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MIKE PESCA, host:

Back when TV shows ran under the names "The Colgate Variety Hour," and "The Kraft Mystery Theater," viewers at least knew who their programs were sponsored by. Of course, that was the age of three to four channels and no remote controls, but now you can click away TiVo or just ignore your TV in favor of new media. So advertisers often integrate their products into the content of the shows, and sometimes they do it subtly. Now, consumer groups want the FCC to require TV shows to make their stealth advertising via product placement totally obvious. The NBC show, "30 Rock," already makes their product placement pretty obvious, so obvious that it's part of the comedy.

(Soundbite of TV show "30 Rock")

Mr. ALEC BALDWIN: (As Jack Donaghy) These Verizon Wireless phones are just so popular, I accidentally grabbed one belonging to an acquaintance.

Ms. TINA FEY: (As Liz Lemon) Well, sure, because that Verizon Wireless service is just unbeatable. I mean, if I saw a phone like that on TV, I would be, like, where is my nearest retailer so I can get one?

Can we have our money now?

PESCA: Amy Schatz has been covering the story for the Wall Street Journal. Hi, Amy.

Ms. AMY SCHATZ (Journalist, Wall Street Journal): Hi, Mike.

PESCA: So why is the FCC taking this up now? Is product placement out of control all of a sudden?

Ms. SCHATZ: Well, one of the reasons is - they were actually going to take it up last year and the advertising industry freaked out so much they had to postpone it for a little bit and try to re-think what they were going to do about it. But you know, one of the big problems here is that, as you're saying, a lot of consumers are just not watching ads anymore, and they're using their DVRs to skip by it completely, or just watching shows online, where you don't have as many ads. And advertises are desperately trying to find new ways of getting their products in front of you. And it's raising issues about, you know, disclosure. The FCC is not saying that you can't do it. What it's saying is if you're going to do it, you really have to provide - you have to tell consumers about it.

PESCA: Do you know any stats about how important it is to the bottom line of the networks? Could they - do they need product placement ads to survive?

Ms. SCHATZ: Yes. It is one of those issues where they have seen declining viewership across the board, whether it's the networks or the local broadcast station, and as advertising dollars are going down, they need to find other ways of supplementing that. And you know, one of the ways they've been really doing that in the last couple years is through product placements. There was a study last year by a research group, by PK Media, that found that there was almost three billion dollars worth of product placements that happened in 2007, which is almost a third from the year before. So, it's becoming pretty big business.

PESCA: What do consumer groups want the FCC to do?

Ms. SCHATZ: They want a variety of things, some of which FCC is not going to do.

PESCA: Let's talk realistically. What can we see the FCC doing?

Ms. SCHATZ: Basically what they're going to do is they're going to look at three things. They're going to look at, you know, what kind - if you're going to do this on your show, if you're going to do this on "30 Rock," or you're going to do this on "Gossip Girls," you've got to put some of disclaimer at the end of the show, probably at the end of your show, that says these are the companies that provided, you know, products inside this show.

And it can't be one of the things that you've got right now, which is just, you know, when you see credits at the end of the show, it's like part of the screen, and as that's happening, you've got the preview for next week's shows on top. So, you know, people don't look at it very much and the type is super, super tiny.

So what the FCC is talking about doing is maybe having some kind of announcement at the end of the show, similar to what you see in a political ad, where, you know, it has to be something like, so and so paid for this message, and it's got to be on the screen for a couple of seconds and it's got to be in really big type so people can see it. And you know, they're not talking about - there are some other things they were talking at, but advertisers freaked too much. So they are talking about that. They are talking about also making sure that this goes - this happens not just for broadcast TV shows, but it might also happen for cable television shows.

PESCA: Right. Why can't the FCC regulate cable television? I thought they're there because the broadcast airwaves are a public trust, but as far as television goes, what even gives them the right to wade into those waters?

Ms. SCHATZ: Yeah, that's kind of a problem, because they're not really sure that they have the authority to do that. They'd really like the authority to do that. So it's sort of an open question with what they could actually do about cable, but they certainly think that, if nothing else, they can use the power of bully pulpit to sort of try to pressure some of these broadcasters and provide at least a little more notice.

