In taking a leaf from other markets - including China where product placement activities have exploded in recent years - the authority has bowed to market pressures to provide a more conducive business environment for its terrestrial licence holders. But can the agencies and - in the longer term - the viewer find anything to celebrate in the authority's change of heart?
First the agencies. A four-year bout of deflation and fragile consumer confidence - both have been further exacerbated by the unfortunate Sars outbreak - have already cut into agencies' ability to provide even the basic traditional services. The about-turn will only make an already tactically-inclined market even more tactical in nature if that is at all possible.
It will also add a new competing offer along with production shops to database managers vying for scarce client jobs in today's price-driven market. More importantly, it will provide new ammunition for the procurement office of client companies to equate the purchase of creative services with that of stationery and other office supplies.
Clearly this is a thorny issue not just in Hong Kong but globally, judging by WPP chief Sir Martin Sorrell's focus on the growing practice in the group's newly-released report. Sorrell ponders if the procurement process in place at client companies can be effectively used to buy creative services.
The problem is that agencies, not just those in Hong Kong, have yet to devise a way in which they can demonstrate the value they bring to clients' brands.
Now more than ever, agencies must hone their service to demonstrate their worth to a client's chief executive officer, not simply to the procurement office. Failing to do so at this late hour will only push agencies further down the food chain, particularly in Hong Kong where the tactical mindset is unlikely to lift anytime soon.
As for viewers, the authority has rightly laid down the ground rules to ensure that product placement is justified editiorially and isn't intrusive or gratuitous. Even so, it's a slippery slope. Recent releases from Hollywood are increasingly looking like a string of contrived product placements.
It's a scenario that could just as easily be replayed in Hong Kong.
So long as there are commercial considerations to exploit in today's weak advertising market, local broadcasters could easily be swayed into writing placement opportunities into programmes. Let's hope show producers tread carefully because it's never easy winning back a disgruntled viewer.