

The FDA letter, dated May 5, gives General Mills 15 days from receipt of the letter to correct the violations or face "enforcement action without further notice," adding that "[e]nforcement action may include seizure of violative products and/or injunction against the manufacturers and distributors of violative products."

The FDA points out in the letter that it has approved the claim that soluble fiber from whole grain oats, which Cheerios is made from, is associated with a reduced risk of coronary heart disease. The claim can also include that Cheerios, for example, reduces that risk via lowering LDL cholesterol. Where the claim by Cheerios manufacturer General Mills runs afoul of the rules is by including a percentage of reduction. The rules state that the claim cannot attribute any degree of risk reduction for heart disease, and the FDA considers LDL cholesterol (so called "bad"
cholesterol) levels to be a "surrogate endpoint" for coronary heart disease.

In a statement, General Mills spokesman Tom Forsythe defended the cereal's claims. "Cheerios' soluble fiber heart health claim has been FDA-approved for 12 years, and Cheerios' "lower your cholesterol 4% in 6 weeks" message has been featured on the box for more than 2 years," he said. "The science is not in question. The scientific body of evidence supporting the heart health claim was the basis for FDA's approval of the heart health claim, and the clinical study supporting Cheerios' cholesterol-lowering benefit is very strong. The FDA is interested in how the Cheerios cholesterol-lowering information is presented on the Cheerios package and website. We look forward to discussing this with FDA and to reaching a resolution."

At press time, the company was still promoting the cereal on its Web site as helping reduce cholesterol by 10% in one month.

“I don’t understand the FDA’s logic in issuing a warning letter to General Mills for their claims that Cheerios can lower your cholesterol,” said Adonis Hoffman, senior VP and counsel for the American Association of Advertising Agencies. “If the claim is truthful, not misleading and can be substantiated, what sense does it make to require a food product to be treated like a drug? Where does such a policy lead us when it comes to claims for healthful foods such as broccoli, milk, eggs, beef, oatmeal and many, many more?”

Erectile Dysfunction Commercials are Not Indecent

by Adonis Hoffman

On April 29, Congressman Jim Moran (D-VA)introduced HR 2175, the "Families for ED Advertising Decency Act".

The legislation would change the law to require the FCC to interpret and enforce its regulations to treat any ad for "a medication for the treatment of erectile dysfunction or for male enhancement" as "indecent material" and prohibit such ads on radio or television from 6 a.m. to 10 p.m.

Recognizing that many things often get turned around in the heat of the debate, I felt compelled to point out a few important facts. Let's call them the 10 C's of ED advertising.

1. Concern for Children--Underlying the legislation is a legitimate concern for protecting children from inappropriate commercial messages. This is a lofty and laudable objective for any public policy, and as a parent I agree totally with the goal. Although the bill has this aim, the proscribed enforcement will not accomplish the objective.

2. Conditions--We often lose sight of the fact that ED commercials promote medicines for a legitimate medical condition, which while ridiculed, is no laughing matter to the thousands of men and couples who suffer from it.

3. Comfort--One of the many side effects of ED medications beyond headache, loss of vision, and nausea, is the ominous "four hour erection" . Because FDA regulations require these ads to cite all known benefits and risks, this side effect has to be plainly stated or articulated. That alone, makes many people uncomfortable.

4. Censorship--The new law would require the FCC to treat ED advertising the same way it treats highly salacious visuals, pornography and other "indecent"material. This would amount to an unacceptable level of government censorship, which if polled, probably would be rejected soundly by the average man or woman on the street.

5. Constitution--There are serious questions as to whether such a ban on advertising would pass the Court's long-developing test for the protection of "commercial speech". After all, as long as the ads truthfully promote a legal product, the government has to show a compelling interest in limiting their publication and get around a presumption that there may be less restrictive alternatives to such a limitation. It is doubtful the Moran bill could pass these well-established constitutional tests.

6. Conversation--Often overlooked in the debate on DTC advertising in general, is the fact that these commercials have proven to drive patients to doctor's offices and as a result, engage in a conversation about their health. In the case of ED, thousands of men not only have begun the conversation, but in the course of treatment have discovered they suffered from previously undiagnosed conditions, including high cholesterol, diabetes, and hypertension. For men of color, these conditions are even more prevalent.

