March 23rd, 2001
Ads Show Up in Unexpected Places
By Michael McCarthy
USA Today
Stealth ads are sneaking up on you.
These commercial messages fly under the radar, tucked away in places where consumers expect non-commercial reality. And they come in many disguises, including product placements in TV news and talk shows, interviews with celebrities who are actually paid endorsers and digitally created images that don’t exist in the real world but look very real on your TV screen.
What they have in common is that they obliterate the walls between commercial and non-commercial content. And they are setting off alarms with watchdog groups.
“Blurring programming and advertising . . . advertising executives go to sleep dreaming of that,” says Ralph Nader, Green Party presidential candidate and founder of the 3-year-old Commercial Alert consumer group.
Dream or nightmare, this genie is out of the bottle. Despite a few noisy flaps, the practice is quietly becoming accepted.
A stealthy example: Next month, fans watching Major League Baseball on ESPN will see what seem to be product billboards on the walls behind home plate. But fans at the game will not—they don’t exist.
ESPN has a deal with digital ad leader Princeton Video Image (PVI) to insert such “virtual ads” into the network’s Sunday night game broadcasts, PVI Chief Executive Dennis Wilkinson says. Such ads were tested in games last year. PVI also inserted a virtual street banner (Denny’s), entry canopy logo (Candie’s) and logos on sidewalks (Ford and MasterCard) into TV coverage of arrivals at the Grammy Awards last month. TV viewers saw the ads. Arriving celebrities did not.
The ad industry sees stretching the truth by weaving ads into content as just doing its job. “Ad agencies and marketers are always pushing the envelope as much as they can,” says Burtch Drake, president and CEO of the American Association of Advertising Agencies (AAAA). “It’s up to the media to push back—or draw the line. It’s their properties and reputations that are at stake.”
But for media, the risk to credibility gets weighed against the advantages of stealth ads:
* They are zap-proof. Viewers already channel surf away from ads. Media are even more scared by new technologies, such as the TiVo digital recorder, that let consumers delete commercials from a show. In-show messages are zap-proof.
* They are something else to sell. Broadcasters have crammed as many 30-second commercials into shows as they think consumers will tolerate. Stealth marketing offers a new outlet for sales without adding to the commercial interruptions . Says PVI’s Wilkinson: “Look at the World Series. Those games lost their audience because they ran till one in the morning with all the 30-second commercials.
We will find ourselves in a world where we will have a lot more in-content and in-game advertising.”
* They can be woven into the show. Marketers believe that the closer a commercial message is to a show’s content or personalities, the more impact it has with consumers. Complains Commercial Alert Director Gary Ruskin: “There’s an effort to make a seamless web between commercials and programming.”
Such blurring is nothing new for entertainment shows. Few identifiable products seen on a typical sitcom did not pay to be there. It has, however, been taken to a new level by “reality” shows such as CBS’ Survivor, which makes advertisers’ products part of the story line—for $ 12 million each this season.
But the “reality” show is obviously not reality and is anything but stealthy about product integration, executive producer Mark Burnett says. “We’re not liars. We don’t pretend it’s not there. The public’s used to it.”
Says Burnett: “Marketers have to get a benefit for their dollars. As long as you do it in a tasteful way and don’t lie to the audience, it’s fine.”
That’s the question raised by stealthy placement of products, messages and virtual ads into contexts where consumers believe they are getting reality: news and talk shows, live events, sports—even newspaper interviews.
“The line between entertainment and news is blurring. We need to make clear what the boundaries are,” warns Loren Ghiglione of the University of Southern California’s Annenberg School for Communication.
Other stealth ad techniques blurring the line:
* The NyQuil news. TV news production company INNX in San Diego is pitching advertisers on “news-adjacent targeted advertising.” The company produces TV news health features, partly hosted by former NBC News correspondent Lucky Severson, for 200 NBC stations watched by about 9 million consumers a day.
INNX will let advertisers select from among its upcoming segments those that best match their products. INNX will then tack a 12-second ad at the end of the segment, which also directs consumers to the TV station’s Web site, where they can click on a page for the advertiser, says Teri Hirschfeld, INNX chief marketing officer.
For example, a NyQuil promo could be attached to a news story about the flu.
INNX has a deal with pilot advertiser Procter & Gamble to start attaching ads next month for NyQuil, Crest and other P&G brands to news stories.
P&G calls it “holistic marketing.”
Critics call it unethical.
Hirschfeld argues: “TV stations have been doing this for years. This is no different than weather segments ‘brought to you by. . . .’ “ Still, she concedes, some TV stations are “not used to seeing advertising embedded” in the news.
