FCC Preps Product-Integration Inquiry--Adelstein's Pet Issue Part of Tentative Agenda for FCC’s Dec. 18 Meeting

By John Eggerton
Broadcasting & Cable, 11/30/2007 11:29:00 AM

www.broadcastingcable.com

The Federal Communications Commission is preparing a possible crackdown on product integration in TV shows.

According to sources who have seen the tentative agenda for the FCC's December meeting, it includes a proposal seeking information on how and where to put on-air disclosures for products that advertisers have paid to be worked into the plot lines of shows.

Product integration is distinguished from product placement, where a product might be used as a prop. For example, Everybody Loves Raymond creator and executive producer Phil Rosenthal told a Hill hearing audience earlier this year about a Seventh Heaven episode in which Oreos were repeatedly mentioned by name and even featured in a marriage proposal in which the ring was embedded in Oreo cream filling.
The commission isn't proposing exactly what to do, the sources said, but the item -- which is expected to pass with the help of commission Democrats -- would signal that the FCC is serious about taking some action.

Democratic Commissioner Jonathan Adelstein, in particular, has pushed hard for better disclosure of paid and outside material used in broadcasts, including video-news releases and paid product plugs, but Martin had also pledged to look into it. The issue was also raised in public hearings on media-ownership rules.

Industry lobbyists will be meeting with FCC officials about the issue over the next couple of weeks. They are looking to avoid disclosures that would break up the flow of a show, such as a crawl across the bottom of that Seventh Heaven episode pointing out that Nabisco had paid for the privilege.

Adonis Hoffman, senior vice president and counsel to the American Association of Advertising Agencies, said the FCC should not go in with the presumption that there is a problem or tar new forms of advertising with the payola brush.

"There is quite a bit of misinformation and misunderstanding surrounding the very term 'product placement,'" he told B&C. "Today, the opportunities for advertisers to advance brands in multiple media platforms and formats are not limited to what we all grew up with. But just because there are new forms does not mean there is something inherently sinister going on."

He continued, "It goes against logic for any advertiser to hide its message, no matter where or how it appears. The fact that a product appears embedded in noncommercial content should not be cause for alarm, provided that there is ample opportunity during the credits for acknowledgement and disclosure. What we do not want to see is the association and mischaracterization of today's branded content with the unlawful practice of 'payola,' which everyone acknowledges is wrong ... Our members would look forward to helping the commission understand current practices, terms and trends in the business."

Product integration was among a half-dozen media items circulated among the other FCC commissioners by chairman Kevin Martin. None is a lock to make the final cut, which is released publicly seven days before the Dec. 18 meeting, and items could be pulled after that, as well.

Also on the list are several media-ownership-related items the chairman would probably like to take care of all at once, including a vote on the newspaper-broadcast cross-ownership rules (although pressure from the Hill could still potentially foil that plan); proposals to boost minority broadcast ownership, including a Martin proposal to lease digital-TV spectrum to minorities, women and small business and address broadcast localism; and a vote to cap cable companies' subscriber count to 30% of multichannel-video providers.

The package of broadcast-related issues would be an attempt to bring the 18-month media-ownership-rule review to a close, although, again, that could depend on how much push-back there is from Hill Democrats, who are holding hearings and trying to pass a bill that would block a media-ownership vote.

© 2007, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

The Advertisers' Advocate

The Advertiser's Advocate

By Staff -- Broadcasting & Cable, 7/23/2007
w w w . b r o a d c a s t i n g c a b l e . c o m

Washington legislators are turning up the heat on advertisers over childhood obesity, drug ads and violent content, to name a few issues. Adonis Hoffman's job is to help explain why advertising should not be the government's “default” scapegoat. He is senior VP/counsel at the American Association of Advertising Agencies as well as director of the Center on Responsible Marketing and Media, of the American Business Leadership Institute in Washington. Complex problems can't be solved with simplistic solutions, he says. At stake is more than $10 billion worth of food advertising to kids.

How seriously are advertisers taking the childhood-obesity health issue?

The issue is perhaps one of the most important public-policy issues to come on the agenda in a while. First, we're all concerned about the health of children. Second, advertisers have been front and center on critics' lists as one of the leading causes of childhood obesity.

Is that a fair criticism?

I don't think so. It is clear that many, many factors contribute to childhood obesity. Advertising and marketing is remote at best. While policy makers, public-health experts and the food industry search for solutions, the implications for business are extremely important. Marketers of junk foods have been postulated by many as the chief contributors to childhood obesity. I think there is a disputable scientific basis for the claim, but it has taken root in an activist sector that wants to limit or abolish advertising.

