Regulating Branded Content in the Israeli Media

A. Summary

Branded content is the incorporation of advertising messages in content presented via the media in a camouflaged or semi-concealed way. Recent years have witnessed a significant and large increase in branded content in the media, and advertisers regard it as a central component in the business model of the contemporary media economy.

Branded content is harmful on several levels. On the economic-consumer level, it misleads media consumers who believe they are viewing content and not an advertisement and, therefore, do not activate the cognitive defense mechanisms they generally employ when viewing advertisements.

On the level of public discourse, branded content endangers the pluralism of content in the media, prevents the existence of a space that is free from commercialization and, most importantly, instills doubts among the viewers who cannot know for sure whether the content they are viewing is reliable. This situation makes it impossible to conduct frank and rational discourse on public issues.

Due to historical reasons, the regulation of branded content in Israel varies from one type of media to another. Thus, there is no legal prohibition on branded content in films, newspapers or the new media, but there is such a prohibition in television broadcasts. Despite this prohibition, branded content appears on Israeli television, and the gap between the language of the regulation and the reality is enormous. Consequently, the various types and shades of branded content comprise a problematic phenomenon in the Israeli media.

The regulation we propose for contending with the issue of branded content is based on three principles:

1. Branded content should not be prohibited, but a system of disclosure should be created. In addition to the general duty of disclosure, there should be specific prohibitions on certain ways of incorporating advertisement in content, particularly those that appear in content pertaining to news and public affairs, and those that promote the consumption of harmful products.
2. Cross-platform regulation of branded content should be formulated. In addition to the television channels and their associated content websites, the regulation should include the institutionalized press – print and online – and content sites such as blogs.
3. The Israel Consumer Protection and Fair Trade Authority should be assigned responsibility for overseeing branded content in all media, based on the laws of deceptive advertising. Our proposal is consistent with the Consumer Protection Law - 1981, which determines that branded content is deceptive advertising.

B. Content of the Proposed Arrangement

I. Definition of Branded Content

1. We propose defining branded content on the basis of exchange value. The significant harm inherent in branded content is not merely attributable to the fact that brand names are presented. Rather, this harm primarily derives from the fact that the motive for including these brand names is concealed. The demand for defining branded content is already reflected in the Consumer Protection Law - 1981. Therefore, we propose that the regulation of branded content be based on the definition contained in this law.
2. The instilling of values or social issues by non-commercial entities will not be considered branded content. The question of political advertising or advertisements dealing with controversial public issues should be addressed. Branded content by entities that have special obligations of trust vis-à-vis the public should also be regulated, and branded content by the government or political parties should be restricted via amendment of the Elections Law (Propaganda Methods) – 1959.

II. Model of disclosure

1. We recommend that each case of branded content be clearly disclosed and labeled.
2. We propose that branded content be labeled via a uniform classification system defined by a single entity – the Consumer Protection Authority – regardless of the technological platform in which the content is presented to the public. The use of a uniform classification system will make it easier for all of the entities involved and will enable the institutionalization of categories of advertising labeling. It would be appropriate to establish a legislative basis that would require the suppliers of end devices (mobile devices, tablets, televisions and various types of computers) and Internet service providers to enable consumers to make use of this labeling in online filtering and “net nanny” tools.
3. Similar to the principles of the U.S. Federal Trade Commission, we propose that the scope of disclosure be determined in accordance with the consumed content and the circumstances of the advertising. Proper disclosure will be clear and prominent such that a reasonable person will understand that the content before him includes branded content.
4. We propose that the duty of disclosure in audio-visual broadcasts include a staged process of labeling. In any case, the broadcasters will be required to present the appropriate logo from the uniform classification system at the beginning of the content and when returning from an interruption from it (such as a break for commercials). However, during the stage of implementing the duty of disclosure, a textual and graphic slide will be presented, explaining that the content includes branded content. After the stage of implementation, the broadcasters will only be required to display a logo that labels the advertisement.
5. We propose that branded content be completely prohibited in media platforms that do not allow for the inclusion of sufficient disclosure of the branded content.
6. We propose that the duty of disclosure not include display of the name of the product or service being promoted.
7. We believe that a necessary condition for the effectiveness of the disclosure is to include the labeling of branded content within the general system of classification and labeling in order to ensure a uniform and consistent system of labeling in all platforms. Thus, for example, in regard to television, the Classification, Labeling and Prohibition of Harmful Broadcasts Law – 2001 should be amended to add labeling pertaining to branded content; the entity responsible for this will be the Consumer Protection Authority.

C. Prohibitions on Branded Content

1. We propose a complete prohibition of branded content in media entities funded by the public, including content they produce themselves and content produced for them by others. The rules of incidental advertising that apply to public broadcasting (advertising of products and services that appear incidentally in a broadcast and without payment) should be maintained and resources should be invested for enforcing them.
2. We propose a complete prohibition of branded content in news, current events and public affairs content. This content constitutes the heart of the journalistic work that addresses the hard core of the political discourse. We adopt the assumption that undisclosed branded content in the guise of a news item, report or article – from the formal perspective (location, font, order, etc.) or from a content perspective – is by definition deceptive. Accordingly, we propose that a creator of content that includes commercial collaboration will not be able to present it as a news, current events or public affairs item. In the appropriate media, there should be an effort to synchronize the way in which the programs are defined for the purpose of granting benefits to the broadcasting entity, on the one hand, and the prohibition on including branded content in these programs, on the other hand (for example, in deciding whether to include the program in the framework of the hours for the elite genre of programming required in tenders for the commercial television franchisees).
   
