Product Placement Industry - Literature review Example

Should Product Placement in films and other media be controlled? Abstract: While a mutually beneficial relationship between the advertiser and the producer is achieved via product placement, the best interests of the audience are neglected. Another concern this phenomenon has raised is the compromising of artistic merit for commercial gain. Conventional wisdom instructs us that high profits and elevated ethics don’t go together. Given the impressive profits made by the public relations industry (which promotes product placement), by implication ethics have been ignored. Although a framework of regulation exists in the United States, it has loopholes and suffers poor enforcement. Greater control of the practice of product placement can be achieved through a concerted effort from the public and policy makers. Main Essay: Product placement is the combined effort from entertainment program producers and sponsors in which branded commodities are embedded in the content with the intent of influencing consumer behavior in favor of the sponsor. In other words, it could be defined as “the purposeful incorporation of a brand into an entertainment vehicle”. (Russell & Belch, 2005, p.78) This vehicle could take the form of television, radio, video games, music records and even the written word. Although there is a symbiotic relationship between the advertiser and the producer, the best interests of audience is left out of the equation. Another concern this phenomenon has raised is the compromising of artistic merit for commercial success. This industry had grown to more than $5 billion in size as of 2010, with as many as 1,000 products being promoted through this channel (these numbers pertain to the United States alone). Needless to say, the worldwide figures are even more staggering. There is an ongoing debate across the world on the pros and cons of product placement. There are also vocal calls for regulating this practice across media outlets. (Moorman, et.al., 2005, p.50). The rest of this essay will answer in the affirmative to whether such regulation is called for. Suitable scholarly citations are provided to support the claims. The concept really took off in the 1980s as a result of its success in the movie E.T. The placement in the film triggered unprecedented growth in sales of Reese’s Pieces. Prior to 1980s the industry was somewhat disorganized and industry practices were haphazard. Since the start of the 1980s though, the product placement industry and its parent public relations industry grew to become major players in commerce, economy and politics. The following snippet helps us understand the size of the placement-industry: “BMW invested an estimated $20 million on the placement campaign surrounding the launch of its Z3 roadster; the campaign included prominent exposure in the James Bond film Golden Eye, as well as in most of the film's trailer and television advertisements. Spielberg's Minority Report contained interactive advertising billboards within the film promoting its placement sponsors, including Mokie and Lexus - who reportedly paid $5 million to $7 million each to promote their placements. Marketers are now moving more aggressively, seeking prominent roles for their brands in feature films.” (Karrh, 2007, p.140) The bigger the industry, the more influential it is in affecting public opinion, consumption patterns and consumer behavior. Given such a pervasive nature of industry impact, it is all the more relevant that its business practices are scrutinized for fairness and ethics. The best way to do this is to study the regulatory framework within which the industry operates and the factors affecting regulations in the first place (Russell & Belch, 2005, p.78). The two primary decision makers in the industry are the placement agencies and content producers. To gain a better understanding of ERMA (Entertainment Resources and Marketing Association) in particular and the industry in general, a survey was conducted in 2007 by James Karrh and his team. This survey gives us a sense of where the industry is presently and what could be expected in years to come. One of the key areas of discussion is the blurring of distinction between a) content created for purposes of information dissemination and b) content created for purposes of persuasion. With respect to regulation, these two content categories in and of themselves does not invoke introspection and debate. Where regulations apply, quite rightly so, is in cases where ‘persuasion/propaganda’ is integrated into a façade of ‘information’. When this happens, what we see is an act of sophisticated deceit. Given the far-reaching implications of such a phenomenon comprehensive research is warranted. As a result, these days, research on product placement is extended to the study of “cognitive-response, attitudinal-formation, and involvement perspectives, etc.” (Moorman, et.al., 2005, p.50) Through an understanding of these aspects of product placement, appropriate strategies to regulate and control it can be devised. Content that has the potential to reach a large audience (for example movies) is an attractive medium for brand promotion. The product-placement industry’s success is attributable to this “integrated marketing communication” approach. In the words of an industry