You acknowledge that there is some industry responsibility for the problem as well as for the solution?

There is certainly a responsibility for the solution, and I think that, if you want to look at media as a factor in behavior, yes, media is a factor in behavior for a lot of things.

If childhood obesity is a legitimate threat, shouldn't the government step in to protect kids wherever it can, including regulating TV ads, as FCC Chairman Kevin Martin said it might have to do?

Here are some areas where the government can be helpful. How about lack of exercise? What about stimulating physical-education programs that get kids off the couch? Diet has a big, big role to play. Parental choices. Helping parents become wiser.

The FCC limits ads in children's shows. Why shouldn't it limit food ads in those shows, as Rep. Ed Markey (D-Mass.) has suggested?

The commercial time limits are a legitimate use of the FCC's regulatory authority because it has nothing to do with content. It's a time limitation. To take that authority and extrapolate it into content— as in, you can only advertise food that somebody determines is healthful—that gets us into a qualitative determination by the government into what we can say and consumers can hear. There is no such thing as an unhealthy food. There are unhealthy diets.

What is the biggest government threat to commercial speech?

I am very troubled by the notion that advertising and marketing has been seen as the cause of so many societal ills, whether it is obesity, the high cost of prescription drugs, violence. There has been an automatic default to go immediately to marketing and advertising.

What is driving this issue? Politics?

Sen. Sam Brownback [R-Kan.] and Sen. Tom Harkin [D-Iowa] have taken on the childhood-obesity issue and have legitimate concerns about the public-health issue. To ask the advertisers and marketers to come into a larger group of stakeholders is perfectly legitimate. To zero in on marketing and advertising as the single most controllable factor for solving the problem misses the mark. A lot of activity has developed around these issues. It is driven in part by public advocates and public policy, but it is also driven by the marketplace. I can't tell you how many Dateline NBC specials there have been on advertising to kids, junk food, the perils of food marketing. And yet in some very credible research and polls, parents rate marketing and advertising way down in the single digits as causes of childhood obesity.

On the viral-marketing front, the FTC has been asked to look into the practice. Should parents be concerned that kids are being sold products by marketers posing as fake online friends?

To the extent that those practices exist, they represent a very small portion of marketing and advertising practices. Social marketing is a reality. I would like to see disclosure for social marketers and buzz marketing. If my next-door neighbor who just got a Chevy Tahoe and says it is the best truck he's ever had and he is a paid endorser, I want to know that. But I don't think the viral marketing to kids is at such a serious level at this point. I would like to see perhaps an FTC guideline or rule that, like every other form of marketing, you have to be truthful, fair and accurate.

© 2007, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

Seeking Answers to Google-Doubleclick from FTC

4A's And ANA To FTC: We Want Answers!

by Tameka Kee, Media Post, Online Media Daily
Thursday, May 31, 2007 6:00 AM ET


WITH A JOINT LETTER TO the FTC and the Justice Department, the 4A's and the ANA made it clear that marketplace restriction is one of the possible implications of the $11 billion wave of online advertising mergers and acquisitions.

"Advertising on the Internet is one of the fastest-growing sectors of marketplace promotion," the letter said. "Therefore, ensuring its competitiveness is critical for all participants."

So while market analysts, bloggers and journalists alike have been content to theorize how deals like Google/DoubleClick and WPP's acquisition of 24/7 Real Media will affect how online advertisers do business, the two major advertising associations want definitive answers.

"When all of the acquisition announcements came out, we said, there's so much stuff going on here and we don't know what the implications are," said ANA CEO Bob Liodice. "We simply asked the people who could best assess this to use the tools and ability and look at the market dynamics as a whole."

Given the FTC's wealth of antitrust experience, relative manpower and federal budget, the agency is well equipped to tackle both micro issues such as how the merged companies should handle pricing and inventory management, and macro questions such as whether the deals affect just online advertising or advertising as a whole.

While neither organization would comment on specific concerns, maintaining industry-wide competitiveness was a key consideration. "As a trade association, we have a vested interest in making sure that the Internet remains competitive as an advertising/marketing space," said Adonis Hoffman, legal counsel for the 4A's. "But it's fair to say that a lot of people are looking at the impact that these combinations will have on the marketplace."

Industry players--from publishers to brand executives to smaller ad networks--will be affected by how these deals play out, but independent agencies offer a unique perspective.

