Tuesday, November 2, 2010
Embedded advertising - marketing that promotes brands from within entertainment content - is a thriving, rapidly changing practice. Analysts estimate that embedded advertising expenditures could exceed $10 billion in 2010. The market continues to grow even as traditional advertising revenues contract. The relatively few legal scholars who have studied embedded advertising believe that it is under-regulated. Ineffective regulation, they claim, is deeply troubling because corporations may with legal impunity deceptively pitch products to trusting viewers. Critics charge that embedded advertising creates “hyper-commercialism,” distorts consumers’ tastes, taints the artistic process, and erodes faith in public discourse. This Article argues that the critics are wrong. Sponsorship disclosure law under the Communications Act of 1934 and related regulations is indeed largely ineffective, in part because the media industry has consolidated considerably and in part because media content is now created and consumed in diverse ways unimaginable to the drafters. The law was conceived for yesterday’s marketplace, but also for yesterday’s consumer. The media consumer today is what this Article calls a “venture consumer.” Often, she knows what she wants, knows where to get it, and is aware of the risks and costs involved. The mismatch between the consumer imagined by regulators and the contemporary consumer means that expanded regulation of embedded advertising according to current reform proposals could end up harming consumers more than helping them. Moreover, embedded advertising is not especially amenable to effective regulation, given the incentives for artists and advertisers to collaborate in the production of entertainment content. In light of the difficulty of correcting the regime’s flaws and the consumer interests threatened by expanded regulation, the Article concludes that the consumer is better served if the law is maintained as-is rather than expanded through the proposed reforms.
Download the article from SSRN at the link.