US Marketers Spend $3.5bn on Product Placement

05 April 2005

The US advertising industry last year saw $3.5 billion (€2.71bn; £1.86bn) slip through its fingers and into the maw of product placement deals. In 2005 this figure is projected to increase by nearly 23%.

However, in estimating these values, it is not just dollars that change hands. Barter plays a part in many of the deals and some are even gratis.

There are no free lunches? Note the Oprah Winfrey Show last December when General Motors gave each of the 276 members of the studio audience a new Pontiac G6 car.

Such facts are alll contained within a new report, Product Placement Spending in Media 2005, published by PQ Media, a Connecticut-located market research and strategic consulting firm serving the media and entertainment industries.

The report, which includes thirty years of historical trends and five years of spending forecasts, predicts the product placement market will expand 22.7% to $4.24 billion in 2005.

Growth of the practice is at the expense of the traditional advertising market, says the report, which notes that marketers are now aggressively migrating dollars away from advertising to alternative media and product placement.

Says PQM president Patrick Quinn: "The reasons behind this development are rather simple, but critical to a media industry undergoing rapid change.

"Technological advances, most notably personal video recorders, and continued audience fragmentation, due to the growing popularity of new media, have led major marketers to become more skeptical of their return on investment in traditional advertising."

By media sector TV is now the product placement flavor of the month, its 2004 growth of 84% outgunning movies for the first time in the history of this less than pellucid practice. Computer games is also a fast growing sector.

"Marketers have substantially ratcheted up the pole of product placement in their buying strategies," notes PQM's Quinn.

For further details of the study click here

Data sourced from multiple origins; additional content by WARC staff