"I think the big issue will be what are the definitions of the categories of business," said Tom Bedecarre, CEO of AKQA, the largest remaining independent agency, which took a majority investment from private equity firm General Atlantic Partners earlier this year. "The people putting up noise are doing it for competitive reasons. It smacks to me of paranoia and fear in the face of change."

According to Gal Trifon, Eyeblaster's founder and chief executive officer, "these deals erase the familiar demarcation lines. When the dust finally settles after the recent frenzy of acquisitions, we believe that this complexity will drive demand for independent campaign management solutions."

MARKETERS GET THE MESSAGE

Say what you will about product marketers, but they are nothing, if not smart. There is a new political wind a-blowing in Washington, with a Democratic House and Senate, and promises by lawmakers to look closely at business practices throughout the land.

That makes today's action by two different industries all the more prescient.

First, food companies that sell to kids have promised to be much more responsible in the products they advertise and the way in which those ads are delivered to our youngest consumers.

Second, the distilled spirits industry--makers of alcoholic beverages--conducted its first ever nuts and bolts media buying summit. The importance of this industry-led event is that alcohol makers are proving they want to do everything possible to make sure their products are not advertised in any media whose audience (readers, viewers, etc) is not comprised of 70% adults.

To the skeptics out there who say these self-regulatory initiatives were driven by the threat of government action, I say: "so what." It doesn't matter how these industries got to where they are--it only matters that they're here--and here to stay.

I am most impressed with the alcohol industry's educational efforts. It is bending over backwards to help distillers understand the societal and regulatory framework in which they operate, and to keep their marketing and advertising squarely within bounds. Other than those industries that are highly regulated (securities, pharmaceuticals), I do not know of many other self-regulatory efforts as robust or rigorous as that found among distilled spirits. Kudos to them for getting the message, and taking even more steps toward responsible advertising.

As for the food companies, their plan to launch new self-regulatory guidelines is exactly what the FTC had in mind when it encouraged the industry to review its messaging to children.

When policymakers and the public spoke, these industries got the message.

Adonis Hoffman, a former FCC and congressional lawyer, is a strategic communications expert in Washington.

The Senate, FCC Obesity Task Force

AAAA's Praises Obesity Task Force

By John Eggerton -- Broadcasting & Cable,
9/28/2006 3:18:00 PM

The American Association of Advertising Agencies Thursday praised the task force on media and obesity launched by Senator Sam Brownback with an assist from FCC Chairman Kevin Martin.

"We commend Chairman Martin and Senator Brownback for broadening the public policy conversation on obesity to include industry and media as well as consumer groups," said AAAA senior VP Adonis Hoffman. It is currently a Republican-heavy bipartisan effort, but Brownback said they planned to reach out to both sides of the aisle.

Brownback and Martin both said in announcing the task force Wednesday that its goal was industry-government cooperation, not regulation.

Hoffman was all for it: "I hope the Task Force will lead to a solid public-private partnership and viable solutions to address a growing societal problem," he told B&C.

"Every credible study concludes there are many factors contributing to childhood obesity, including less physical education time in schools, parental choices in diet, and more time spent on computers," said Hoffman. "Advertising is way down on the list.

The task force is seeking input from a variety of sources, and Hoffman suggests some of that should accentuate the positive. "As food companies and advertisers continue to adjusted their messages to accentuate healthy choices, they should be applauded by policymakers for responsible action."

© 2006, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

Meeting the Challenge of Diversity on Madison Avenue--Testimony of Adonis Hoffman before NY Human Rights Commission

Statement of Adonis E. Hoffman, Esq., to New York City Council,
Commission on Civil Rights, Sept. 26, 2006

Chairman Seabrook, Members of the City Council,

Good afternoon. My name is Adonis Hoffman. I am Senior Vice President and Counsel for the American Association of Advertising Agencies, also known as the 4-As. I also serve on the board of the Center for Responsible Media and Marketing, which is a think tank focused on the issues of responsible media policies and practices, and formerly on the board of the Black Education Network, a New York-based broadcast network focused on delivering quality content to African Americans. Before this, I had the honor of serving as a Senior Counsel to the Chairman of the Federal Communications Commission, where I headed up an inter-agency task force on advertising practices.

I appreciate the opportunity to testify at your hearing today on this important topic. My testimony today is in two parts. Part one is on behalf of the American Association of Advertising Agencies, which was invited to testify at the hearing. Part two is in my private capacity as a communications lawyer who has been involved in this issue for the last ten years.

