structuring product placement deals: mitigating risks to the...

Structuring Product Placement Deals: Mitigating Risks to the Brand, Regulatory ComplianceNegotiating Exclusivity, Creative Control and Other Key Provisions, Enhancing Brand Awareness

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THURSDAY, JANUARY 3, 2019

Presenting a live 90-minute webinar with interactive Q&A

Amy B. Goldsmith, Partner, Tarter Krinsky & Drogin, New York

Rick Kurnit, Partner, Frankfurt Kurnit Klein & Selz, New York

Anne Kennedy McGuire, Partner, Loeb & Loeb, New York

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Product Placement

Rick Kurnit

[email protected]

“Brand Activation”• Product Placements

• Public relations

• User generated content

• Influencers

Social Media/Websites

Blogs and tweets

• Viral videos

• Sponsored Content

• Branded content

Please center

image within

this image area.

6

Necessary for “Legacy Media to compete with start ups….

• advertising content that is more relevant and a better user experience

– Honestly, isn’t anything better than (annoying and ignored) banner and pop up ads?

7

Media Created Brand Content

• Separate Ad content group

• Keeping the Ad Agency out saves money

• The media create interstitials and freebies

• The Marketing Department is on its own

• Consulting Legal cost money

8

Section 5 of the FTC Act

An act/practice is deceptive if:

• It is likely to mislead consumers

• Who are acting reasonably under the circumstances, and

• It would be material to their decision to buy or use the product.

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Product PlacementStaff Letter to Commercial Alert

• As a general matter, “it does not appear that failure to identify the placement as advertising violates” the FTC Act. – Few objective product claims are made

– Thus, rationale for disclosure - preventing danger that consumers will be under mistaken belief that product claims are being made by an objective third party - is absent

– “One size fits all” solution not appropriate

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Product PlacementStaff Letter to Commercial Alert

• “[I]f, through product placement, false or misleading objective, material claims about a product’s attributes are made, the Commission can take action against the advertiser.”

• The FTC can take action in cases where “the line between advertising and programming may be blurred, and consumers would be deceived absent a disclosure clarifying that a communication is an advertisement.”

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Product Placement

• The brand does not control the message

• Payment may vary based on how prominent

• Brand may be able to remove itself

• OK to specify will not disparage (?)

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Advertorials – Deceptive FormatFTC Advisory Opinion on Deceptive News Formats73 FTC 1307 (1968)

“[T]he column uses the format and has the general appearance of a news feature and/or article for public information which purports to give an independent, impartial, and unbiased view of the cuisine facilities. Since the column in fact consists of a series of commercial messages which are paid for by advertisers, the Commission is of the opinion that it will be necessary to clearly and conspicuously disclose it is an advertisement . . .”

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Fake NewsAmerican Media (NAD)

• SHAPE Water Boosters featured in “article” in SHAPE magazine

• Editor’s note plus 2 ads for product on different pages

• Captioned “news”

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Infomercials

Program length commercials

• “The program you are watching is a paid

advertisement”

• The FTC has prosecuted advertising disguised

as programming

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Best Practices: Product Placement

• Do not ask for final approval

• Do not dictate the message

• Do not supply materials with releases specifying advertising use

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“Placement” in a Documentary?

Facenda v. NFL Films

(542 F.3d Cir. 2008)

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Documentary=advertising= publicity rights claim

• Talent agreements specified advertising use

• Timed to air within weeks of release of game

• Included a “countdown” to release date

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Best Practices

• Do not Contractually require that specific messaging be included in editorial content as a condition of the purchase of advertising

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Editorial Content: “no quid pro quo”

Reasonable Relationship

Stephano v. News Group (N.Y. 1984)

Independent Editorial

New Kids on the Block

(9th Circuit 1992)

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Best Practices

• If you cannot keep the editorial entirely separate from the commercial content, clear it as advertising

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Branded Website=

Commercial Speech?Editorial content separated from the

marketing and sales content

Gorran v. Atkins

(2d Cir. 2008)

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Magalog

Downing v. Abercrombie + Fitch

(9th Circuit 2001)

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A magalog?

• Advertising or editorial?

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Best Practices

• Disclose any brand influence over content

• that is not obvious AND

• is likely to influence consumers’ purchasing decision…. and

• behavior (?)

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Buzz Marketing

• “buzz marketing” : a “technique by which corporations seek to influence buying decisions, often by stealth”

⚫Paid Endorser Goes on Tv to talk about

her use of the drug to treat her arthritis

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Astroturfing

(phony grassroots)

“…..put your wig and skirt on and tell them about the great experience you had”

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Best Practices: $$

After editorial is completed (independently) add links for affiliate marketing

New Kids on the Block

(9th Circuit 1992)

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Editorial Content and Commerce

• Best Practice:

• “Clear and conspicuous” disclosure of any revenue-sharing arrangement/ “affiliate” marketing

• BUT: Right of Publicity

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Right of Publicity –

• Name

• Picture/Likeness / Photograph

• Voice

• Indiana:– Distinctive appearance, Gestures,

Mannerisms

• “Persona”

• For “Commercial” Purposes

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Jordan v. Jewel Food Stores

• “Jewel’s ad has an unmistakable commercial function: enhancing the Jewel-Osco brand in the minds of consumers. This commercial message is implicit but easily inferred, and is the dominant one.”

