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Nets Carefully Approach Product Placement Deals

Nov 17, 2003  •  Post A Comment

If product placement is the wave of the future, where is the steady flow of Starbucks lattes on “Will & Grace,” or the bags of Lay’s Potato Chips on “King of Queens”?
The answer is that apart from a few hit shows such as Fox’s “American Idol” and CBS’s “Survivor,” integrated product placement of consumer products into programming has yet to grow into a sustained presence on network TV, advertising executives say.
TV product integration and product placement have been buzz phrases among TV media buyers and sellers ever since the advent of personal video recorders, which enable consumers to skip over commercials. But CBS, NBC and Fox are not aggressively pursuing placement deals. Only ABC, and to a lesser extent The WB, are actively seeking such deals, through which a specific product, such as a cellular phone or a brand of snack food, becomes a consistent part of a TV show. The reasons are that product placement deals take time to develop, are tough to successfully implement and at the moment aren’t cost-effective for the programmers.
According to Jon Nesvig, president of advertising sales for Fox Television Network, “There are a handful of deals” concerning product placement on his network. “You can do too much of it. It’s time-consuming. I don’t think product placement is a total solution.”
CBS executives said other than for major shows such as “Survivor” they are not actively seeking deals. “It’s not part of our daily operation,” said a CBS spokesman.
NBC executives didn’t return phone calls by press time.
Unlike product placement deals of years past, where agencies would supply consumer products free of charge to prop masters for specific TV shows or movies, today’s placement deals include new advertising media dollars, which are the major lure for network executives.
One network sales executive said product placement could be valued almost the same as a 30-second commercial network TV spot-what amounts to $150,000 to $250,000-for one “visual” or “mention” of a specific consumer product. A product may be on the air for a couple of seconds-or could be part of an entire episode.
But media buyers said the networks would rather have marketers pay for commercials than strike product placement deals, the financial returns of which are relatively meager. In addition, some marketers demand free product placement as an added value to a media buy. Over the long run, product placement deals could hurt network sales of commercials, the media buying executives agreed.
“Product placement doesn’t replace advertising,” said Norm Marshall, president of Norm Marshall & Associates, a longtime Los Angeles-based entertainment marketing service and product placement agency. “You need a call to action, a consumer promotion for it to be effective. Product placement alone just helps awareness.”
The strength of the traditional network advertising market would indicate little need for product placement and its attendant hassles. For this past June’s upfront advertising market, the networks tallied some $9.3 billion in sales, a sharp 15 percent hike from the year before, which pulled in $8.1 billion.
Another complication comes from TV producers, who say they want to incorporate real consumer brands into their shows, but it can take a lot of time to deftly write brands into scripts.
When placement is too obtuse, there’s a price to pay. Case in point: NBC’s “The Restaurant.” While it succeeded somewhat in ratings as a summer reality show, its product integration efforts for clients such as American Express, Coors Brewing Co. and Mitsubishi Motors Co. failed to become organic parts of the show and drew much criticism.
Some mentions from restaurant owner Rocco DiSpirito were “forced,” said NBC and agency executives. For example, when in need of financial help to run his new restaurant, Mr. Dispirito, said: “I need an American Express loan.”
ABC is attempting to come up with lower-key, episode-by-episode product deals-unlike the big-series multimillion-dollar marketing efforts that companies such as General Motors, AT&T, Coca-Cola and Ford Motor Co. are doing with such shows as “Survivor” and “American Idol.”
ABC has done as many as eight product integration deals in recent months, according to executives. One upcoming deal, to be seen later this month, is for “I’m With Her,” a new sitcom about a regular guy who’s dating a major movie star. Visa USA will have the name of its credit card written into the script of the show.
Geri Wang, senior VP of prime-time sales for ABC, wouldn’t comment on any specific deal, only saying, “We are doing more than last year. We don’t call them product placement deals; we call them integrated deals. We do have several deals that feature a specific product tied to one episode.”
“We are pretty active,” said Bill Morningstar, executive VP of advertising sales for The WB, about product placement deals. “But I don’t think this is the answer to TiVo.” This past summer The WB put together two programming efforts for Pepsi-the music series “Pepsi Smash” and the big contest, “Play for a Billion,” both of which featured signage and other Pepsi placements.
Purveyors of product placements said other issues need to be addressed before the business grows. Those issues include whether actors might strike separate product placement deals with marketers or whether long-term product placement in a particular show could hurt its afterlife. Legal experts wonder whether product placement may misrepresent a product from a consumer protection standpoint.
“Cellphones, for example, seem to work in every elevator a character goes into,” said Doug Wood, a principal of Los Angeles-based law firm, Hall Dickler Kent Goldstein & Wood, who has struck a number of TV and film product placement deals.