I am joined at the table today by the Honorable Victor Frazer. Mr. Frazer is a former Member of the U.S. House of Representatives. He is a lawyer, and has been one of the distinguished outside advisors to the advertising industry on this issue.

PART I—On Behalf of the American Association of Advertising Agencies

1. Headquartered in New York, the 4-As is comprised of over 450 advertising agencies and media agencies throughout the country. These large and small agencies are responsible for approximately 75 percent to 80 percent of the advertising placed in all media in the U.S.

2. Several of our member advertising agencies and media companies received invitations to testify here today. Those agencies asked that the 4-As, as the industry trade association, collate their testimony into written form and submit it for the record on their behalf. And we are happy to do that.

3. As has been well-publicized in the media, 16 advertising agencies in New York signed individual agreements with the New York Commission on Human Rights to bolster employment diversity and the numbers of African Americans within their middle and senior ranks.

4. These agreements were historic inasmuch as no other industry has made such commitments. Chairman Patricia Gatling of the Human Rights Commission and her staff deserve high marks for moving the industry forward.

5. As the advertising agencies sealed their negotiations with the Human Rights Commission, it was agreed that they would be free to proceed with their diversity plans without any hearings on the issues that were resolved as a result of many months of negotiation. Thus, following the advice of their individual legal counsel, the agencies, as you can understand, opted not to appear today. I believe there were a number of corporations that opted-out as well.

6. As a courtesy to you, Mr. Chairman, and out of our respect for the City Council system, we did not want to let the opportunity go by without affecting the record on this issue.

7. Consequently, I would like to submit this report on Advertising in New York Media for the record today.

8. This report was compiled by experts in the New York media industry who are familiar with both the challenges and opportunities that exist when it comes to this category.

9. The data were derived from independent, third-party data collection sources and standard industry research sources, including Nielsen Ad-View, TNS, Audit Bureau of Circulation, and Arbitron. These are not estimates and are not sourced from advertising agencies, but reflect standard industry measurements.

10. Much of the report is technical, and some of the data were taken from proprietary sources. Unfortunately, as much as I would like to claim to be, I am no expert in this area.

11. If you have questions or comments about the report, I am sure it can be arranged for industry experts to discuss the details with you and your staff at a working session, or if you prefer to submit them in writing.

12. I would also submit for the record a copy of Principles & Best Practices for Diversity and Inclusion in Advertising Agencies. This document was issued by the 4-As to provide guidance to its member agencies on a range of issues relating to diversity, including the expanded utilization of minority media. It was produced after consultation with a number of concerned individuals from around the country who served on the Diversity Advisory Board. I draw your attention to the fact that the Principles and Best Practices calls for increasing minority contracting by all agencies.

Finally, Mr. Chairman, the advertising industry would urge you to explore productive rather than punitive initiatives to further diversity and inclusion in the advertising and media industries.

I appreciate the opportunity to testify today. This concludes my remarks on behalf of the American Association of Advertising Agencies.


Part II—Personal Statement of Adonis Hoffman

Councilman Seabrook, now, if I can take off my advertising association hat for a moment, and speak to you in a different voice. And that is as a communications lawyer who has observed the landscape from both inside and outside of government. I would like to offer your committee a few recommendations.

First, the question of inclusion in any industry is not something that lends itself to a fast, easy solution. There are any number of industries in this country, and this City, for that matter, that have serious, serious, challenges when it comes to diversity. From Wall Street, to the broadcast networks, to the editorial rooms, to the law firms, to the accountants, insurers, and almost any other major industry, the representation of minorities, generally, and African Americans, particularly, is woefully low, especially at the most senior levels.

As the merger of major communications companies continues and consolidation within the media industry increases, opportunities for smaller players are shrinking. I say smaller players because most minority media are small players. The number of minority and black-owned media are shrinking. Whether due to lack of access to capital, increased competition from the general market media, paucity of financial resources, sale of the business by the founder, or just plain old racism, it is a fact that black media have a particularly difficult time surviving. For every BET success story, there are the untold hundreds who could not make the payroll, meet the deadlines, or cover the rent.

As media becomes larger and more bundled, it becomes increasingly more difficult for smaller and independents to survive. It is a reality that affects not only media, but also minority-owned advertising agencies, too. Their survival is something to be concerned about as well.

