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December 3, 2018

Network TV Shows Get “Secret” Payments for Hyping Products

Filed under: Internet,Retail — Edgar (aka MrConsumer) @ 5:29 am

Pressed for time? Read the shorter news release version here.

When you see a news story online or a feature segment on television about a product or service, you never expect the media in which it appears to have a financial interest in it.

The trouble is, today there are hidden financial connections between media outlets like TV networks, and outside commercial entities selling products or services. What appear to be regular informational segments on TV shows sometimes are really advertising in disguise. Consumer World has been investigating these secret connections for over nine months, and today reveals some of the surprising findings.

The issue is evident most clearly in “deal” segments run by the major TV networks several times a week. For example, Good Morning America (GMA) airs a popular Steals & Deals feature, and The View broadcasts “View Your Deal” twice a week. In these segments, show hosts or guest presenters demonstrate and tout five or six products that viewers can purchase for a limited time at deep discounts. And many are genuine bargains.

Oprah's Favorite ThingsThe products offered are unrelated to each other, but may be grouped together under a theme such as summer beach bargains. The theme of two recent deal segments involved “Oprah’s Favorite Things 2018.” That is an annual list of products that Oprah recommends in her magazine and through her surrogates in television segments as worthy products and gifts. In no way are we suggesting any wrongdoing by Oprah or the products that make her list. We are using it as just one example of the type of bargain segment that network programs are broadcasting.

Some media outlets have figured out a way to capitalize on the list. It is all done very quietly, without prominent disclosure to the viewer that the programs are making money directly or indirectly from the sale of these products.

Good Morning America

In early November, ABC’s GMA featured in a Deals & Steals segment a first look at six of Oprah’s Favorite Things for 2018, and offered them at deep discount:


Deals & Steals segment on ABC’s Good Morning America

There is no oral disclosure anytime during the segment that ABC has a financial arrangement to be paid by the makers of the products they are demonstrating. Only at the very end of the segment does any disclosure come up:

*MOUSE PRINT:

GMA disclosureDisclosure on ABC’s Good Morning America

“Promotional consideration” was provided by the six companies whose products were featured on the program. Normally this means that products were provided to the program to give to audience members, which did occur in this instance.

But segments like this are no longer just about touting deals to viewers and giving free merchandise to audience members. They are now about the program quietly receiving money based on the actual sales of the products promoted on the show. How do they do this? Viewers are sent to a special website created just for the show with these items, or to the show’s own website, and if they click on the special link provided and buy the item, the show gets a commission.

How do we know this? Certainly not from watching the program. It is only on the special GMA website (GMADeals.com and GoodMorningAmerica.com/shop) that there is an added disclosure:

*MOUSE PRINT:

GMADeals footer
Disclosure at GMADeals.com that ABC receives a fee on purchases

This is a bit different from the disclaimer at the end of the TV segment because it clearly says that if you buy the featured products, ABC is going to receive compensation. This is not an isolated incident.

The View

ABC also features bargain segments like this on The View. That program cleverly uses a vague oral disclosure at the beginning of the segment that says “We’ve partnered with vendors for at least half off.”

At the end of the Oprah’s Favorite Things segment on The View in early November there is a disclosure in the credits that the brands shown in that segment paid ABC “promotional and financial consideration.”

*MOUSE PRINT:

The View creditsDisclosure in credits on ABC’s The View

This does not clearly communicate to the average viewer that The View gets a cut of every item sold. Like GMA, The View sends shoppers to a special website (ViewYourDeal.com) where they can purchase the items shown. It is only there that the viewer first learns that ABC is going to be paid money when a purchase is made.

This sounds very much like an affiliate relationship whereby a reader clicks a product link on a website and is taken to the actual seller’s website. The website owner who referred the sale to the seller gets a small commission if a sale is actually made.

In ABC’s case, the concept of affiliate marketing has been transformed for use on a television program. If you buy an item you see promoted on the show, the program gets a commission. Clever. Very clever.

The Today Show

ABC is not alone in quietly collecting affiliate-type commissions. On NBC’s Today show, viewers are only let in on the secret via an explicit but fine print disclosure on a cluttered screen at the end of their Steals & Deals segments. They make no disclosure of the payments on their special website, deals.today.com, however. See sample segment.

*MOUSE PRINT:

Today disclosure
Disclosure at end of Today’s Steals & Deals segment

The Law

Under the FCC’s “payola” rules, if a program’s producers receive payment to feature a product, that fact must be disclosed to viewers during the program. Similarly, the FTC has two sets of advertising guidelines. They both require clear and timely disclosure: (1) if there is any financial connection between a presenter and the products being touted (endorsement and testimonial guidelines) and (2) if the presentation looks like a regular part of the program but is in fact commercial in nature (native advertising guidelines). Of particular relevance is the FTC’s Enforcement Policy Statement on Deceptively Formatted Advertisements.

We asked Disney-ABC’s PR folks four times to explain the differences between “promotional consideration” and “financial consideration,” who pays whom when these segments are aired, and whether ABC makes money in an affiliate-like relationship based on the number of products sold. Despite these repeated requests to representatives of both GMA and The View, no response was received.

However, a vendor whose products have appeared in a previous GMA Deals & Steals segment confirmed to Consumer World that ABC uses a commission structure whereby it receives a percentage of sales.

NBC did not respond to two inquiries.

The disclosures the networks make come too late and are couched in industry jargon. Viewers have a right to know upfront in clear and unambiguous terms that they are really watching an ad, that the networks are making money on each sale, and that the gushing product comments of the show’s presenters could be influenced by the networks’ likely desire to maximize commissions.

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5 Comments »

  1. This is not my idea of clever. This is deceptive and against FCC regulations. How about complaining to the FCC or are they turning a blind eye to it?

    Edgar replies: Ann, FCC investigators will be receiving a copy of my report this morning.

    Comment by Ann — December 3, 2018 @ 8:07 am
  2. I just complained to the FCC and suggest everyone who reads this do the same. https://consumercomplaints.fcc.gov/hc/en-us/requests/new?ticket_form_id=33794

    Comment by Ann — December 3, 2018 @ 8:15 am
  3. How much money would ABC make on a sale for something like the slippers or the popcorn as displayed in the video??

    How much profit is still made on something like the slippers or the popcorn as displayed in the video??

    Edgar replies: These segments sell thousands and thousands of each item, so even if they only made a dollar on each, they are making a pretty penny.

    Comment by Richard Ginn — December 3, 2018 @ 9:20 am
  4. Isn’t this a Federal Trade Commission issue?

    With the current FCC commisioner Ajit Pai (sp?), there isn’t going to be anything done about this issue. He doesn’t care about the consumer. I doubt that the FTC will do anything of merit either.

    The answer is to NEVER buy anything shown on any show that is not relevant to the normal show content.

    Comment by bobl — December 3, 2018 @ 12:54 pm
  5. Well bobl why would I spend like 170-180 on a bucks on a tub of popcorn when I can get it for 90 bucks based on the video posted. That is a steal.

    Today on the GMADEALS site they are selling Cheryls cookies for 50% off. That is far less than the official website for cheryls and certainly less than what QVC sells them for.

    Comment by Richard Ginn — December 4, 2018 @ 2:04 pm

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