Rule change paves way for Hong Kong broadcasters to boost ad revenues through product placement
Communications Authority relaxes regulations surrounding indirect advertising, but goods and services must be shown in ‘natural and unobtrusive manner’
Rules surrounding unpaid commercial references have also been relaxed as part of the changes governing indirect advertising after a two-year review to improve the increasingly competitive market amid the threat of new media, the Communications Authority announced on Wednesday.
The move, which will come into force on July 27, applies to all programmes apart from those dealing with news, current affairs, education and religion.
Product placement must be done in a sympathetic manner and fit within the content and genre of the programme concerned.
The direct encouragement of purchase or use of products and services is still prohibited.
Winnie Tam Wan-chi, the authority’s chairwoman, said the principles of determining acceptable indirect advertising were “natural and unobtrusive” and the regulator would not police all the indirect adverts or product placements in any television shows.
“We precisely want to raise the scope of creativity,” she said. “This is a new regime, which is like any new laws, which need to build up a collection of cases for future judgment. It’s a learning process.”
For example, a coffee chain store’s branded products can be displayed on the table of a talk show. But, if there are frequent close-up shots of the brand, and a talk-show host encourages the audience to buy the products, that risks breaching the rules.
In response, a spokesman with Hong Kong’s largest television station, Television Broadcasts, said the wording of the new regulatory regime that required stations to present “in a natural and unobtrusive manner, is still very subjective and creates interpretation problems”.
“Sponsorship is a form of advertisement and its presentation entails creativity,” TVB said. “Whether such creative efforts are natural or not will inevitably be perceived differently by different viewers.”
It added that it will “not be any easier” to ensure compliance with the new arrangements.
The ban on undertakers would be lifted, which allows “dignified and restrained” adverts, but those with explicit references to death and technical aspects of associated services, and morbid details, are forbidden.
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Tam said the relaxation facilitated broadcasting licencees to diversify their source of advertising, striking a balance between providing a more conducive business environment to licencees in light of the keen competition in the broadcasting industry, and protection of the interests of viewers.
Embedding indirect advertising in television programmes has been a subject of a long-running dispute between the regulator and free-to-air television station, TVB.
On three occasions since 2015, the authority has fined the station a total of HK$650,000 (US$83,000) for inserting indirect adverts in its programmes after receiving complaints from viewers, penalties TVB station is still contesting.
The authority said about two-thirds of some 60 substantiated complaints on indirect advertising over the past eight years would be considered as compliant with the new regulatory regime.
TVB said it would watch closely whether the new measures “can truly allow” a more conducive business environment and provide flexibility for the broadcasting industry to generate more advertising revenue.
The station, which was one of the most vocal critics of the restrictions in indirect advertising, posted a profit of HK$244 million last year, a 51 per cent drop on 2016, and a far cry from the HK$1.74 billion it earned in 2013.
Lawmaker Charles Mok said the new regulations meant Hong Kong was aligning itself with other jurisdictions and bringing its outdated communications rules up to date.
The authority said it took into consideration practices in other markets such as mainland China, Britain, the European Union and Taiwan.