The real challenge is to stimulate opportunity and ownership for black and minority firms in the advertising and media space. It seems to me there are two highly laudable goals:

1. Increasing the overall number of black and minority-owned media; and

2. Increasing the current utilization of black and minority media by major corporations.

Meeting that challenge will take a sustained and multifaceted approach, and the City Council of New York can play an important role. By adopting a broader approach to the issue of economic development, the Council can investigate ways to stimulate and promote minority ownership of media and media-related entities.


Here are six recommendations:

1. Develop a City program to produce more minority owners of print, television and radio media in New York.

2.As the center of finance and private equity, the City of New York should find ways to involve the capital markets in the goal to increase minority media ownership.

3.The City should investigate the use of tax credits to stimulate investment in minority-owned media companies and to encourage minority media utilization.

4.The City should investigate tax holidays or other investment incentives for minority entrepreneurs starting media companies.

5.To facilitate access to capital, the City could provide incentives to financial institutions who lend to minority media owners.

6.To spur further economic investment and development, the City should expand its economic development zones as an incentive for media companies to locate businesses there.

Mr. Chairman, I am not an economist, but it seems to me there are any number of financial inducements the City could come up with to promote the growth and development of minority media ownership in New York.

Recognizing that city government is limited in scope and resources, it becomes even more important to partner with independent private sector entities to reach these goals. As the original architect of many of the initiatives on the table today, Mr. Sanford Moore should be encouraged to play a more constructive role as an interface between the City and the private sector. I understand that Moore’s group has had discussions with agencies and advertisers on a series of programs to achieve these very objectives. Before the City Council proceeds with more hearings, it should allow for private initiatives to take root.

As everyone knows, the media and advertising industries are at the core of a vibrant New York economy. I am sure you will find willing partners among every stakeholder if this constructive approach is followed. In short, Mr. Chairman, it is in the best interests of the City, the advertising and media industries, and minority firms alike to find ways to work together on these important issues.

I appreciate the opportunity to submit these remarks to your committee.

Responsible Advertising: Who Determines What is Right?

For better or worse, the rules of advertising are changing. I’m not talking about new techniques or creative concepts here, or even the Big Idea. Nor am I referring to the latest technologies surrounding product integration, search marketing, interactive platforms, or anything as intriguing as that.

The growing challenge for advertisers is not how to reach consumers where they are—marketers know how to do that very well—but how socially responsible the message is once it reaches those consumers. The new rules of advertising have more to do with responsibility than with Return On Investment. It is not the medium, it is the message.

We are witnessing the dawning of a new era of “responsible advertising” that seeks to protect consumers from advertising that someone, somewhere, deems socially and politically incorrect. Even if we stipulate there are categories of advertising that can—and should be—disallowed, responsible advertising goes well beyond traditional notions of content regulation. For example, should values become an indispensable part of the advertising mix?

Bolstered by political rhetoric and a conservative mood in Washington, the would-be arbiters of responsible advertising claim a public mantle, if not a public interest. Most would like to see advertising go entirely away, but would surely settle for heavier regulation at the end of the day. And they seem to be getting nearer to that goal every year. Because it is impolitic for big corporations to wage extended war with do-good public interest groups, companies prudently have disengaged from that battle and taken initiative on another front.

More and more advertisers are choosing to aggressively self-regulate the marketing of products or categories that some critics have found to be objectionable. Since most large companies have a working familiarity with the mandates of social responsibility in other areas, applying those principles to marketing and advertising has not been difficult.

Last summer, prescription drug makers established a new code of marketing practices and set up an Office of Accountability to review direct-to-consumer drug commercials. More recently, a leading food company decided not to advertise some of its products on children’s television programs that reach audiences under age 12. Many other industries have instituted marketing codes and established independent review panels. And the advertising industry has strengthened its unique self-regulatory regime through the Children’s Advertising Review Unit (CARU).

All of these actions suggest the emphasis on responsibility is well-placed.
What troubles me, though, is who gets to define responsible advertising.

Advertisers have a vested commercial interest in portraying their products in the best light possible. They are, after all, ultimately accountable to both their customers and shareholders in a competitive marketplace, and should be able to decide for themselves. It would be a mistake to abdicate this role to outside interest groups who want to do away with advertising altogether, or who would promote a system that only permits the marketing of products they alone deem to be good, healthful, nutritious, wholesome or necessary.

© 2006

Adonis Hoffman is a lawyer and strategic marketing and communications expert in Washington, DC. He is the founder and chairman of the Center on Responsible Media & Marketing in Washington.