In its submission to the Department for Culture, Media and Sport's ongoing consultation, ISBA said it believes the introduction of product placement would lead to a "double disadvantage" for advertisers and viewers.
It argues that the current system of unpaid prop placement, where programme makers seek out branded products to use within shows, serves both groups better than a paid system.
Changing to a paid system would raise costs for advertisers and make viewers more likely to complain, ISBA said, highlighting the fact that no viewer complaints have been upheld in the past 25 years.
Bob Wootton, media and advertising director at ISBA, said: "Advertisers are concerned that the existing low-cost system of prop placement will be closed off and that broadcasters will drive them into more expensive paid-for product placement.
"Advertisers paying more to place their products might then naturally expect to see them placed more prominently and it is this increased visibility that may well increase complaints from viewers."
The position taken by ISBA strengthens the lobby against product placement, which so far consists of health-focused organisations including the British Medical Association and the British Heart Foundation.
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Lifting the ban on product placement would lead to UK broadcasters making annual revenues in the region of £25m to £35m per year after five years, according to Ofcom.
The consultation closes on Friday.
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