Government Reviews Virtual Advertising and Product Placement Policies

The government is reviewing the possible permission of “virtual advertising,” a state-of-the-art advertising method mainly used in sports broadcasting, fueling controversy.

The Regulatory Reform Committee of the Office for Government Policy Coordination said on February 10 that the government decided in a recent ministers’ meeting over regulatory reform over which Prime Minister Lee Hae-chan presided that it would review whether to permit virtual advertising in the third quarter of this year after collecting opinions from broadcasting companies, consumer groups, and experts.

A small-to medium-sized company under administrative guidance used virtual advertising equipment in broadcasting the 2002 FIFA World Cup after developing it for the first time in Korea, spending three billion won in development costs. However, the company was banned from using it afterwards, as it was pointed out as violation of laws and regulations.

The Committee also announced that it would review whether to allow PPL (Product Placement)-utilizing props in TV dramas.

However, many point out that virtual advertising, which show both TV programs and ads on the same screen, are illegal, as the existing broadcasting laws distinguish the two.

Moreover, some express their concern over a possible escalation of the “rich get richer” phenomenon in the ad market, if the virtual advertising utilized in sports broadcasting are allowed under the circumstances in which TV commercials are overly concentrated among three big broadcasters.

Meanwhile, the government concluded “methods to enhance the creativity of culture and arts” in the meeting.

According to the decision, a second deliberation is not necessary after a first deliberation when producing the same content in different forms, like movies, videos and communication contents, unlike the existing methods of forcing deliberations from each relevant committee.

In addition, normal corporations are allowed to own art products worth equivalent to a certain amount (one million to five million won) in business assets, while insurance companies are permitted to own paintings and calligraphic works or antiques equivalent to a certain amount, for example, within a certain limit for each item for the purpose of installing them in their offices.

The committee also decided to prevent waste of foreign currency by permitting the production and leasing of mock firearms used in movies. The movie “Silmido” paid Hong Kong 150 million won in rent for firearms-related props.

In addition, the committee announced it would allow widely used foreign words like marathoner and analyst in TV commercials.

Yong-Gwan Jung yongari@donga.com