Opening the door for product placement in Hong Kong?

On 4 September 2017, the Communications Authority of Hong Kong ("CA") announced that it will review the relevant provisions in the codes of practice governing indirect advertising and product/service sponsorship (commonly known as "product placement") in television programmes.

Currently, the rules for television advertising are contained in the Generic Code of Practice on Television Advertising Standards (January 2013) and the Generic Code of Practice on Television Programme Standards (May 2014) (together the "Codes"). The Codes are issued by the CA pursuant to section 3 of the Broadcasting Ordinance (Cap. 562) and the CA has the power to impose sanctions on licensees who do not comply with the Codes. Product placement in television programmes must comply with the Codes. The Codes provide, among other things, that the exposure or use of the product must be clearly justified editorially, not obtrusive to viewing pleasure and not gratuitous. Other requirements include that the sponsor for the product or service must be clearly identified in the front and/or end sponsor credits of the programme.

These restrictions on product placement are not without controversies. For instance, In May 2016, the CA issued a fine of HK$150,000 to a licenced television broadcaster for violating terms of the Codes in respect of product placements and indirect advertising. The TV programme concerns a TV awards presentation ceremony, during which fried chicken and drinks in containers carrying the logo of a fast food chain were delivered to artists who ate and passed around the containers of food for over a minute. The television broadcaster subsequently filed judicial reviews against the decision of the CA and also the relevant provisions of the Codes (the proceedings are ongoing).

The CA is conscious of the ongoing discussions on product placement in TV programmes in the community and the changing and increasingly challenging landscape for the local TV market (e.g. the emergence of new media advertising; the entry of new free TV licensees). Against this backdrop, in May 2016, the CA conducted a study into the regulation of product placement in free television services in other jurisdictions, and between February and June 2017, commissioned an opinion survey to gauge public attitudes and views regarding indirect advertising and product/service sponsorship on television.

The results of the opinion survey indicated that the majority of television viewers in Hong Kong do not find product placement advertisements objectionable. However, at the same time, the majority also considered that product placement should not be totally unregulated. For instance, product placement in current affairs programmes is generally considered to be undesirable. Focus group participants generally considered whether the product placement was presented naturally and whether it was obtrusive to viewing pleasure as the most important factors affecting their acceptance of product placement advertising.

Based on the results of the study and opinion survey, the CA considered that there is room for relaxation of the Codes in respect of indirect advertising and product/service sponsorship and has agreed to propose amendments to the Codes and launch a consultation on the proposed amendments in due course.

We consider this a positive and open-minded move by the CA. We hope that a relaxed regulatory regime on product placement would lead to more creative advertising.

Article by Eugene Low, Monique Woo and John Deng from Hong Kong office.

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