Is it necessary to disclose all product placements as advertisements?

Published on: May 24, 2021

The world of advertising is extremely dynamic, and organizations are constantly faced with new challenges when it comes to how best to market themselves and their products or services. Product placements are a proven tool, often used in movies or TV shows, but now found at least as much in everyday social media. In the current debate about such advertising, however, there is criticism that the advertising purpose of the content is potentially obscured and consumers could be manipulated. This raises the question of whether it is necessary for all product placements to be labeled as such. In this post, we will look at why organizations in practice so often advertise with the help of product placements, how such advertising is perceived by consumers, and whether it is necessary for legal regulations to stipulate that they be labeled as advertising in practice.


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In almost all media, there is an ever-increasing mixing of editorial and commercial content. Organizations deliberately use the attraction of entertainment media to place themselves and their own brand in the foreground of public perception. In the process, sponsored content is placed in strategically favorable locations. However, the commercial intent of the advertisers often remains “hidden” in the course of this.¹ Organizations use this form of marketing for a good reason: Such product placements are one of the most effective means available to marketers. In addition to increasing their own visibility and raising awareness and interest in their own organization, product placements can also be used to manage or improve their own public perception. One reason for this ability is the fact that such advertising is usually linked to well-known personalities or characters, or to content that individuals enjoy consuming. Brands or specific offers are thus integrated into a positively perceived environment, which under certain circumstances also radiates positively on the individual’s own perception. However, this effect is not only achieved in the context of film and television, but also in video games or social networks, for example. Even if the use is not limited to one medium, it is argued that the highest effect is achieved in (cinema) films. This is because consumers of other media are often subject to a variety of alternative stimuli and distractions that do not exist or exist only to a very limited extent in the cinema. Even though product placements are usually highly effective, there are still a number of factors that influence the success of such advertising. In addition to the existing image of the advertiser, the volume of other product placements or other advertising content and the integration of content are particularly relevant. Flooding the program with other brands reduces the positive effect on the advertiser’s own visibility, as the various organizations have to compete for consumers’ attention here. If the sponsored content does not fit with the rest of the content or is seen too much as a commercial product, consumers are more likely to have a negative attitude towards the organization or meet the sponsored content with rejection. A successful placement thus integrates itself into the storyline and supports the other content instead of distracting from it. Finally, it should be noted that the provision of sponsored content often also leads to a kind of loss of control on the part of the advertisers, as they partly hand over the decision on the actual use to the creators of the entertainment media.²

Regardless of how effective individual advertising measures are, consumers have a fundamental right to know when they are exposed to advertising content. In their work, Boerman & Reijmersdal (2016) analyzed the limited state of knowledge on the topic of advertising disclosure and derived some key recommendations for dealing with it in everyday life. First of all, the disclosure of advertising content should ensure fair communication between the parties involved. Many countries therefore already have corresponding laws that regulate the disclosure of advertising deals, although these regulations differ from country to country. If corresponding content is explicitly marked as advertising, this has an influence on how consumers perceive it. Initially, disclosure leads to a better perception of sponsored content and consumers are aware that the message they are receiving contains a commercial intent. When individuals are aware of the promotional intent, it can lead to a more critical view of the content being presented, so consumers are more able to protect themselves from manipulative content. However, the authors also emphasize that certain factors must be met in the context of disclosure to have this effect. The communication of commercial intent must be clear and easy to understand, so that as large a proportion of consumers as possible identify the advertising as such. Furthermore, the duration and timing of the disclosure are also relevant. The optimum time varies depending on the medium and type of disclosure, but as far as duration is concerned, it can be said that the disclosure should tend to be seen for longer and longer than is currently the case in practice. Consequently, if legislators pass appropriate regulations, they should not only regulate disclosure as such, but also the type and extent to which it must be made.³

Even though advertising is almost always associated with the intention of manipulating consumers’ perceptions and attitudes, it should be emphasized at this point that in most cases this manipulation is not done with the intention of harming consumers. Nevertheless, it does make sense to provide information about the commercial intention, especially when such advertising messages are integrated into entertainment media. However, the extent of legal requirements for disclosure is debatable. The protection of consumers that results from this is undoubtedly an advantage. At the same time, however, disclosure could also lead to sponsored content being perceived more negatively, without any appropriate justification. If smaller artists and content creators disclose sponsored content, this could lead to their own opinion losing value if consumers (subconsciously) assume that the opinion expressed is positive only because of the financial compensation. This observation could lead to individuals who rely on such sponsorship in the course of their professional activities trying to avoid corresponding advertising deals and thereby limiting their own performance potential.

An important note at this point is that placements can be both paid and unpaid. Not every product placement involves a monetary transaction. Consequently, producers and other creators of entertainment media benefit from placements not only through financial compensation. The provision of products as props, for example, can reduce the production costs of films and TV shows, since they do not have to be acquired by other means. In addition, consumers perceive real brands more positively than fictitious ones, so there is a further incentive to accept corresponding advertising deals. However, it should be noted that a healthy level should not be exceeded, otherwise the content will be perceived as a kind of collection of explicit advertising videos and the actual content could fade into the background. However, all parties involved could benefit from transparent placements that are not realized with the intention of deliberately deceiving the consumer. Consumers are educated about new products, content creators’ work is simplified, and organizations receive the desired advertising impact.

Product placements are a cost-efficient and mostly highly effective advertising medium used by many organizations. However, the continuously increasing use also means that editorial and commercial content are becoming increasingly difficult to separate. However, if the commercial intent remains hidden to the consumer, this can also lead to problems. If the advertising purpose is apparent to consumers, this changes perception and leads to a more critical view of the content. In addition, individuals have the right to know when they are confronted with advertising and when the content consumed is independent of sponsors. However, a general obligation to disclose sponsored content may also have negative consequences for content creators, so legislators should weigh carefully at this point whether such regulation is absolutely necessary. If corresponding laws are actually passed, it is necessary that they also follow certain guidelines in terms of type, scope, duration and timing, as the desired effect may otherwise fail to materialize.

¹ Boerman S., van Reijmersdal E., Neijens P. (2013) Appreciation and Effects of Sponsorship Disclosure. In: Rosengren S., Dahlén M., Okazaki S. (eds) Advances in Advertising Research (Vol. IV). EAA Series. Springer Gabler, Wiesbaden. https://doi.org/10.1007/978-3-658-02365-2_21.

² Product placement effectiveness: revisited and renewed. K Williams, A Petrosky, E Hernandez, R Page Jr – Journal of Management and Marketing research, 2011. http://citeseerx.ist.psu.edu/viewdoc/download?doi=

³ Boerman, S.C. and van Reijmersdal, E.A. (2016), “Informing Consumers about “Hidden” Advertising: A Literature Review of the Effects of Disclosing Sponsored Content”, De Pelsmacker, P. (Ed.) Advertising in New Formats and Media, Emerald Group Publishing Limited, Bingley, pp. 115-146. https://doi.org/10.1108/978-1-78560-313-620151005.

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