As TV viewers turn off adverts, Hollywood seizes a golden chance

"Look at this can," the character says, as the camera zooms in. "It's just like it was back then." Is this entertainment, or a shameless product plug? Either way, it could be the wave of the future in Britain now that the European Union is loosening hitherto strict rules on product placement - or, as it is euphemistically known in US marketing speak, "brand integration".

Product placement is a bargain that has everything to do with commerce and nothing to do with art. Producers acquire free props and, often, significant financial help. In exchange, advertisers can count on the undistracted attention of their target audience.

It's become common practice in the United States now that audiences, especially television audiences, have so many better things to do with their time than sit and watch commercials. The advent of TiVo, a recording system that allows the viewer to skip adverts altogether, has been a particularly big spur.

Hence the profusion of mentions, from the casual to the clunky, of Pepperidge Farm biscuits on Frasier, of the hi-tech company Cisco on the counter-terrorism drama 24, of Amazon.com's search engine A9.com on the teen drama The OC.

According to the marketing company PQ Media, the number of dollars exchanged over product placement grew by 30 per cent in 2004 and is likely to grow another 22 per cent this year - to more than $4bn (£2.3bn).

The biggest growth was on television - 46.4 per cent last year. But it is also increasingly prevalent in independent feature film-making, where a few hundred thousand dollars from a commercial sponsor can make the difference between a green light and production shutting down.

The Weinstein brothers, who have just set up their own company after 11 years under the Disney umbrella at Miramax, recently signed a multi-year agreement with L'Oreal, giving the French cosmetics-maker exclusive coverage in Weinstein films.

The paid use of brand-name products has been a feature of film and television entertainment on the other side of the Atlantic for decades. On Hawaii Five-O, the Seventies police serial, the beat cops drove nothing but Fords, and it was no coincidence. In Steven Spielberg's E.T., the alien is lured out of its hiding place with sweets called Reese's Pieces, which were then used extensively in various cross-marketing initiatives. The script had originally called for M&Ms, but it was Hershey's, the manufacturer of Reese's Pieces, that closed the deal.

The Austin Powers films are stuffed with product names from AOL to Starbucks to Virgin Airlines.The Matrix fetishised Nokia mobile phones and Ray-Bans. The Tom Hanks movie Cast Away played, in many ways, like a feature-length plug for Federal Express, the firm his character worked for.

The rise of reality television this decade offered new opportunities for product placement. On Survivor, the US version of Castaway, participants guzzle Mountain Dew water and Doritos snacks. On American Idol, the Stateside version of Pop Idol, judges have bright red Coca-Cola glasses in front of them at all times.

Now the trend is moving into scripted drama. On an episode of Lost, the series about a group of plane-crash survivors, the characters try to break into a Zero Halliburton security case but manage to open it only after they find the key.

Product placement tends to be loathed by writers and directors who have occasionally managed to send it up. In David Mamet's film-business satire State and Main, for example, a 19th-century period drama has to demean itself in absurdly anachronistic fashion with a visible plug for an up-and-coming internet company called bazoomer.com.

Apologists for product placement, especially in the advertising industry, argue that the practice regulates itself. If the plug is too blatant, they say, audiences will stop watching and the show will shrivel and die. If the plugs are subtle, the audiences won't mind and may not even notice.