PESCA: Right. The bully pulpit would indicate that the congregation is clamoring for change, but is there any evidence of that? I mean, I have read surveys that consumers actually like product placement more than regular advertising because it's less obstructive, and I have also read studies that show that because it's being going on so long, it doesn't particularly trick people. I mean, viewers know the deal. The reason Paula Abdul is drinking a prominently displayed can of Coke is because Coke paid - or it is Pepsi? See how good I am?

Ms. SCHATZ: They seem really dehydrated on that show. They've always got those in front of them.

PESCA: But you know, as far as the basic issue, do you know that consumers really area demanding this change?

Ms. SCHATZ: Yeah, I think for shows like daytime shows or primetime shows, probably not. One of the things that consumers are really most concerned about is having product placements inside of children's television shows, because they are afraid that kids just can't tell the difference. You know, you or I might know, you know, if they're starting to flag some product on "The Biggest Loser," that the fact is they are being paid to do that, or "30 Rock," you know.

But if you are talking about "Dora the Explorer" or something, you know, for much younger kids, they may not be able to do it. And that's the thing with consumer groups, when they first started looking at this, were really the most concerned about. And that's the other thing you have to do is going to be looking at, whether it's ever OK to have product placements inside kids' TV shows.

PESCA: Right, problem there is "Dora the Explorer" is a product placement, "Blue's Clues." The whole thing is a product placement given how many products - forget even "He-Man," which is - first it was a toy, then it was a TV show. Every children's show has so many products. What is the whole thing, just half content and half disclosure? Doesn't seem to make that much sense.

Ms. SCHATZ: Yeah, well, you know, that has historically been the issue with kids' TV shows, and you know, even for shows like "Dora," which might have really good things to teach kids, there is still, you know, obviously a big element of that is, you know, selling stuff to kids.

PESCA: Yeah. I can't buy a diaper for my son without either Ernie or Elmo or Dora on it, and it's just like, you know, he cannot possibly comprehend this. Who is this for? This is for a 15th month old. I don't that product placement is going to do anything about that. Maybe not.

Ms. SCHATZ: Yeah, maybe not. They don't think it will hurt, frankly, but you know, it may not help that much.

PESCA: Tell me what the situation is like in Europe. Some interesting things going on over there with product placement.

Ms. SCHATZ: Yeah, it's really interesting. So, recently, the European Union, they've been looking at this issue, too, and they told their member countries that, you know, they think that it would be OK if they start passing rules to say that it's OK to use products inside their shows, with the one exception. Well, you know, it's not an exception, but the UK sort of looked at that and they said absolutely not.

We're not going to allow this in there because we think that it's really going to hurt the integrity of our shows, and the consumers, when they watch shows in the UK, are just going to feel very deceived, and this is really going to be a big problem for them. And so they're not going to - at least they're saying right now, they're not going to allow product placement inside UK-produced shows. I mean, they'll still get to see them because they run a good chunk of our shows over there.

PESCA: What's the politics of this? Why is this happening now?

Ms. SCHATZ: Basically, it's one of those issues that has been kicking around at FCC for about five years now, and one of the Democrats over the FCC, a guy named Jonathan Adelstein, just got really - I mean, it's just one of his big, big issues and finally, all the other commissioners said OK and they'd go along with it after they took out a few things that were really worrying to advertisers. Because one of the things - the other thing consumers groups wanted, and actually the Hollywood writers want, is some sort of prohibition against - or they want some sort of notice during the show, when you're watching Paula drink the Coke can, they want something to flash up there about Coca-Cola helped sponsor this show.

PESCA: Yeah. Maybe they should also have something flash up there that says the reason that you get TV for free is because people use it as an advertising medium.

Ms. SCHATZ: Maybe so.

(Soundbite of laughter)

Ms. SCHATZ: I mean, a lot of people, I think, still pay for it because of cable and have had to pay a lot for it, but, yeah, I mean, that's one of the things. That's one of the deals. You get advertising. And the same thing happens online, right?

PESCA: Yeah.

Ms. SCHATZ: You watch shows online. You're still going to get stuck through a 30-second ad.

PESCA: Amy Schatz bandies about my questions gamely with me and also writes for the Wall Street Journal. Thank you, Amy.

Ms. SCHATZ: Thanks for having me on.

PESCA: Coming up, the Quavers play us some tunes. This is the Bryant Park Project from NPR News.

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