7. Clearance--Any commercial that appears on broadcast television has gone through a series of clearances to make sure they meet a laundry list of criteria. In the case of ED commercials, the clearances have been even more strict, as pharmaceutical companies and their advertising agencies now voluntarily submit the ads in advance to the FDA for its opinion as to their propriety. Of course every network has its own in-house standards and clearance advisor (often called censors) to make sure that commercials and program content meet their standards.

8. Code--The Pharmaceutical Manufacturers of America (PhRMA), the trade association for drug companies, instituted an industry-wide set of Guiding Principles on DTC advertising which establish a notable self-regulatory regime. Sweeping in their application, the PhRMA Guidelines set up very reasonable rules of the road for drug advertising. Principle 16 speaks to this problem directly: "In terms of content and placement, DTC television and print advertisements should be targeted to avoid audiences that are not age appropriate for the messages involved. In particular, DTC television and print advertisements containing content that my be inappropriate for children should be placed in programs or publications that are reasonably expected to draw an audience of approximately 90 percent adults (18 years or older)."

9. Corporate Responsibility--The behavior of the drug companies in upholding this principle can be viewed as a matter of corporate responsibility. Responsible advertising requires them to take into account the impact of their messages on society. If it can be shown that these commercials are having a negative impact, the companies should, as a matter of good corporate citizenship, adjust when and where they are broadcast.

10. Constructive Compromise--As with most things in life, the solution to the problem Congressman Moran has identified probably lies in a compromise of some sort. Is it not reasonable for Congress to go back to the pharmaceutical industry and ask it to enforce its own self-regulatory code? Can't Congressman Moran enter into a constructive dialogue with the big drug companies to discuss this issue? Wouldn't that be more productive than a prolonged and costly legal battle which surely would ensue over the constitutionality of the law, should it pass?

In sum, there are many more arguments to be made against legislation that prohibits ED ads than those in favor. Now in the interest of full disclosure, I do advise advertising agencies on legal and legislative matters in Washington. But it seems to me, the solution here is more a matter of common sense conversation between policymakers and big pharma than anything else.

(c) 2009. All rights reserved

Danger Signs for Advertising and Marketing

by Adonis Hoffman

Unless something changes, advertising as we know it today could be headed for a cataclysmic run-in with policymakers who would like to impose more, not less, regulation on the industry. My suspicion—and fear—is that in a dynamic, fast-paced, new media environment, industry self-regulation may no longer be enough to withstand the inclination of government to regulate industries that it does not understand and are too large to ignore.

I believe there are twelve (12) indicators that portend more, not less, governmental regulation of advertising in the future.

Over the course of the next few days, I will comment on these indicia with a degree of, I hope, some insight.

I should say at the outset that none of these indicators have anything to do with a lack of effectiveness of industry self-regulation. As any astute observer will attest, the advertising industry’s self-regulatory framework works extremely well. It is efficient, saving government thousands, if not millions, of dollars in routine oversight and enforcement. It is effective, compelling compliance with well-recognized principles for ethical and responsible advertising. And the system has been lauded by successive chairmen of the Federal Trade Commission as a model for other industries to follow.

But sound reasoning and rationale has never been a deterrent to governmental intrusion before, and I’m afraid it may not be a deterrent going forward in the new media environment.

So, here goes:

The first sign of danger is advertising is a big industry, and it’s getting bigger.

At an estimated $600 billion, the advertising industry is large and growing. Even with cyclical expansion and retrenchment, the sector will continue to grow steadily over the next five to ten years. It is a juggernaut whose tentacles touch every other sector of the global economy.

Since its rather pedestrian beginnings at the turn of the century, advertising has become more sophisticated, more ubiquitous, and—according to its many critics—more intrusive than ever. Its reach is global. Its impact virtually incalculable, even though billions of dollars are spent each year trying to do just that. Measurement of advertising’s value and reach has become a science with its own lexicon and subculture. And the laws that have evolved to regulate, limit and allow advertising are multiplying, as cities and states join the federal government’s efforts to contain the advertising juggernaut.

