Product placement spending to rebound in US

01 July 2010

STAMFORD: Advertisers in the US reduced their expenditure on product placement for the first time in three decades in 2009, but are expected to boost their outlay in this area over the next five years.

According to PQ Media, the amount corporations spent on integrating their goods into content across TV, movies, online and videogames fell by 2.8% to $3.61bn (€2.94bn; £2.40bn) last year.

"It used to be that product placement was an added-value model, where you'd buy this much commercial time and the networks would throw in these product placements for you," said Patrick Quinn, ceo of PQ.

"Now you have all these agencies whose job is to add brands into scripts, making the real estate of the screen more and more important."

Prominent shops responsible for brokering these agreements include Mediaedge:cia, Mediacom, Mindshare and Liquid Thread, most of which have reported improved trading conditions for 2010 thus far.

One source of growth in 2009 was the promotion of goods and services in recorded music, where totals climbed by almost 10% year-on-year.

This segment accounted for around a fifth of what PQ Media termed "other media," a definition that also applied to newspapers, books, magazines and radio.

Numerous brands appeared in high-profile music videos last year, a trend that even extended to unlikely offerings such as Kraft's Miracle Whip, which featured in Lady Gaga's "Telephone".

The Black Eyed Peas also recently penned a jingle for Pepsi, while Chris Brown released a single, called "Forever", in a partnership with Wrigley in 2008.

Doug Scott, president of WPP's Ogilvy Entertainment, said the future of product placement will rely on companies taking production and distribution into their own hands.

"More and more brands are looking at how to get smarter with their media dollars and see it as a blended approach of media plus production," he said.

"I think the nature of the deals being done will significantly change over the next 12 to 18 months."

Looking forward, PQ Media predicted product placement revenues would double to $6.1bn by 2014, having consistently generated annual double-digit annual expansions between 2005 and 2008.

"The secular shift to paid placements from the non-paid model will continue ... as changes in consumer behaviours, new technology and the increased penetration of DVRs drives up the value of branded entertainment marketing strategies," said Quinn.

Overall, the branded entertainment sector registered a contraction of 1.3% to $24.6bn in 2009, PQ Media revealed.

This constituted an interruption to the industry's constant pattern of growth since PQ began tracking figures in 1975, in just one indication of the broad impact of the recession.

Consumer events spending, which represented the largest single category analysed by the consultancy, also decreased by 1.1% last year as events budgets were slashed.

However, branded entertainment as a whole displayed greater resilience than the norm, with Kantar Media having estimated that measured media spending in the US plummeted by 12% in 2009.

Data sourced from PQ Media; additional content by Warc staff