Embedded Advertising and the Venture Consumer

Embedded advertising—marketing that promotes brands from within entertainment content—is a thriving, rapidly changing practice. Analysts estimate that embedded advertising expenditures will exceed $10 billion in 2010. The market continues to grow even as traditional advertising revenues contract. The relatively few legal scholars who have studied embedded advertising believe that it is under-regulated. Ineffective regulation, they claim, is deeply troubling because corporations may, with legal impunity, deceptively pitch products to trusting viewers. Critics charge that embedded advertising creates "hyper-commercialism," distorts consumers' tastes, taints the artistic process, and erodes faith in public discourse. This Article argues that the critics are wrong. Sponsorship disclosure law under the Communications Act of 1934 and related regulations is indeed largely ineffective, in part because the media industry has consolidated considerably and in part because the drafters could not imagine the diverse ways we create and consume media content in the twenty-first century. Congress conceived the law not only for yesterday's marketplace, but also for yesterday's consumer. The media consumer today is a "venture consumer." Often, she knows what she wants, knows where to get it, and is aware of the risks and costs involved. The mismatch between regulators' imagined consumer and the contemporary consumer means that expanded regulation of embedded advertising according to current reform proposals could end up harming consumers more than helping them. Moreover, embedded advertising is not especially amenable to effective regulation, given the incentives for artists and advertisers to collaborate in the production of entertainment content. In light of both the difficulty of correcting the regime's flaws and the consumer interests threatened by expanded regulation, this Article concludes that maintaining the law as-is—rather than expanding it through the proposed reforms—better serves the consumer