The onset of digital video recorders has changed consumer behavior by giving television viewers the ability to fast-forward through commercials. As a result, many advertisers now place their products directly in the television shows themselves. The practice, known as "product placement," has increased significantly in recent years and may soon be subject to new federal regulations issued by the Federal Communications Commission ("FCC").
While the Federal Trade Commission ("FTC") previously rejected consumer advocacy group proposals for the creation of more stringent product placement regulations, a new coalition of advocacy groups is now seeking asking the FCC to issue regulations. With the FCC split on how much regulation may be needed, the Commission has compromised by issuing both a Notice of Proposed Rulemaking and a Notice of Inquiry.
Kelley Drye’s Advertising Law Practice Group has prepared a Client Advisory addressing the call for product placement regulation by the FCC and summarizing the key points outlined both in the Notice of Inquiry and the Notice of Proposed Rulemaking. Ultimately, whatever the FCC decides is certain to have a significant impact on advertisers who utilize product placements. Advertisers are encouraged to participate in the FCC’s proceeding, directly or through written comments, to help the Commission develop a policy on the use of product placements. Comments will be due 60 days after the Notices are published in the Federal Register and reply comments will be due 30 days after the comments are filed.