Product placement spending to rise

14 December 2012

NEW YORK: Product placement spending is set to surpass $8bn around the world this year as demand rises in markets like the US and China, PQ Media has predicted.

The specialist consultancy estimated that the revenues generated by this channel are due to register an 11.7% lift, to $8.3bn, in 2012, fuelled by growth across the TV, digital and music segments.

This should follow on from the 9.8% leap recorded in 2011, when brand owners invested a total of $7.4bn in product placement globally, including $4.8bn expenditure on television.

As such, while the sector is currently failing to match the 12.6% compound annual growth rate (CAGR) logged between 2006 and 2011, it has remained robust compared to the ad industry as a whole.

Its relative resilience can be demonstrated by the fact that revenues stood at just $6.3bn in 2009, as the financial crisis exerted an impact on marketing budgets.

The US is the largest market overall, and is pegged to be worth $4.8bn this year, an improvement from $4.3bn on an annual basis.

"US marketers continue to up their investment in product placement in an effort to connect with harder-to-reach, multitasking consumers who are using digital and wireless technology to consume content more often and to view advertising less frequently," the study said.

During the period from 2006 to 2011, the industry enjoyed a CAGR of 12.8% in America, although this figure declined to 10.2% last year. However, it should rebound to 11.4% for 2012.

The US held a 57.6% market share in 2011, and while no other nation delivered over $1bn in revenues, Brazil and Mexico were both worth more than $500m in returns.

Expenditure in Australia and Japan also topped $100m last year, as was the case in France, Italy and the UK, a process aided by the loosening of legal restrictions.

China assumed the position as the fastest-growing market of 2011, with demand increasing by 26.6% to $81m. India and Russia also logged expansions surpassing the 20% mark.

The Americas yielded $5.9bn in total last year, ahead of Asia Pacific on $811m. Europe, the Middle East and Africa were on $739m, and saw the slowest growth as a result of the crisis in the eurozone.

Data sourced from PQ Media; additional content by Warc staff