   The duty of disclosure will not apply to content that presents a product, service, etc. that does not entail exchange value – for example, a consumer report or critique of a particular program or service. We believe that there is no reason to prohibit commercial collaboration that appears alongside news content, as long as there is a prominent distinction between the two, so that it is clear to news consumers that they are being exposed to advertising content (such as marketing sections in online newspapers).
   
   
3. We propose prohibiting the incorporation of branded content in content intended for children under the age of eight.
4. We propose prohibiting branded content that promotes certain harmful products such as tobacco products; alcoholic beverages; pharmaceuticals; food that is high in sugar, salt or fat; weapons; gambling and lotteries. This prohibition is needed because of branded content’s encouragement of consuming harmful products (such as tobacco products) or of adopting undesirable and harmful patterns of behavior (gambling, for example).

D. Legal Liability

We propose assigning responsibility for branded content to two entities:

1. The commercial entity that chooses to include unlabeled branded content among the various means of advertising it purchases.
2. The entity that receives monetary payment for incorporating an advertising message in the content (for example, a production company). We also propose imposing liability on the owner of the platform in which the branded content is presented, if two conditions are met: First, it must be aware that payment is involved; second, it had a reasonable possibility of disclosing the commercial collaboration in the framework of the duty of disclosure but failed to do so.

E. Promoting Media Literacy

We believe that public awareness is key to confronting branded content, as it is in other issues where law and technology interface (for example, the right to privacy). Therefore, we propose the following steps:

1. A comprehensive public information effort vis-à-vis branded content, aimed at explaining to the viewers the meaning and impact of branded ontent and how to detect it. This effort will be conducted via the media in order to enable maximal exposure of media consumers and promote an understanding of the mechanism of concealed advertising messages. We propose that the effort be funded by the authorities that currently regulate television, from the revenues they receive for branded content.
2. Building an online database on the use of branded content. The database will include visual illustrations and will help foster awareness and skills related to branded content.
3. Building an easy, comfortable and multi-lingual mechanism for submitting complaints and clarifications regarding suspected cases of branded content.

F. Transition Period Model

The proposal presented in this study seeks to provide a simple and valid model for all of the content platforms; at the same time, the transition from the current situation to the proposed situation requires an interim solution that will apply until conditions are ripe for full implementation of the proposed model. We propose that during the transition period the regulation outlined above will be applied to all of the media. In commercial television and radio (the channels under the supervision of the Second Authority for Television and Radio and the channels in which advertisement is allowed under the supervision of the Council for Cable and Satellite Broadcasts), branded content will be permitted in accordance with the regulation we proposed, with several changes:

1. Classifying and labeling the level of branded content: We propose that branded content be classified and labeled according to three levels of advertising embedded in content, based on several criteria: how prominently the brand name is displayed, including the way it is displayed (visual, textual or combined); how natural it is to incorporate the brand name (the more natural it is to incorporate the brand name, the better the viewers remember it and the greater the impact on the consumer); how closely connected the brand name is to the central character in the displayed content, if there is such a character; how often the brand name is repeated; and the context of incorporating the brand name (for example: a positive context will induce a more positive approach than incorporating content with no context). These levels will be included in all of the regular rules of classification and labeling, and will affect the hour of broadcast and the recommended viewer age.
2. Limiting the time of the brand name: We propose limiting the possibility of advertising the same product or company via an explicit advertisement and unlabeled branded content in the same broadcast unit.
3. Revenues from branded content: Today, the Second Authority Act stipulates a minimum threshold of mandatory annual spending to fund production and acquisition of programs, to produce new programs, and to produce programs of the “elite genre”. In addition, the law stipulates an obligation to pay royalties to the Second Authority. Since all this depends on the franchisee’s revenues during a particular year, we propose amending the Second Authority Law so that revenues from branded content will also be allocated toward the franchisee’s content obligations.
4. Responsibility of the government ministries and supervision by the existing regulatory agencies: Since a duplication of authorities is liable to develop during the transition period, we propose that during this period the responsibility for labeling branded content be assigned to the ministries, under the supervision of the existing regulatory authorities – despite the problematic nature of this and the failure of enforcement in the past. Nonetheless, we propose that during the transition period a coordination committee be formed to address the cases pertaining to the regulatory entities. Thus, the Consumer Protection Authority will be a permanent observer in the enforcement process, and the television and radio regulatory authorities will transfer responsibility to it in an orderly way. As part of this handover, the Consumer Protection Authority will receive the organizational knowledge held by these authorities in regard to the enforcement of advertising.
5. The transition period will be defined for a maximum of four years and will end when the uniform supervision system is implemented for all audio-visual content.