Advertising is an indispensable element of competition, and competition spurs the technological innovation that makes appliances, cars, computers, personal services, and much of what we need to live, quite affordable indeed.

The tremendous growth of the Internet has opened up yet another medium for advertising products and services. Online advertising dollars recently eclipsed radio, and print, television and cable are sure to follow at some point in the not-too-distant future.

The salient point about the size of the advertising industry is not to stand it in competition with other industries. My concern is that advertising has grown much too large for government regulators and policymakers to ignore or leave alone. It remains one of the biggest industries—outside the Internet—that has remained largely underegulated. Or put a better way, it is one of the biggest industries with its own self-regulatory framework augmented by light-touch government regulation.

(c) 2008. All rights reserved

Advertising Makes the World Go Round

by Adonis Hoffman

You cannot pick up a business magazine or newspaper today without reading a headline about advertising. “Google Acquires Ad-Serving Network;” “Microsoft Makes Bid for Yahoo's Advertising Network"; “AOL Abandons Pay in Favor of Ad Supported Service.” And the list goes on.

For an industry that has been overlooked, overshadowed and under-appreciated, advertising is finally getting its long overdue credit. The business world has figured out what everyone in advertising has known all along: advertising makes the world go round. In 2006, over $150 billion was spent on measured media advertising. Growth of 4 percent is projected for 2008.

Advertising, after all, is something of a shadow industry, akin to the “invisible hand” Adam Smith used to describe the force that guides free market capitalism. It undergirds the core of almost every major industry and has been the economic backbone of the media business since inception. Unfortunately few have publicly attributed such prolific economic power to the advertising industry, so the folks on Madison Avenue have had to pat themselves on the back over the years.

Until recently, the advertising industry had a latent inferiority complex that deepened whenever a new technology or “new thing” got credit for driving economic growth. Other sectors have looked down on advertising for decades, treating it as a lesser-than, but necessarily tolerable, component of whatever (bigger) business they are in. But all that is changing. With private equity confirming the multiples surrounding advertising, economic respect is on the way. There’s a palpable self-confidence permeating the advertising business today, even amidst the financial and cultural problems the industry perennially faces.

But with higher stakes come higher barriers to entry. Advertising agencies themselves can no longer afford to make horizontal acquisitions. The entrance of big money players has changed the rules of the game for the foreseeable future. The signs are clear, and in the words of Fergie and the Black-Eyed Peas: “If you ain’t got no money, take your broke a** home.”

Without doubt, advertising’s ascendance owes much to the maturation of digital, interactive and broadband technologies. The advertising models driving today’s market were heretofore impossible because the media platforms were neither reliable nor well-developed. Annual spending on online advertising recently surpassed spending on radio advertising, and it is on target to bypass newspaper, magazine and other media in the not-too-distant future.

So what does all this mean and why is it important anyway?

First, paid-for consumer content could slowly die. The proliferation of ad-supported networks provides so much choice that paid content will have to be extremely rich, highly targeted or extremely narrow to demand subscriptions. Cable television remains the glaring and profitable exception with its dual revenue streams.

Second, advertisers could slowly eclipse media as arbiters and developers of non-news programming content. In an environment where consumer choice abounds and media lack leverage, advertisers can be the kings of content if they choose to exercise their market power. As more media move toward a pure-play advertising model, the big challenge for advertising creatives will be to remain relevant and part of the mix.

And third, speaking of power, at the end of the day, it is all moving slowly but surely toward the consumer who alone determines which media platform(s) to watch, support and include in their social networks. Advertisers must find new ways to keep them engaged and interactive, while at the same time respecting their privacy, tastes and individual priorities—a daunting, but not impossible challenge for the future of advertising.

