Ads in TV Shows Come Under Microscope

June 27, 2008— -- "American Idol" judges sip from Coca-Cola cups. The folks on "Extreme Makeover: Home Edition" take a trip to Wendy's. As time-strapped television viewers increasingly zip past ads using digital video recorders, broadcasters try to pay the bills by sneaking advertisements for products into reality shows and sitcoms alike.

"This often subtle but always insidious blurring of the line between content and commerce is an issue not just for the creative community but for the American viewing public as well," said Writer's Guild member Philip Rosenthal, creator and executive producer of "Everybody Loves Raymond," while testifying before Congress on the topic last year.

It's a practice the Federal Communications Commission is now looking into. The FCC Thursday said it would open an investigation into the use of undisclosed paid product placements in broadcast TV shows. The FCC also proposed using a larger font size for its disclosure requirement and requiring that the disclosures air for a certain period of time.

"I believe it is important for consumers to know when someone is trying to sell them something," FCC Chairman Kevin Martin said Thursday.

According to the Nielsen Co.'s media research, prime-time product placements on broadcast networks rose 39 percent in the first three months of this year, from the comparable period in 2007. There were more than 117,000 brand occurrences on cable and broadcast networks in January, February and March of 2008, Nielsen found.

The trend has prompted consumer groups to push the FCC to investigate product placement and integration. The Writer's Guild of America-West, a group of 7,500 television, film and new media members, also hopes the FCC will re-examine the issue.

The Writer's Guild has asked the FCC to make new rules to eliminate the practice entirely in news and children's programming, and to ensure that product placement arrangements are disclosed in other broadcast television programs in specific ways.

This week's announcement puts the FCC on track to write new rules that would force networks to prominently disclose when a product's placement has been purchased.

But some said Friday that the FCC's proposal and examination into the issue doesn't go far enough.

"Is the FCC's decision to announce a rule-making and formal inquiry into product placement issues a case of better-late-than-never? Perhaps," Robert Weissman, managing director of Commercial Alert, said in a statement. "But the commission's proposed new rule is wholly inadequate to address the problem of product placement deception."

Weissman said the proper remedy was the "mandatory disclosure of product placement advertisements at the time they air," rather than at either end of a television show.

"Being told earlier or later that the portrayal is an ad will not cure the deception perpetrated at the moment it happens," he said, adding that people also tend to leave a room, or stop paying attention, once the program ends.

The Writer's Guild has likewise called on the FCC to require broadcasters to tell viewers they are advertising a product by scrolling that information across the bottom of the TV screen for at least five seconds. The Writer's Guild would also like that information to include how much money a company paid to advertise its product on a show.

But advertisers disagree about how to disclose that information. At the American Association of Advertising Agencies, Adonis Hoffman, senior vice president and legal counsel, said Friday that the group is glad to help the FCC separate the "reasonable from the ridiculous" when disclosing information about advertisements.

"It is completely reasonable to require a bolder disclosure of paid-for products at the beginning or end of a program to alert viewers that consideration was paid," Hoffman said. "It would seem ridiculous to require simultaneous pop-ups or crawls -- or what one viewer has called Spam on TV -- whenever a paid-for product appears in the show."

The Writer's Guild conversely reacted to this week's announcement, releasing a statement Thursday that said, "While the WGAW applauds the FCC decision to seek federal rules to address the increasingly pervasive use of product integration in today's television programming, the Writers Guild urges the FCC to require onscreen"real-time" disclosure when product integration occurs, in order to make viewers fully aware they are watching a paid advertisement."

Last fall, Writer's Guild of America-West President Patric Verrone testified that doing so "would be no more intrusive" than the warnings on pharmaceutical ads or "paid advertisement" notes in magazines.

Product placement is especially pervasive on reality television. Nielsen found that in the first quarter of 2008, the show "The Biggest Loser" had the largest number of product placements, with 3,977. Other shows that had more than 1,000 placements during that time period included "American Idol," "The Apprentice," "Deal Or No Deal," "Extreme Makeover Home Edition" and "Big Brother 9."

Of all brands, Coca Cola was placed most on broadcast television, thanks to its prominence on "American Idol,: Nielsen research found.

"Reality TV should mean informing viewers about who is secretly pitching to them in the TV shows they are watching," FCC Commissioner Jonathan Adelstein said Thursday. "The true reality is that news and entertainment alike are practically being turned into undisclosed commercials."

But as for scripted comedies and dramas, television producer, creator and writer Jonathan Prince said that in order to stay on the air, they need to get creative. For that reason, Prince accepts the subtle integration of brands into television scripts, so long as they don't compromise the integrity of the show.

"I want to keep my crews working," Prince said.

As the creator of the series "American Dreams," Prince recalled integrating Campbell's Soup and Oreo cookies into storylines for the show, explaining, "I needed a way to help the studio and the network with their deficit so I could spend more money."

Prince, a Writer's Guild member who said he wholly supports the Guild's efforts to make viewers' experiences "have more integrity," said that if the writing is good, conversations and interactions that incorporate brands feel real, instead of like commercials.

ABC News' Brian Hartman contributed to this report.