Survey: Product Placement Growing Fastest in Television

Apr 4, 2005  •  Post A Comment

Branded entertainment is an increasingly popular TV marketing tool, but until recently few observers have been able put a real dollar amount on the value of TV product placement and product integration exposure.

The results of a just-released study conducted by Stamford, Conn.-based research firm PQ Media indicates that product placement is growing faster in television than in films, video games and other media. The study said the total value of product placement deals on television in 2004 was $1.88 billion, a 46.4 percent increase from 2003.

Advertisers paid $552 million for TV product placement deals in 2004, an increase of 84 percent over 2003, the study said. Paid arrangements represented 29.2 percent of product placement deals; 64.2 percent were on a barter basis, in which money did not change hands; and 6.6 percent were on a gratis basis, where branded products were used without the involvement of the manufacturer.

PQ put a value of $1.21 billion on barter deals, an increase of 39.1 percent over 2003, and $118 million on gratis deals.

Though reality shows such as CBS’s “Survivor,” Fox’s “American Idol” and NBC’s “The Apprentice” represent the fastest-growing program category for product placement, other program genres have had more product integration deals.

TV drama shows represent the largest portion of all product placement deals, with 22.6 percent. News and talk shows are next at 17.3 percent. Reality and game shows logged in at 16.6 percent.

In the survey, PQ Media examined all product placement deals for TV since 1974. But Patrick Quinn, president of PQ Media, said the real uptick in TV product placement occurred in summer 2000, when CBS launched “Survivor.”

“As part of that deal, CBS was willing to try a different way to pay for the show-and they went to product placement deals from [creator] Mark Burnett,” Mr. Quinn said. “[In] the first placement in the first challenge of ‘Survivor’ the winner got a bag of Doritos and a six-pack of Mountain Dew.”

Some critics said it’s difficult to examine actual paid product integration deals because those deals are tied to traditional TV advertising buys. As much as 80 percent of any money paid in these deals is put into traditional TV media, such as 30-second commercials.

Mr. Quinn said PQ Media took great pains to strip out these revenues.

Though product placement has generated big headlines in the TV business press, Mr. Quinn said, it’s just a fraction of all TV advertising dollars.

“It’s still a smidgen,” he said of the $550 million in paid product placement. “If you add all TV together, you have about $50 billion in [advertising] spending.”

With $550 million in paid product placement media deals, according to PQ Media, “That implies product placement is 1 percent of those revenues,” said Brian Wieser, VP of industry analysis for Magna Global. Media research analysts say that number sounds reasonable, but they want to examine further data.

Of more interest to marketers is the evaluation of each individual product placement deal, media buying executives said.

“A lot of people are really confused [about product placement], and they are looking for some sort of benchmark,” said David Poltrack, executive VP of research and planning for CBS Television. “There is a perception that they are paying too much. From our perception we may not be charging enough, but we don’t know.”

Long History

In addition to television, product placement continues to grow in other entertainment media, including theatrical film, where it has a long history. In that sector placement grew 14.6 percent to $1.25 billion in value in 2004. In the survey’s “other media” category, which includes newspapers, video games, Internet, recorded music, books and radio, product placement was up 19.9 percent to $325.8 million.

PQ Media found the biggest product placement brands were automobiles, which represented 16 percent of all deals in 2004. Apparel was next at 15.6 percent. Food and beverage products were at 12.5 percent, followed by travel and leisure (11.1 percent); health and beauty (10.5 percent); house and home appliances (9.9 percent); and toys and sporting goods (7.3 percent).

PQ Media produced the research because marketers were desperate for more information in this growing field. “There was a real dearth of information on the size and structure of this market,” Mr. Quinn said.

To compile its database, PQ Media interviewed dozens of brand and agency account managers and media buying and selling executives at ad agencies, media agencies, TV networks and consumer product companies. It also analyzed thousands of private and public documents.

Network research executives believe this type of research is useful in determining the health of the business, but contend that a better research tool for marketers can be found in evaluating specific product placement deals. Mr. Poltrack said companies such as IAG Research provide that kind of detailed analysis.