Product placement spending to surge in Europe

23 August 2010

LONDON: Product placement spending is set to enjoy double-digit growth in Europe over the period to 2014, as a result of the economic recovery and a relaxation of formal restrictions.

According to PQ Media, the research firm, expenditure through this channel - including films, music, online, television and video games - remained "steady" in 2009, on $610m (€480m; £392m).

Looking ahead, revenue levels should record a compound annual expansion rate of 18.2% to 2014, the company added.

PQ Media suggested this type of marketing is "more controversial" in Europe than the US, where limitations have historically been much looser.

However, the collective forces of the recession, declining public category adspend, competition from digital mediums and the take-up of devices like DVRs meant there was a pressing need to find new income streams.

The European Union reviewed existing rules relating to this practice in 2007, although by the close of that year just Belgium, Romania and Slovakia had incorporated its recommendations into domestic law.

Spain and France have adopted similar policies in 2010, and the UK communications watchdog, Ofcom, is in the midst of a consultation, running until September.

Provisions laid out by the EU dictate TV viewers must be made aware of the use of product placement before and after shows, as well as at the end of ad breaks.

Children's programmes, documentaries and news shows were excluded from the list of areas where this model can be employed.

Sectors such as tobacco and prescription medical goods are subject to tighter controls, with scope for individual states to implement prohibitions on other segments, like unhealthy food.

PQ Media predicted France will retain its current status as the largest market in the region in terms of product placement budgets, reaching a value of $283m in 2014.

Italy follows in second place at present, with the UK in third, Germany in fourth and Spain completing the top five overall.

By 2014, the UK will take second position on this measure and will only fall behind Russia, which is not a member of the EU, among the fastest-growing nations.

The outlook may be more mixed in Germany, the biggest economy in Europe, as enthusiasm for a change in regulations has proved somewhat muted to date.

"Germany has been one of the most vocal opponents of relaxed product placement rules on TV and, as a result, placements tend to appear mostly in film and other media," PQ Media said.

Viviane Reding, the EU commissioner for information, society and media, argued a unique approach would be required when speaking in 2006.

"We do not want US-style TV on European screens with permanent advertising where the advertising drives the content. We want content to drive the advertising," she said.

Worldwide, product placement posted a 0.3% contraction in revenue last year to $6.3bn, largely as the US was off 2.8% to $3.6bn, the first decrease since PQ Media began collating figures in 1975.

"Despite the cyclical decline in global product placement spending in 2009, driven primarily by the severe recession, the secular trends favor the resumption of relatively strong growth for this marketing strategy going forward," said Patrick Quinn, ceo of PQ Media.

Data sourced from PQ Media/Wall Street Journal; additional content by Warc staff