MGEITF 2009: TV ad decline… Can product placement provide the answer?

As the downturn continues to seriously impact TV advertising revenues – which are predicted to fall by as much as 33% by 2010 – panellists at this year’s MediaGuardian Edinburgh International Television Festival asked whether relaxing the rules on product placement could ease broadcasters’ troubles.

Culture secretary Andy Burnham made it clear earlier this year that the British Government had no plans to accept the European Union directive allowing product placement on UK television, despite calls from the advertising industry to consider de-regulation as a means of generating revenue.

Burnham said product placement risked further harming trust in TV, especially in the wake of scandals such as dodgy TV phone-ins, adding that as a viewer he did not “want to feel the script has been written by the commercial marketing director”.

ITV’s share price fell by almost 3% within hours of Burnham’s statement.

Panellists at the festival’s ‘ Money Shot’ seminar strongly believed Burnham’s “extreme view” was a mistake for that very reason.

“We have an analogue system in a digital age, which is completely and utterly absurd,” Ed Vaizey, the shadow minister for culture, said. “I’m in favour of product placement and de-regulation. Relaxing the rules would ease the impact of the recession, especially for ITV.”

However, Vaizey understood that there are issues around quality. “It’s about getting a balance, not creating a free-for-all.  We still need boundaries,” he said.

The code provides “vague guidelines” and currently restricts brands from investing in broadcast, according to the panel at Friday’s seminar.

Mark Evans, managing director of Drum, pointed out that UK audiences are already subject to product placement, particularly from US programming but also online.

“What are we going to do next, start regulating the internet?” he said.  “Consumers get it … and brands know it’s about trust and association, not immediate financial returns.  We need to allow an open level of interaction to take place between brands and consumers.”

The session seemed to be in agreement – it’s about time Ofcom replaced the “cloudy framework” that governs sponsorship, advertising-funded programming and product placement to save television advertising during the recession.