Doritos sales spiked in 2000, thanks to a prominent role in the premiere season of “Survivor.” NBC’s “The Apprentice” showcases a brand in nearly every episode. The “Queer Eye” guys make strategic mentions in every makeover.
The value of television placement jumped a whopping 46.4% to $1.87 billion in 2004 — mostly driven by the onslaught of reality shows — outstripping films for the first time in 30 years, a new report by market research firm PQ Media says. In 2004, film product placement alone rose by 14.6% to $1.25 billion, it states.
And experts say the trend will likely continue, thanks to a growing use of personal video recorders and larger placement deals as marketers move from traditional advertising to alternative media.
According to Product Placement Spending in Media 2005, the report conducted by Stamford, CT-based PQ Media, the value of product placement grew 30.5% to a high of $3.46 billion in 2004. That number is expected to soar another 22.7% to $4.24 billion in 2005, the report states.
“Marketers are obviously extremely wary of ad-stripping technologies, and this is only going to, in our minds, increase the role of product placement in the overall media buying strategies to compensate for the perceived diminished effectiveness of the 30-second television spot,” says Patrick Quinn, president of PQ Media. “Product placement is right there. You are watching the show. You are going to see it. So why wouldn’t you do more of that?”
The explosion of reality TV programs played a big role in product placement growth in TV, according to PQ Media. The success of such shows as “Survivor” and “The Apprentice” proved the value of product placement as an additional component to the declining popularity of the 30-second spot, the report states.
Brand integration is a “natural inclusion” in reality shows, says Gisela Dawson, president of the La Habra Heights, CA-based Entertainment Resources & Marketing Association.
“It’s just fertile ground,” Dawson says. “You can fit so many products in so many ways.”
Instructional cable networks, including The Food Channel and The Learning Channel, are also fueling product placement growth in TV. Marketers in that genre are promoting their tools of the trade via placement but at a slower pace than reality programs, says Leo Kivijarv, vice president of PQ Media.
While branded entertainment won’t replace advertising, the method “is becoming a larger part of the marketing package,” Quinn adds.
The 100-page study, which details U.S. trends spanning the last 30 years and forecasts spending five years out, is based on six months of research and interviews with dozens of executives at advertising and marketing agencies, consumer product companies and media and entertainment corporations. PQ Media is entertaining plans to conduct a similar study to include international markets.
Product placement is not new. The concept has been around since Roman billboards promoted gladiator matches. By the late 1920s product placement took a strong hold in films, starting first with barter arrangements and later to paid agreements. Brand integration in films took on newer meaning in 1982 with Hershey’s Reese’s Pieces placement in the blockbuster film “E.T. The Extra-Terrestrial.” That placement translated into triple-digit sales for Hershey, Quinn says.
It took another 17 years before product placement took off in TV with the introduction of TiVo and personal video recorders in 1999, says Kivijarv. With the new technology, marketers had to devise new ways to expose audiences to its brands, he says.
“Marketers have been complaining about advertising clutter for years and that 90% of the ads on television aren’t worth watching,” he says. “So, branded entertainment…is a way to just get out of that clutter.”
The key to success for most product placement deals is “seamless integration,” Quinn says. “It has to be done right. There has to be an element of entertainment and integration so that the viewer is not completely taken aback.”
If done correctly, product placement gets consumers thinking about trying new products, he says.
The impact of TV product placement on consumers is evident. Eighty percent of Americans have a positive view of product placement in television shows as a new form of advertising, according to a MindShare study released in March. Of the 1,200 Americans surveyed, 46% said “it depends on how it’s done,” while 37% agreed product placement is “generally okay with me.” Twelve percent of those polled said, “I don’t like it at all.”
The study, which surveyed 1,200 Americans, found that two-thirds of the people polled said they see more product placement in TV shows and movies, and one-third admitted they were more open to try a product after seeing it in a TV show or movie.
Product placement is even making a home via video games, but one challenge plaguing manufacturers is finding the perfect marriage between a brand and a game.
“It’s a creative process from the very beginning,” Tomas Melian, vice president, integrated marketing, Vivendi Universal Games, told attendees at the Advertising in Games Forum in New York in April. “You have to ask the question early in the process, ‘What brands make sense here?’”
Whether in film, TV or other media, product placement is here to stay, Dawson says.
“Product placement is the biggest thing to hit the advertising industry in years,” she says. “It will never go away. It’s an implied endorsement. You are involved in a story and the story involves a product that you see or notice. [Product placement] moves and motivates people. It’s an incredible medium.”
PQ Media predicts the value of product placement will grow at a compound rate of 14.9%, reaching $6.94 billion by 2009. The media will find new ways for marketers to insert products using brand integration and tag on higher rates to meet the demand, the report states.
“The big thing now is the return on investment and trying to come up with a methodology that justifies the costs that you are putting into it,” Kivijarv adds.
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