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But I don’t even mention a product!Jordan v. Jewel Food Stores (7th Cir. 2014)

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“Jewel’s ad has an

unmistakable commercial

function: enhancing the Jewel-

Osco brand in the minds of

consumers. This commercial

message is implicit but easily

inferred, and is the dominant

one.”

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Right of Publicity

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At last!

“Ms. Heigl has voluntarily

dismissed her lawsuit, and

Duane Reade has made a

contribution to benefit the Jason

Debus Heigl Foundation. The

parties have agreed to keep the

terms of agreement

confidential.”

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ETW Corp v. JIREH PUBL

(6th Cir 2004)

BRAND

INTEGRATION!

37

Structuring Product Placement Deals

ANNE KENNEDY MCGUIRE

Partner, Entertainment Department

[email protected]

212.407.4143

January 3, 201939

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Crucial Provisions: An Overview

Varieties of Product Placements

Product Placement Can Mean Many Things

1) Product placement (in which an advertiser may pay a fee for

its product to appear in a movie, television show, or video

game) – can be “active” and “passive”;

2) Sponsorship of a television series, concert tour, or sporting

event;

3) Advertiser-created content (short films, online channels,

long-form content); or

4) Multi-platform deals (buy an ad in a magazine and get your

product on special anniversary episode of game show).

3

How Branded Is the Content?

▪ From a passive product placement to a dramatic infomercial

▪ Who is driving the story? Creatives or the brand?

▪ Is the product serving the story or the story serving the

product?

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Product Placement vs. Branded Entertainment

▪ In a simple product placement deal:

▪ A brand usually gives permission for its product to appear in an

entertainment product;

▪ Brand has little or no creative control or approval rights as to how

the product is featured; and

▪ Producer might not guarantee that the product appears in the final

version.

▪ Branded entertainment generally refers to a more sophisticated

arrangement between the advertiser and producer in which the

advertiser pays some or all of the production budget, the advertiser

might have more control over the final product, and both parties

engage in co-branded promotions to market both the entertainment

property and the branded product.

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Contractual Issues: Finding a Balance

▪ Content producer: wants control of the content / creative

control

▪ Advertiser: wants control of how the brand is presented

and wants to maximize exposure in the content as well as

with brand tie-ins

44

Business Issues Advertisers Should Consider for

Product Placements

▪ Are you able to articulate your brand communications goals clearly to network

and production partners and any other parties who will carry your message

forward?

▪ Do you have an internal process in place to provide timely review and approvals

of the work being created at both the planning and final stages? Is approval

power vested in one person or are multiple checkpoints needed?

▪ Do you have a clear understanding of the scope of your content approval rights?

▪ Is the property you are considering in the development stage or has it reached

the point where a network has agreed to pick it up? Are you certain that all the

programming you have invested in will be broadcast?

▪ Can you leverage your programming investment using other assets, for

example, by coordinating PR and marketing campaigns in other media? Do you

have sufficient time to accomplish this?

▪ How will you measure success?

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Legal Issues Advertisers Should Consider for

Product Placements

▪ What is the structure for the product placement or branded entertainment deal? For example, who will own the entertainment content – the media consultant company, independent producers, or the network/cable channel?

▪ Do the other parties have the rights they say they do?

▪ Do you have the rights you need to exploit properties and products? Are agreements in place with other parties to exploit properties and products?

▪ Does your right of content review and/or approval ensure that your product will not be portrayed unfavorably? Do you have approval rights over cast, writers, etc.?

▪ What if the content does not go forward? Are there remedies or “make-goods” in the event of termination?

▪ Are your financing responsibilities clearly articulated? Are distribution and marketing costs clearly articulated?

▪ Are ancillary rights and exclusivity clearly articulated?

46

Crucial Provisions Overview

▪ Exclusivity

▪ Scope of rights

▪ Creative control and approvals

▪ Termination rights

▪ Other issues

47

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Exclusivity

Key Contractual Provisions

▪ Exclusivity

▪ Will the advertiser be guaranteed its product will be the

only product depicted or the only product depicted in its

category/industry?

