FCC votes to consider new "embedded" ad rules

WASHINGTON (Reuters) - U.S. regulators on Thursday took a step toward adopting stricter rules on the growing use of product placements by television advertisers.

The Federal Communications Commission voted to consider new regulations requiring that viewers are more clearly notified when television advertisers have paid to feature products ranging from soft drinks to cars in television programs.

"I believe under all circumstances consumers should be able to understand when products are being advertised to them," Martin told Reuters on Thursday after the vote.

Current rules require broadcast programs to carry notifications, but the FCC is considering whether to require those notices to be bigger and longer, and whether they should be posted at the beginning or end of a program.

Also under consideration will be whether the embedded advertising rules should be extended to cable operators and whether the FCC should ban embedded advertising in children's programming.

The agency said it believes product placement ads in children's programming already run afoul of current FCC advertising restrictions. But it questioned whether a more explicit, outright ban is needed.

The issue of so-called "embedded advertisements" has been a subject of rising concern in recent years among consumer groups and some lawmakers in Congress.

Programmers are turning to embedded advertising since many viewers were using TiVos and other digital video recorders to skip over traditional ads.

A group of 23 consumer and health advocacy groups wrote in a June 19 letter to the FCC urging the agency to tighten the rules on the embedded ads, as well as a related tactic known as "product integration" which weaves product promotions into the script of a TV program.

The advocacy groups, including Public Citizen and the Parents Television Council, cited industry estimates of a 13 percent increase in the number of product placements in prime time network television in 2007.

Reuters/Nielsen