(c) 2008. All rights reserved

Common Sense on Product Placement

AAAA, ANA Push FCC on Product-Placement Rules

w w w . b r o a d c a s t i n g c a b l e . c o m

American Association of Advertising Agencies, Association of National Advertisers Meet with FCC Commissioner McDowell

By John Eggerton -- Broadcasting & Cable, 2/5/2008 5:40:00 PM

Advertisers and agencies are trying to get the Federal Communications Commission to seek more comment and information before deciding to adopt new rules on product placement.

In a meeting Monday with FCC commissioner Robert McDowell, representatives of the American Association of Advertising Agencies and Association of National Advertisers said that if the FCC did anything, it should open an inquiry rather than proposing rule changes.

According to a filing at the FCC, they argued that the commission's existing sponsorship-identification rules are sufficient and cited the Federal Trade Commission's 2005 finding that no action was warranted on product placement absent a showing that it was unfair, deceptive or harmful.

Adonis Hoffman of the AAAA and Daniel Jaffe of the ANA said their associations would also like to clarify for the FCC the different types of product placement, including the differences between paid endorsers, products that are "embedded" in programming but are not sponsored, products that are embedded but make no claim about a product and paid-for product integration.

© 2008, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

America Interactive--The Republic is Not Yet Safe

By Adonis Hoffman

If history is any barometer, it will not be long before a well-meaning public servant comes up with a solution to a problem that does not exist. Policymakers just might over-react to new technologies they do not quite understand. For some, the default position becomes: when in doubt, regulate. Or at least try to regulate.

In line at the DuPont Circle Krispy Kreme in Washington, I could not help but notice the young woman ahead of me who was peering intensely into her video iPod. On the screen was a podcast of last Sunday’s Meet the Press. I asked her how she liked watching programs on such a small screen and whether it was worth the time and effort. She said her husband uploaded all of her content every morning, and sent her off to work with more programs than she could watch—all without commercials. “And, oh by the way,” she said, “we don’t really watch much TV at home, nor do we have cable—he gets most of this stuff online.”

As a parent of two teenagers, I am rapidly becoming an interactive expert out of necessity—not unlike a jailhouse lawyer—because there is so much I need to know just to keep apace in the day-to-day world of digital convergence where music, games, voice, video, products, goods and services are all within the grasp of a handheld device. In the wrong hands—say that of a fourteen year old male—this could be disastrous either due to the cost or the content. But for a responsible adult, this new world is simply marvelous.

When I talk with advertisers seeking to master today’s new world order, I encourage them to leave their value judgments at the doorstep. The ease of interactivity changes everything, not the least of which is how marketers vie for the attention of viewers, listeners and consumers. For the millions of Americans who love shopping from home via television, interactivity makes purchasing as easy as pressing a button on the remote control. For those who buy online, permission based marketing messages and RSS can cut through the usual clutter. And for wireless handheld devices, the sky is the limit.

While some experts say that better creative content is the key, I think the answer lies in the speed, personalization and medium of delivery. After all, when the ad for sales on the latest lacrosse sports gear comes over my son’s cell phone, he could care less about the creative content—although there are style points given for the “cool factor”. Three things make it most effective: First, the ad reached him where he was; second, it was for something he really wants and somehow opted into; and third, it caught his attention before and better than any other form of marketing.

But all is not rosy in this scenario. If history is any barometer, it will not be long before a well-meaning public servant comes up with a solution to a problem that does not exist.

My concern is that policymakers just might over-react to new technologies they do not quite understand. For some, the default position becomes: when in doubt, regulate. Or at least try to regulate.

This is not good for business, good for competition or good for end-using consumers. America, if not there already, is well on the road to complete media and marketing interactivity, and consumers appear to really like the power it gives them. Few people really understand how all the interactive technology works. Even fewer know anything about the complex interstitial relationships between suppliers, delivery systems and media platforms. What’s more, they don’t care.

What people care about is ease. Make it easy for them to do what they want to do with the medium that is in their hand, on their desk or in their family room, and they will be very, very happy. If marketers can help policymakers understand this simple, but powerful maxim, the republic will be safe for the pursuit of commerce, innovation and information.

If marketers do not succeed in making the case, we could see 20th century regulation imposed on new millennium technologies. Not a comforting thought.


© Adonis E. Hoffman, 2007