Either could work though most advertisers would prefer upfront product exposure (read - lower production and media costs).
A lot depends on the brand strat which in turn drives all the other strats. Thing is, for the former to work, the creatives have to be very very compelling and media placement has to be spot-on for it to create maximum impact.
One of the most memorable campaigns of indirect selling I remember is the one for Sovil et Titus with CY Fatt as a WWII pilot. The product feature only came on subtly at the end of the TVCs and that was carried through with painstakingly designed collaterals. Production and media must have costed a bomb!
Another examples would be the AXA life campaign with the young successful adult re-visiting his old kampung house (and memories).
Direct and entertaining are aplenty, like Coke's 'First Kiss', the launch of the UOB ladies card (the boys just don't get it[?]) as well as Citibank's 'Preferred' series that was shot entirely in SG but looked like it was shot in Europe. I'm sure there are many more examples.
