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FCC Probes Product Placement

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Regulators to investigate covert branding.

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In the movie The Minority Report, commuters are bombarded with strikingly personalized advertisements. Steven Spielberg's adaptation of the 1956 short story by science fiction visionary Philip K. Dick depicts retinal scanning billboards that speak to customers by name. Protagonist John Anderton (Tom Cruise) is told, "John Anderton, you could use a Guinness right now."

Indeed, being hunted by the Washington D.C. Precrime police, he could have.

Habitually anti-establishment, it's not surprising sci-fi authors frequently take jabs at increasingly pervasive ad campaigns. Now, The Federal Communications Commission (FCC) seems to be jumping on the bandwagon.

According to The Wall Street Journal, the FCC is taking a hard look at product placement and whether consumers deserve more disclosure when companies surreptitiously hawk their wares. With the advent of TiVo (TIVO) and other ad-skipping technology, advertisers are scrounging for ways to better reach their clientele.

Perceptive television-watchers have undoubtedly noticed name brands creeping into their viewing experience. The Journal cites Coco Cola's (KO) prevalence on Fox's (NWS) American Idol, where judges carefully display their refreshments logo-out. Meanwhile, NBC's (GE) The Biggest Loser is the most saturated show on network television, with 3,977 instances of product placement in the first three months of 2008.

The FCC is concerned such ads don't give consumers sufficient information about which companies are subliminally vying for their discretionary dollars. Advertisers contest product placement isn't done with malicious intent, and that such promotions are done in a clear and straightforward manner.

Digital video recording, however, isn't responsible for the advent of product placement in television and film. After all, who can forget Reese's Pieces (HSY) undeniable pull on a certain memorable extra-terrestrial or Wayne and Garth's shameless product-placement parody.

Well-targeted spots are advertisers' raison d'être. Online stores like Amazon.com (AMZN) offer detailed recommendations based on past purchases and analysis of consumers with similar preferences. Google (GOOG) even scans email content to deliver ads that better fit users' interests.

Surely the FCC has more important issues to tackle than this one. The recent spike in product placement is a natural response to a technology that renders traditional advertising ineffective.

If consumers are unable to discern between a prominently displayed soda can and a 30-second ad spot, advertisers should consider theirs a job well done.
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