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Product Placement Growing

Mar 28, 2007  •  Post A Comment

Product placement has become a huge business both in the U.S. and abroad, as anyone who has seen Courteney Cox drive around in a Pontiac Solstice in FX’s “Dirt” could tell you.
A new report from PQ Media confirms that impression, with figures showing that the U.S. was the largest market for paid product placement at about $1.5 billion in 2005. That’s up 49 percent from 2004. With barter and value-added deals factored in, the value of product placement in the U.S. during 2005 rises to $6.2 billion.
Television, which accounts for the biggest chunk of paid product placement, grew 70.5 percent to $941.2 million in 2005, while placements in film were worth $499.8 million, up 23 percent.
Globally, the paid-product-placement market was $2.45 billion, up 40.3 percent. If the value of non-paid placements is included, the market would be $6.24 billion, up 27.8 percent from 2004. Television accounted for the bulk of paid product placement spending in 2005 at $1.6 billion worldwide, up 51 percent from 2004.
The report called product placement “one of the fastest-rising stars of this new media order.” The growth is fueled by the perception that ad-skipping technology is negatively impacting the 30-second spot, driving brand marketers to seek alternatives such as product images embedded in the program rather than during commercial breaks.
That explains the rapid growth of placement at a time when traditional spending on TV ads is virtually flat.
In the U.S., the biggest spending category is transportation and parts, which is also the top traditional advertising spender. Other big users of product placement include apparel and accessories; food and beverage; travel and leisure; and media and entertainment.
The growth will continue, according to PQ Media.
In the U.S., paid product placement is expected to hit $5.5 billion in 2010, a 29.6 compounded annual growth rate. The value of paid TV placement should rise by 34 percent annually to $4.1 billion.
Globally, the value of paid product placement in 2010 is expected to hit $8.1 billion. That’s a compounded annual growth rate of 27.1 percent. About $6.1 billion of that will be on television, which is growing at a 29.8 annual percentage rate.
Product placement is defined as a process through which an advertiser integrates a product into selected media, most often television and film, for clear visibility. PQ Media noted that although the product is visible, it is often not the focus, as it needs to fit almost seamlessly into the context of a scene or story.
PQ Media noted that product integration is a special type of product placement in which the advertiser’s product is central to the program’s plot line.
The report discussed three ways an advertiser can provide compensation for product placement: The first is straight pay; the second is barter, in which the product itself is the compensation. In both of these cases, PQ values the product based on the quality of the placement. The third way an advertiser can provide compensation for product placement is when it is considered value-added and included in the purchase of more traditional ad time. As with barter arrangements, PG looks at the exposure value of the placement in putting a value on it for the study.
According to PQ Media’s Opinion Leader Panel, paid placements are overwhelmingly replacing barter and added-value arrangements. “In addition, brand marketers are becoming more aware of the quality of placement by using various measurement tools and seeking better integration of their products into television programs and films,” the report said.
PQ Media’s methodology for its study is a combination of its Global Opinion Leader Panel, which includes more than 50 of the world’s leading authorities in product placement, its proprietary SpendTrack database and exclusive econometric modeling.
The research company said it believes in separating paid-placement spending from the value of barter and exposure of non-paid placements in order to reflect demand in the marketplace for product placement.

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