Who checks the plug on our TV?

Product placement in movies is an old story, but it's still banned on British television. Or is it? Meg Carter reports

You scratch my back, I'll scratch yours. That's the motto of advertisers eager to get their products on screen - not through traditional advertising but by a more surreptitious route: product placement. Commonplace in movies yet banned by the Independent Television Commission and the BBC, it is nevertheless an activity on the increase on UK terrestrial and satellite TV.

Product placement offers the ultimate endorsement. In the latest Bond film, Goldeneye, 007 drives the new BMW Roadster, wears a Brioni suit and Church's shoes, sports an Omega watch and sips Smirnoff Black. Each brand struck a product placement deal with the movie's producer, Eon Productions. "It is a powerful way to launch our new car," a spokesman for BMW explains. "We get exposure; [Goldeneye] gets promotion in our marketing."

In the movies, it takes two forms: paid-for placement - when an advertiser pays a producer to use its product - or when a product is offered free and the provider agrees to help promote the movie in its own advertising. Product placement has been big business in the US ever since Humphrey Bogart poured himself some Gilbey's Gin in African Queen back in 1951. Today, the drinks giant Anheuser Busch has set up its own LA-based product placement division for Budweiser Beer.

What goes on in Hollywood, however, is unacceptable on European TV, where product placement is banned on terrestrial, cable and satellite stations. Yet many agencies now see it as an area set for significant growth. Already Mars, Volvo, Whitbread and many more are working with product- placement specialists.

"Product placement can be a very effective way to communicate brand message," says Simon George, managing partner of sponsorship specialist Drum, part of the advertising agency Abbott Mead Vickers BBDO. "We are striking deals across the board with programmes for ITV, Channel 4 and the BBC." For the ITC allows the producers to obtain discounted, or even free, products and services as long as they are not paid to do so or enter a contractual arrangement to feature the product. Nor can branded products enjoy what the ITC calls "undue prominence" - appearing on screen longer than required for the purposes of realism. In short, a plug.

"We work with prop supply companies," Mr George explains. "No money passes between the prop company and the producer, but the brand owner pays the prop hire company a fee to represent its products."

A wide range of programmes have benefited from products "placed" this way, from Coronation Street, Rides and Trainer to The Bill. Of course, there are no guarantees the product won't end up on the cutting-room floor: that would be breaking the law. But placement specialists say they can veto use of a client's product if it is shown in a poor light and sometimes they even view scripts in advance.

"There are a number of benefits to the advertiser," explains John Barnard, chairman of promotions at New Media Group and co-founder of the Entertainment Marketing Association, the product-placement trade body. "It's free media. It enables the product to be seen as contemporary. The brand can be endorsed by a character." Then there is the benefit of repeats.

For Goldeneye, free supply of IBM and Pioneer products alone shaved around pounds 500,000 from the budget; total savings could run into millions. For the beleaguered TV producer, it can free funds to be spent elsewhere. "Every little helps. If that means accepting payment in kind, then so be it. I can, and will, protect the integrity of my production," says one producer.

The ITC and BBC insist product placement is illegal - and that applies to US films and programmes. This poses a problem. "There's only one thing we can do - take it out," says Jeff Ford, controller of network acquisitions at ITV Network Centre. Easier said than done. Ford points to the film The Paper, in which a Coca-Cola vending machine stands centre- stage in the newspaper office. "It looks like product placement," he says. "But it is also realism, which makes the whole area very slippery."

The ITC is getting tough on companies that give products "undue prominence", launching a consumer ad campaign to encourage viewers to report perceived breaches of the ban. Last November, it fined Granada pounds 500,000 after products including Heinz, Safeway and Calvin Klein enjoyed undue prominence on This Morning. Others criticised Big Breakfast, Blind Date and Aspel and Co, and the ITC prevented UK Living from broadcasting the BBC series Challenge Anneka for the same reason.

But it is an uphill battle. Policing the ban is near impossible, as proof is required to show that money has actually changed hands. As more programmes are made by more producers for more channels on smaller budgets, product placement on British TV will inevitably become harder to detect.