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Last Updated: Tuesday, 2 January 2007, 23:12 GMT
Standing out on the silver screen
By Joe Lynam
Europe Business Reporter, BBC News, in Brussels

The Aston Martin DBS used in Casino Royale
Aston Martin has a long association with the James Bond franchise

Doesn't James Bond look cool when he's sitting there in his Armani suit, wearing his Omega watch, sipping his Smirnoff vodka-martini having just arrived in his gleaming new Ford Mondeo?

Yes, you're correct but something's not quite right here.

Bond does not wear Armani suits.

All the other brands though have stumped up millions of dollars to have the suave spy drink, drive or damage their labels in the Ian Fleming inspired movies.

In fact, of the $150m which it cost to make the latest 007 adventure, Casino Royale, a fifth of it was covered by more than 20 companies in a practice known as product placement.

Crucial funding

And it is not just James Bond who practices this dark art of subtly plugging brands within films.

Count how many times you see Heineken labels in Enemy of the State with Will Smith, or the blanket coverage afforded to the delivery company Fedex in the Tom Hanks movie Castaway in exchange for access to their facilities and people.

Increasingly, the rising cost of making films means that producers have little choice but to turn to advertisers to help them subsidise their movies. Remove product placement and who knows how many great films might never get made.

Tom Hanks in Castaway
Product placement helps to get movies made

Nor is product placement just about what we see in our cinema screens.

TV has become home to some of the sharpest and unfortunately bluntest instruments in advertising, especially in the US which has few laws to curb such practices.

Here in Europe it is nearly the exact opposite.

Whereas a US broadcaster could be heavily fined for showing nudity on any of the main networks, in Europe there's more concern about gratuitous advertising than about any scene of a violent or sexual nature.

But with the all-pervasiveness of the internet, EU laws needed updating to reflect the 'anytime, anyplace, anyone' manner which the web allows users to consume programmes these days.

And it had to do that without stifling innovation and programme making in Europe at the same time.

Prohibition or regulation?

The European Commission had to make a choice: does it ban product placement entirely to avoid some of the vulgar and indiscriminate use of branding on TV and simultaneously give American producers an advantage?

Or does it allow product placement in principle but under strict conditions?

The proposal is all part of an EU directive known as TV Without Frontiers and it has just received the final blessing of European parliamentarians after a tortuous battle between the miscellaneous stakeholders.

The bill also sets out strict guidelines on how much advertising should be allowed during news and children's programmes as well as setting an absolute cap of 15 minutes on the amount of ads permitted in each hour of TV.

The new directive also allows no more than one advert every 30 minutes.

Furthermore, to avoid product placement being used to target children, advertisers have agreed to a voluntary code to limit adverts to minors for foods with high sugar or salt content between 6am and 9pm each day.

But family groups are unhappy with that compromise. They also feel that the internet should also be fully covered by the new laws, given how much it is used by children of all ages in Europe.

As with so many laws in Europe, a hybrid law was hammered out between the TV industry, health campaigners and politicians.

TV Without Frontiers hopes to strike a balance between the needs of Europe's programme makers as well as protecting its citizens.

And with product placement in the EU worth an estimated $2bn every year, it wont be going anywhere fast - certainly not as fast as James Bond in his new branded car.

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