analyst, “the impact of product placements and other integrated marketing strategies can be conceptualized as a ‘consumption constellation’ whereby ‘symbolic interdependencies’ of products, brands, or activities come to signify or perform social roles for audience members who use or avoid these products as means of gaining status or avoiding stigmatization.” (Karrh, et.al., 2007, p.138) Advertising agencies found this synergy a very attractive proposition. The members of the industry and their sponsors were determined to keep open these lucrative opportunities. This explains why no amount of regulation ever seems to bring desired results (especially in the United States). More importantly, for every bill that gets ratified in the Congress, many more don’t see the light of day (Katz, 1993, p.76). There was an interesting study published previously in the year 2001, which surveyed college going film enthusiasts in the United States, France, Austria and Singapore. These participants were questioned on their “views on the acceptability and ethics of placements.” (Charlesworth & Glantz, 2005, p.1516) A majority of American participants saw placements as a form of paid advertising (not many saw it as a medium of creative expression). This is an expected response, as anyone with basic education and little common sense would have figured the real proposition of product-placements (Charlesworth & Glantz, 2005, p.1516). But more significantly, a majority of American subjects stated that they were less concerned with the ethical aspects of placement and don’t care if proper regulations and restrictions are imposed by the government. They were also more open to buying products placed in the film compared to subjects from other countries. We can trace the link between the three components of policy making: public pressure/support, response from legislators, regulations pertaining to commercial activities. In this particular case, weak pressure from public led to complacent response from legislators, which in turn led to commercial exploitation and opportunism. But this is not the complete story. After all, the survey was confined to one community (college students) and one age-group. So, inconclusive as the results may be, it is an indicator of the general tendencies (Karrh, et.al., 2007, p,139). This situation also suggests that meaningful regulation is unlikely to come from public pressure (due to their indifference); and hence it is up to the legislators and policy makers to initiate reforms. We would expect the key players in any industry to support practices favorable to the bottom-line. The product placement industry is not immune to the profit motive either. Of course, there were dissenting voices within the industry as well. But as with the history of dissent, they are a small and powerless minority. We now understand the industry’s role in the growth of the practice. But this is not the whole story and the debate does not stop here. Even if the general public might have been indifferent or even complicit with the concept of placement, it still does not vindicate the industry. (Newell, et.al., 2006, p.578) When it comes to public industry regulation, the United States had fallen behind many countries. Countries in the European Union, Canada, Australia and even Israel have come up with reasonable measures of restraint. To fix a problem, it first has to be acknowledged. Going by the reports in the mainstream American press, there is apparently nothing wrong with the practice. This puts an end to all further progress. In contrast, other countries mentioned above all recognize product placement as an “advertised message” (Gould, et.al, 2000, p.41). Clearly, the European approach to product placement implies different value systems on either side of the Atlantic. And legislators in the U.S. would do well to follow the example set by their European counterparts. (Russell, 2005, p.85) The United States law sees public communication as one of two things. All communication falls under 1.Broadcasting or 2.Commercial speech. The rules set for commercial speech are elaborate, fair and balanced. But the broadcasting industry has always enjoyed greater freedoms benefiting from such clauses as “freedom of expression”, “artistic freedom”, etc (Gould, et.al, 2000, p.41). Hence, the broadcasting industry has largely been unregulated. Since films and other entertainment products fall under the broadcasting category, product placement gets a free ride alongside. In other words, “In the U.S., broadcasting was a form of speech that called for regulation mainly under the guise of spectrum scarcity. Since there were not enough spectrums, common wisdom of the FCC and the courts suggested rules needed to make sure that the dominant position of those fortunate to acquire licenses was not abused.” (Gould, et.al, 2000, p.41) While the broadcasting industry enjoys immunity from prosecution, commercial speech does not. In 1942, the Supreme Court passed a ruling that made clear the non-applicability of First Amendment rights to “purely commercial advertising”. (Karrh, et.al., 2007, p.142) But, subsequent processes of “fine-tuning” (another euphemism) the decree, has made it practically meaningless. Section 317 of the Communications Act of 1934 is another case in point. It states that “All matter broadcast by a broadcasting