* Stealth endorsers. Pharmaceutical makers are paying celebrities to talk up drugs during interviews.
The problem: Interviewers don’t always mention that their subjects are paid to drop product names.
Take a profile of Olympic gymnast Bart Conner that ran in New York’s Daily News in August. The story mentioned that Conner uses Pharmacia’s Celebrex for arthritis. It didn’t say he’s paid to endorse the drug.
“Usually, I’m asked if I’m a paid endorser,” Conner says. “And I say, ‘Yes, I am and happy to be so.’ But I also offer it up. I’m not ashamed at all.”
Conner says an athlete talking honestly about a product he uses, even if paid, is different from other celebrity huckstering. “I was having success with this product long before they called me. It’s not like somebody said, ‘Here’s this cheesy thing, go promote it.’ “
Pharmacia “makes every effort” to tell reporters that they are interviewing paid endorsers, spokeswoman Judith Glova says.
Merck has paid Olympic stars Dorothy Hamill and Bruce Jenner to mention its arthritis drug, Vioxx. It is the media’s job to point that out, Merck spokeswoman Mary Elizabeth Basaman says. “In the end, reporters are responsible for what’s reported.”
Shades of gray
Nancy Chockley, president of the non-profit National Institute for Health Care Management (NIHCM), finds the practice “is insidious because it’s a gray area. It sounds like athletes are speaking from their heart. And they may be. But at the end of the day, they are paid spokespeople.”
Nancy Ostrove, one of the chief watchdogs for the Food and Drug Administration’s drug marketing, advertising and communications division, says such interviews are OK as long as celebrities don’t hide their paid relationships or misstate facts about the drug. “Of course, we’re concerned about it. The issue is, do we have jurisdiction? We don’t regulate the news media.”
* Now you see it, now they don’t. MLB is not the only sport tinkering with virtual ads. The NFL gave international viewers “branded first-down lines” during Super Bowl XXXV. Next to the electronic first-down line that U.S. viewers saw, foreign viewers in 200 countries saw what appeared to be logos—Pepsi, FedEx, Kodak and General Motors—painted on the field.
Actually, they were digitally generated in a PVI truck in the parking lot.
The digital ads were sacked from the U.S. telecast on CBS because they conflicted with the NFL’s broadcast contracts, says Dennis Lewin, the NFL’s senior vice president of broadcasting. NFL teams also are prohibited from using virtual ads during the regular season.
Other leagues are taking it slow with virtual ads. The NBA has had “ongoing discussions . . . but there’s nothing in the works,” spokesman Mike Bass says. The NHL “ is not confident the technology is where it needs to be,” spokeswoman Bernadette Mansur says.
But PVI thinks the spread is inevitable. It’s the price consumers pay for free TV sports, says Sam McCleery, vice president of business development. “You can either accept more 30-second commercial breaks or you can accept more in-program advertising.”
So far, it’s a bargain consumers seem to accept. Americans are remarkably tolerant about marketing, Drake of AAAA observes. Survivor‘s Burnett says that “if the economy continues to falter, you’re going to wind up with Microsoft Yosemite Park, and nobody will care.”
Nader just sighs when asked whether stealth ads will spark a consumer revolt: “I’m still waiting for it.”
The backlash
Other advertisers, in fact, are the ones leading the backlash, especially against the virtual ads. The same technology that allows broadcasters to insert virtual ads also allows them to erase or replace real ones.
CBS faces a lawsuit over its use of virtual ads during news coverage of New Year’s Eve 2000 in New York. The lawsuit, filed in October by OTS Signs, says CBS blotted out real billboards for NBC and Budweiser and digitally substituted its own logo on One Times Square, the building where the ball drops at midnight. OTS sells billboards there for up to $ 1 million.
This may be “the first case where digital insertion technology has been used to obscure advertising in favor of other advertising,” says Jeffrey Toney, attorney for the plaintiffs at Kilpatrick Stockton in Atlanta.
Even AAAA’s Drake objects to this use of stealth ads. “If I buy a billboard at Yankee Stadium, I expect the fans watching on TV to see it, too,” he says.
CBS declined to comment because of the lawsuit. Dan Rather, who anchored the event, called it a “mistake” in an interview last year: “When you have new technology like this, it’s going to raise new issues.”
The lawsuit is in “settlement” discussions, says Stephen Zoukis, partner at real estate firm Jamestown, an Atlanta-based company affiliated with OTS Signs.
“We’re in a brave new world. The kids are playing with these new toys. But they haven’t figured out what to do with them,” Zoukis says.