Branded entertainment requires greater regulation

By Ravi Chadha, Lall Lahiri & Salhotra

Branded entertainment has been prevalent in Indian advertising for a considerable number of years. Branded entertainment on Indian television started with the Bournvita Quiz Contest. Many Indian consumers will fondly remember the 1973 movie Bobby, which featured the lead actors on a Rajdoot motorbike making the vehicle extremely popular among teenagers.

Advertisers are looking at branded entertainment to reach customers. Elder Health Care launched its deodorant Fuel and this new brand was competing with well-established deodorant leader Axe. Elder’s strategy to capture consumer imaginations involved a saucy television commercial featuring two of Bollywood’s hottest actors.

Ravi Chadha Associate Lall Lahiri & Salhotra
Ravi Chadha
Lall Lahiri & Salhotra

The concept of brand engagement is huge in the West, but such a concept has yet to catch on in India. Advertising expenditure is nevertheless growing exponentially. PricewaterhouseCoopers predicts that the Indian media and entertainment industry will grow cumulatively from Rs563 billion (US$12 billion) to Rs929 billion between 2010 and 2013. Of this, traditional media (television, print, radio and film) will contribute Rs837 billion, while the emerging segments (music, out of home media, internet, animation, gaming and visual effects will contribute Rs92 billion).

Branded entertainment is product placement on a more impressive scale that typically gives the advertiser more control over the entertainment product and greater branding opportunities. It is the practice of incorporating a brand into programming and its practitioners hope to do this subtly.

Corporate marketing departments have been embracing branded entertainment and commercial brands are increasingly lining up with or creating entertainment content. The concept of branded entertainment has succeeded so well in the Indian market that many television channels are setting up separate units to offer “media maximization” and advertising majors are beefing up branded entertainment wings. Mudra Group, an Indian marketing communications network, has relaunched Mudra Videotec to specialize in branded entertainment and entertainment marketing, as an independent entity within the Mudra Media and Content Services Group.

While branded entertainment is appealing for revenue generation, legal considerations must be taken seriously. Writers, actors, producers or distributors should be clear in their agreements about the purpose and payment structure governing the creation and use of the branded content. Brand owners and producers must ensure that an agreement with talent and creative parties clearly covers the uses for the branded content. Generally, actors, writers and directors will oppose commercial exploitation of the content to which they have not specifically agreed.

Publishers, producers and broadcasters create websites to support existing television programmes, newly released films and published works by best-selling authors. With this newly discovered adjunct revenue, which is supported by web advertising and other revenue streams, the uncontroversial provision that grants “all rights in all media” has evolved into a highly debated issue. Agreements must state clearly the rights and ancillary rights granted for the future; whether the creative party reserves any such rights; and the extent of payment obligations; limitations on uses, approvals or controls of both the creative party and the producer, publisher, broadcaster or other party first engaging the creative party’s services or work. For example, while granting studio rights for a motion picture for an existing character created by an author, it is crucial for an agreement to specify whether the motion picture licence includes or excludes digital exploitation of the character.

In the US, regulations relating to branded entertainment in television are few and far between. The requirements that the Federal Communications Commission (FCC) impose are limited to broadcasters and cable operators, who are expected to disclose to viewers/listeners if material has been exhibited in exchange for money, services, or other valuable consideration. This requirement is minimal – a single announcement that the programme is sponsored, paid for or furnished by the identified sponsor and can be placed in the closing credits.

The FCC has additional rules regarding children’s programming. In addition to limiting the amount of commercial time, the FCC prohibits the airing of any product advertisement in a show associated with that product; or a commercial announcement made primarily for a product otherwise unrelated to the programme which promotes a product related to the show. With brand integration becoming more frequent and refined, consumer groups have demanded that the FCC require prominent and coincident disclosure of embedded ads on television and issue new guidelines for product placement disclosure.

In India, there exist very few regulations that govern branded entertainment. While many brands continue to negotiate with producers and broadcasters for product placements, branded entertainment is bound to attract regulatory examination that could result in governmental regulation and we can hope for a friendly and enabling regulatory environment from the government to be created.

Ravi Chadha is an associate in the Trademarks Prosecution Department at Lall Lahiri & Salhotra.


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