Hidden AD-gendas?

• Author: Stoffers, Carl
• Position: MEDIA

With fewer Americans watching TV, companies are sneaking ads onto social media. How can you spot the newest kind of product placement?

Last June, Selena Gomez posted a photo of herself drinking a bottle of Coke through a red-and-white striped straw on Instagram. "You're the spark"--words from Gomez's hit "Me & the Rhythm"--were visible on the label. Gomez added a caption: "When your lyrics are on the bottle."

The photo, viewed by many of Gomez's 112 million Instagram followers, is one of the most popular images in the social media platform's history, with 6.5 million "likes" and more than 275,000 comments. Unlike some of the other photos Gomez posts, however, this one was a paid advertisement, and it spurred consumer advocates to take action.

TruthInAdvertising.org (TINA), a nonprofit group that monitors deceptive advertising, sent a letter to Coca-Cola, asking why the post wasn't disclosed as an ad. After TINA's complaint, the singer added the hashtag "#ad" to the post, which remains on her Instagram feed. (Gomez's representatives didn't return a request for comment.)

"If an individual has a material connection with the company, they are required to disclose that," says Bonnie Patten of TINA. "The key here is transparency; it has to be clear if the content is advertising."

This relatively new type of celebrity endorsement--and the ease with which the public can be fooled into viewing an unidentified ad--has federal regulators struggling to address the issue. Part of the problem is that long-standing rules, originally meant to regulate ads on TV and radio, aren't so easily applied in today's digital world.

Not a New Practice

The current wave of product placement on social media is rooted in the early days of radio and TV. In the 1950s, soap, tobacco, and oil companies wedged themselves into the names of the shows they produced, like the Colgate Comedy Hour and Texaco Star Theater. But rising production costs pushed advertisers out of the business of producing shows. Instead, marketers began focusing on the space between programs.

Beginning in the early 1960s, a more subtle form of product placement took hold on TV. With shows like Mr. Ed--which featured a steady stream of Studebaker automobiles along, side Mr. Ed, a talking horse--companies paid to have their products placed in scenes, hoping consumers would link the brands with the show's stars.

Product placement on TV reached its peak in the new millennium, with hits like Survivor, American Idol, and Two and a Half Men featuring Apple, Reebok, and Ford products, among others. When companies pay for their products to be featured, federal rules require that the sponsorships be disclosed. But many programs buried the disclosures in the credits.

Movie makers have gotten in on the action, too. Blockbusters like last year's Batman vs. Superman and Captain America: Civil War prominently featured products like Jolly Ranchers candy and Audi automobiles.

Cord Cutters

Today, advertisers are looking for new ways to reach consumers, in part because traditional TV viewership is declining, with approximately 2 million viewers per year "cutting the cord"...