▪ Defining exclusivity - “category” vs. “competitors”

▪ Exclusions from exclusivity

49

50

Scope of Rights


▪ Scope of Rights

▪ Limitations on Producer’s use of brand marks / logos / product(s)

▪ Use of marks / logos / product(s) in advertising / promotion of the

content

▪ Rights inure to benefit of brand and no ownership is conveyed

▪ Reserve all rights not explicitly granted

51

52

Creative Control and Approvals


▪ Approval rights

▪ Approval vs. Meaningful Consultation

▪ Creative input through the production process, especially at key

steps of the development and production of the content

▪ If permitted, approval of use of the brand in publicity or

advertising for the content

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▪ Compliance Issues

▪ Comply with “product usage” requirements or requests

▪ Safety and compliance limitations on how the product can be

used in the content and behind the scenes (e.g., placements

of vehicles or equipment)

▪ Compliance with brand guidelines

▪ Compliance with separate product usage agreement and

insurance requirements (e.g., vehicle rental agreements)

▪ Requiring a brand representative on set

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▪ Non-Disparagement

▪ Restricting disparaging the product, including impairing

the goodwill or reputation of the product or using the

product in a manner not intended or authorized

▪ Disparagement within the content and in connection with

publicity for or promotion of the content

▪ Avoiding “bad association” for the product

55

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Termination Rights


▪ Termination

▪ Termination for delays / force majeure events

▪ Breach

▪ Producer, key talent, and/or content becomes involved in scandal

or criminal activity

▪ Termination if product not included or incorrectly included in the

content

▪ Effect of termination

57

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Other Crucial Provisions


▪ Press and Publicity

▪ Approval of any press or publicity utilizing the brand

▪ Right for brand to use content elements (e.g., talent/clips) in

brand marketing or in-store promotions

▪ Contest / Sweepstake tie-ins

▪ Social media promotion

▪ Events / Premieres

▪ Merchandising

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▪ Credit

▪ Sponsorship credits

▪ “Special Thanks” credits

60


▪ Continued Involvement

▪ Term of Agreement – Options?

▪ Right of First Negotiation for future integrations in the

content for the product’s brand category

61


▪ Remedies and Indemnification

▪ Brand options if the product placement goes sideways

▪ Forcing return of products

▪ Payment milestones and refunds

▪ Indemnification

▪ Insurance coverage

62


▪ Disclosures

▪ Disclosures worked into the placement vs. lower

third disclosures

63

Structuring Product Placement Deals

ANNE KENNEDY MCGUIRE

Partner, Entertainment Department

[email protected]

212.407.4143

January 3, 2019

Structuring Product Placement Deals: Social Media Issues and Compliance with FTC Endorsement Guidelines

Amy B. Goldsmith, Esq.Co-Chair, Intellectual Property [email protected]

Social Media: Instagram, Facebook, Twitter, YouTube

• How are these platforms used for product placement?

• Why are these platforms used?

• How do brands find influencers?

• What rules must be followed?

• What are the consequences if the rules aren’t followed?

66


144.5 million followers

6,989,064 likes

67


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http://mediakix.com/2018/03/top-influencers-social-media-instagram-youtube/#gs.pZMam3c

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Organic vs. Sponsored Content

About the Brand Collabs Manager

Brand Collabs Manager is a marketplace that helps brands and creators find, learn more about and connect with each other. As a brand, the tool let's you:

• Set an audience match to see the percentage of each creator's audience that matches yours.

• Choose any creator or group of creators and find others with similar audiences.

• Explore customized lists of creators based on your past branded content partners, creators who like your Page and more.

• Email creators and start a conversation about collaborating.

Currently, access to the Brand Collabs Manager is limited. If you're a brand, sponsor, advertiser or marketer interested in gaining access, Page admins can apply here.

72

https://www.facebook.com/collabsmanager/start

https://www.facebook.com/collabsmanager/signup/brand/


Native Advertising versus Sponsored Ads

73


Facebook and Instagram Rules

What words do the influencer or brand commonly use?

PAID PARTNERSHIP

AD

SPONSORED

74

The FTC and Social Media Endorsements

FTC ENDORSEMENT GUIDELINES: 16 CFR PART 255

(b) an endorsement means any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser. The party whose opinions, beliefs, findings, or experience the message appears to reflect will be called the endorser and may be an individual, group, or institution.

75

The FTC and Social Media Endorsements: Who is an Endorser?

Hypothetical 1: a consumer who has sensitive skin buys a new brand of laundry detergent. She uses the detergent and does not develop a rash. She posts on Facebook about the detergent. Is she an endorser?

Hypothetical 2: the consumer is given a free sample of the laundry detergent by the company since she is a member of their loyalty club and has accrued enough points. She uses the detergent and does not develop a rash. She posts on Facebook about the detergent. Is she an endorser?

Hypothetical 3: the consumer is a member of a marketing program and receives products to test for the purpose of writing reviews. She uses the detergent and does not develop a rash. She posts on Facebook about the detergent. Is she an endorser?

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What is the endorser’s obligation when posting?

• The endorser must actually use the product

What is the advertiser’s obligation?

• The advertiser must have good reason to believe that the endorser uses the product

Who is liable for false statements?

77

The FTC and Social Media Endorsements: But That’s Not All!

Consumer endorsements: what does an advertiser need in its back pocket?

• Substantiation for the consumer’s representation that one consumer’s experience is representative of what other consumers might experience

Are disclaimers effective?

Should real people be used?

78


Expert Endorsements: really?

79


CLEAR AND CONSPICUOUS DISCLOSURE OF MATERIAL CONNECTIONS

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Connect with Amy on LinkedIn

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structuring product placement deals: mitigating risks to the...

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