station for which any type of monetary (or other) compensation is provided, needs to be identified as such.” (Balasubramanian, 2006, p.120) Section 507 of the same Act mentions a “requirement from those providing and from those receiving the compensation to notify the station of the received reward.” (Balasubramanian, 2006, p.120) Thus, the entertainment production houses as well as the sponsors will be liable for any breach of disclosure. These regulations were followed by a positive development when the Federal Communications Commission (FCC) imposed a stringent code of conduct on the industry. Rule 73.1212 of the FCC states that “When a broadcast station transmits any matter for which money, service or other valuable consideration is either directly or indirectly paid or promised to, or charged or accepted by such station, the station, at the time of the broadcast, shall announce that such matter is sponsored, paid for or furnished, either in whole or in part, and by whom or on whose behalf such consideration was supplied.” (Balasubramanian, 2006, p.120) Failure to follow these rules invited hefty fines or imprisonment up to a year (in some cases both were applicable). Yet, with the growing number of product placement instances every day, the FCC has not taken any concrete steps to enforce regulations. Every now and then some rhetoric is thrown in to keep the public deluded, but nothing substantial is seen yet. What is even more unfair is the fact that the United States government itself uses product placement strategies during election campaigns. So, who will regulate the regulator? (Gurevitch, 2010, p.372) A public interest advocate group “Commercial Alert”, whose basic motto is to “keeping commercial culture within its proper sphere” sent a report to the FCC, highlighting the number of occasions in which the latter had taken no action on the deviant corporations. Some of the defaulting corporations include National Broadcasting Corporation, UPN, Fox Network, Walt Disney, CBS and Warner Brothers (some of the biggest media houses in the country). Prompt came a reply. Not from the FCC, but from an industry representative association “Freedom to Advertise Coalition”. The coalition’s response was a mix of false claims and false beliefs. However, it failed to provide proper justifications for the practice. (Gould, et.al, 2000, p.41) Hence, in conclusion, it is beyond any reasonable doubt that laws and law enforcement agencies are unfavorable to a large majority of the public. The existing loopholes and poor law enforcement mechanisms in the country should motivate public representatives to bring the situation under control. If artistic expression and creative output is influenced or hindered by commercial interests then very soon the media will lose its audience. They may also lose public trust and goodwill. Bibliography: Balasubramanian, S K, Karrh, J A, & Patwardhan, H. (Fall 2006). Audience response to product placements: an integrative framework and future research agenda., Journal of Advertising, 35, 3. p.115(27).  Charlesworth, A., & Glantz, S A (Dec 2005). Smoking in the movies increases adolescent smoking: a review. Pediatrics,  116, 6. p.1516(13).  Johnston, Jane. Media Relations: Issues and Strategies. Crows Nest, N.S.W.: Allen & Unwin, 2007. Karrh, J A, McKee, K. B., & Pardun, C J (June 2003). Practitioners' evolving views on product placement effectiveness, Journal of Advertising Research, 43, 2. p.138(12) Katz, H. (Jan-Feb 1993). New media, new messages: an initial inquiry into audience reactions to advertising on videocassettes. Journal of Advertising Research, 33, n1. p.74(12).  Newell, Jay, Charles T. Salmon, and Susan Chang. "The Hidden History of Product Placement." Journal of Broadcasting & Electronic Media 50, no. 4 (2006): 575+. Russell, C. A., & Belch, M. (March 2005). A managerial investigation into the product placement industry. Journal of Advertising Research., 45, 1. p.73(20).  Gurevitch, L. (2009). Problematic Dichotomies: Narrative and Spectacle in Film and Advertising Scholarship, Journal of Popular Narrative Media, Liverpool University Press, Liverpool, Vol. 2 (2), 143-158. Gurevitch, Leon. (2010). "The Cinemas of Transactions: The Exchangable Currency of Digital Attractions Across Audiovisual Economies", Journal of Television and New Media, Sage Publications, New York, 11 (5), 367-385 Gould, S J, Gupta, P B, & Grabner-Krauter, S. (Winter 2000). Product Placements in Movies: A Cross-Cultural Analysis of Austrian, French and American Consumers' Attitudes Toward This Emerging, International Promotional Medium., Journal of Advertising, 29, 4. p.41.  Moorman, M., Neijens, P C, & Smit, E G (March 2005). The effects of program responses on the processing of commercials placed at various positions in the program and the block, Journal of Advertising Research, 45, 1. p.49(11).  Russell, Cristel A. and Michael Belch (2005) "A Managerial Investigation into the Product Placement Industry".Journal of Advertising Research., 45 (1), 73–92. Sutherland, Max. Advertising and the Mind of the Consumer: What Works, What Doesn'T, and Why. Crows Nest, N.S.W.: Allen & Unwin, 2008. Tsai, Ming-Tiem, Wen-Ko Liang, and Mei-Ling Liu. "The Effects of Subliminal Advertising on Consumer Attitudes and Buying Intentions." International Journal of Management 24, no. 1 (2007): 3+. Read More