Spending on product placement surges to nearly $10 billion in 2012

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New research by PQ Media shows that brand owners significantly increased global spending on paid-for product placement in TV and film to $7.4 billion in 2011 and this could top $10 billion in 2012.

Product placement is a marketing tactic that’s increasingly being used as part of a multi-media campaign where a key objective is to place or integrate brand names, logos or specific products within the non-ad content of various media including TV, film, internet, mobile, videogames and music.

The ultimate goal of brand owners is to prominently place or creatively integrate products into particular story lines or a scene in order to promote brand awareness; generate favourable consumer attitude that translates into brand preference and ultimately influences purchasing behaviour.

In many respects, this isn’t that dissimilar to the way in which sponsorship works but product placement tends to be more overt with respect to the way it integrates with TV and film content.

Since February 2011, product placement is permissible on commercial TV and this has created a new battle ground for savvy marketers eager to grab audience attention. The Dolce Gusto coffee machine on set of itv 1’s This Morning was the first instance of British product placement allowable under the new Ofcom Broadcasting Code (2011).

‘Embedded advertising’ as it’s sometimes referred to is still in its infancy here in the UK but could grow rapidly as TV producers of top shows look to brand owners to help underwrite production budgets as they do routinely in the US where product placement generates billions of dollars in revenues for the rights holders and broadcasters.

PQ predict that product placement on US TV will top nearly $5 billion this year, largely fuelled by strong growth in paid integrations on TV, internet, mobile and music media as brand owners continue to pursue alternative marketing solutions to engage past-paced US consumers.

Growth of product placement globally is estimated to increase by around 12 per cent and could top $10 billion this year, with around a 20 per cent increase in India and Russia, although the US still accounts for around 60 per cent of the total spend globally.

In terms of product placement at the movies, the James Bond film franchise is credited with having started the current fashion of placing well-known branded products in the centre of the action, with brands such as Aston Martin and Omega taking high profile roles on screen.

In Skyfall Daniel Craig is seen drinking a Heineken beer rather than a Martini.

Typically, this type of marketing activity is supported by heavy above-the-line advertising as well as online and social media interaction with fans so as to create the cut-through required and the campaign has been phenomenally successful for Heineken in terms of media coverage for the brand globally.

Critics of product placement on British TV screens are plentiful and various and include consumer groups frightened that editorial and creative independence has been sold to the highest bidder and church groups that worry the corrosive effect of commercialization of TV content is projected to millions of viewers in their living rooms.

Product placement on British TV is subject to the Audiovisual Media Services (AVMS) Directive 2007; the Ofcom Broadcasting Code (2011) and regulations that provide for standards of product placement on TV, on-demand programme services (ODPS), film and video-on-demand (VOD) services.

New UK regulations introduced on 28 February 2011 permit TV channels and programme-makers to receive payment in return for including references to products or services in TV series, soaps, entertainment shows and sports programmes in the UK.

The rules seek to modernise the UK law, not just to meet EU requirements, but also because the traditional prohibition on product placement was becoming increasingly anachronistic in the face of the hundreds of foreign (primarily US) films and programmes full of product placement which are broadcast on UK television every day.

Ofcom updated its Broadcasting Code to contain rules about what type of products can be placed in programmes, where product placement is allowed, and how placed products can be featured. Broadcasters have to inform viewers of paid-for references by displaying the letter ‘P’ for three seconds at the start and end of a programme that contains product placement.

In addition, under the Ofcom Broadcasting Code (2011), broadcasters are required to retain editorial control over the programmes they transmit.

The rules serve to protect viewers from both excessive commercial references in programming and from surreptitious advertising by limiting the extent to which references to products, services and trademarks can feature in programming; requiring that viewers are made aware when a reference to a product, service or trade mark features in programming as a result of a commercial arrangement between the broadcaster or producer and a third party funder; and helping to ensure that broadcasters do not exceed the limits placed on the amount of advertising they can transmit.

In all cases where product placement is being considered, it must be editorially justified and the use of product placement must be incidental to the programme content, although how ‘incidental’ is likely to be a matter of ‘creative interpretation’ which has still as yet to be tested by a complaint to Ofcom or the courts but it’s likely to be given a ‘light touch’.

Ardi Kolah is the author of Essential Law for Marketers 2nd edition (£19.99) published by Kogan Page on 3 January 2013. Click the image of the book to order your copy from Amazon