June 27, 2008

Jeff Perlman, Executive Vice President – Government Affairs
Clark Rector Jr., Senior Vice President – State Government Affairs
Robert Kohlmeyer, Manager – Government Affairs

FCC Announces Embedded Advertising Inquiry and Rulemaking

The Federal Communications Commission has indicated it will conduct a Notice of Proposed Inquiry on simultaneous disclosure of embedded advertising and a Notice of Proposed Rulemaking on all other facets of product placement. The FCC is seeking comments on whether it should require broadcasters to include an on-screen "crawl" whenever there is an instance of product placement on television. The FCC decision is troubling to the advertising industry because it suggests that regulatory action is necessary. In 2005, the Federal Trade Commission considered and rejected a similar proposal, saying there was no evidence that product placement was unfair or deceptive or resulted in consumer harm. The AAF, along with other advertising associations, wrote to FCC commissioners in December asking that the agency consider embedded advertising under a Notice of Inquiry. Given the significance, complexity and economic implications of the issue for free media, we believe the commission should conduct a closer examination of the issue to determine if any problems exist before considering possible regulatory solutions. A copy of the letter the AAF sent to the FCC is available here (Word document).
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FTC Finds High Compliance With Alcohol Advertising Standards

The Federal Trade Commission has released a report finding "high levels of compliance" with the alcohol industry's voluntary standards of directing advertising only to adult audiences. Over 92 percent of all television, radio and print advertising disseminated by 12 suppliers met the audience standard of at least 70 percent of adults aged 21 or over. Additionally, over 97 percent of total alcohol advertising impressions met the 70 percent standard. The report notes that each segment of the alcohol industry has adopted procedures for third-party review of ad complaints and concludes that underage drinking has "declined substantially over time." The full report is available here.
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Two Childhood Obesity Hearings Scheduled for July

The Children and Families Subcommittee of the Senate Health, Education, Labor, and Pensions Committee will hold two hearings next month on childhood obesity. The first hearing, scheduled for July 16, will focus on current issues related to childhood obesity, and the second, scheduled for July 23, will hear from government agencies, advocacy groups and companies who will discuss current and potential actions to address the issue. While no witnesses have been confirmed, many children's advertisers have taken the issue very seriously, agreeing to commit at least half of their children's advertising to promote healthier products and lifestyles.
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Online Advertising Hearing Announced

House Energy and Commerce Committee Commerce, Trade and Consumer Protection Subcommittee Chairman, Bobby Rush, D-Ill., and Rep. Ed Whitfield, R-Ky., the ranking member of the subcommittee, announced they will hold a hold a hearing this summer examining online advertising issues. The members of Congress said they are concerned about data collection and personalized Internet content, including behavioral advertising. They added that they are especially interested in recent online advertising partnerships and the risks such agreements pose to consumer privacy. No date for the hearing has been set.
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AAF Government Report will not be published next week while Congress is in recess.

AAF Government Report is available to all members of the AAF. If you are interested in receiving an e-mailed copy, please e-mail government@aaf.org.