Trends in Product Placement

JANUARY 23, 2008

Apologies for not posting for a while; I was laid up with the flu and am just now back to my ol’ opinionated self. So here goes: I wanted to take a moment to talk about product placement.

During the holidays I watched (for the first time) the original Miracle on 34th Street. If you haven’t seen the film, I highly recommend it. Without too many spoilers, the story centers around a Macy’s Santa Claus who claims to be the real thing. During the movie, we see children asking for presents that have sold out. Although the Macy’s manager gives Santa a list of alternate toys to recommend, Santa, instead, sends the kids/parents to other stores carrying the toys. At first management is appalled. But, the goodwill Santa creates for Macy’s wins out and soon Macy’s is milking the publicity of their “Christmas spirit.”

Well, after watching this, I was intrigued. Was this the first recorded case of product placement in film?

According to this NY Times article , Macy’s did not pay for the product placement as that was simply was unheard of in 1947. But, this film is widely considered to be the “godfather” of placement to come as Alan G. Millstein says in this article, the film “has probably brought Macy’s more good will and publicity than tons of their advertising over the years.”

Today product placement is so common, most of us don’t even notice it anymore. Although it is one of the most difficult aspects of PR to measure, I can tell you from personal experience that it works. Bear in mind, I am a PR professional who identifies product placement deals for clients and yet, while watching America’s Next Top Model, I noticed a box of Special K on the kitchen counter. I caught myself thinking, “I should get some Special K, if these skinny girls are eating it…” Never mind that Kellogg’s paid for that box to sit there. Never mind that these models exist on a diet of water and cigarettes and they’ve probably never touched the cereal, it still registered with me.

One of my favorite films in the past few years was an adaptation of my favorite author’s book, Thank You For Smoking. In the film, cigarette lobbyist, Nick Naylor craves a cigarette after seeing John Wayne light up in a movie. He then goes to Hollywood to “put the sex back in cigarettes” by finding product placement opportunities for tobacco in films. The result is a hilarious scene with Rob Lowe where they come up with a new brand of cigarettes to coincide with the film’s release. I wonder if we’re really that far from that parody.

Then, of course, there are films that are nothing but product placement; i.e. Hasbro’s Transformers. Of course the toys were there; the film is about toys. But, beyond Hasbro, this film was a masterpiece of product placement: from The Strokes tee-shirt Shia wears throughout to the Nokia phone and the discussion about who makes Nokia (the Swedes, apparently) plus Radio Shack, Apple, Sony, Coke, Visa, eBay, PayPal, and of course, Chevy, Pontiacs, Dodge and Porsche. I’ll bet the entire budget plus P and A was paid in full by the placement, which makes the profit earnings even more fantastic!

People just aren’t watching commercials anymore so product placement is one of the surest ways to reach your target audience. And, if your product is pivotal to the story (ala the Fedex commercial that was Cast Away; the AOL spot that was You’ve Got Mail, etc.) then you can really hit the mark.

It’s not just in film and television. I’ve had much success creating placement opportunities that actually generate revenue in Second Life and many brands are leveraging video games and even pop songs. I read recently where Fergie was offering the lyrics of two songs on her next album to the highest bidder!

It’s a brave new world of placement, ladies and gentlemen. Ever wonder why the American Idol judges often comment on how good the contestants look and Simon spends 5 minutes telling that hot young singer that he loves her outfit? Everything the contestants are wearing is for sale via the AI site. Not to mention, the music video/commercials the contestants make for Ford during each show and the Coke the judges drink while making their little quips. American Idol has redefined product placement!

True, placement remains one of the most expensive tactics in PR and it’s still the most difficult to prove ROI. But, measurement can be done–just look at some classic examples.

—– 1982’s ET helped launch Hershey’s new candy Reese’s Pieces. Instead of paying Universal for the placement, Hershey’s sponsored $1 million worth of co-branded advertising for the film. The result: sales of Reese’s Pieces increased by 80%.

—– Remember Tom Cruise drinking Red Stripe in The Firm? Yeah, okay, me neither. But, within a month of the film’s release, sales of the beer had increased by more than 50% in the U.S., and Guinness Brewing Worldwide acquired a majority stake in the brewery just a few weeks later for $62 million.

So, with all this in mind, what is the future for product placement? As is the answer to just about everything these days: the Internet and CGI games.

According to Forrester, advertisers are much more interested in the $24 billion video game industry than they are in TV. Spending on in-game placement was estimated at $300 million last year, with projections of $1 billion in spending by 2010. 66% of males 18-34 own at least one game console, as do 80% of males ages 12-17. In 2006, 62.3 million game consoles were sold. Market researchers anticipate that this number grew by 26% during 2007.

Currently, there are over 148 million gamers. As gamers age, become parents and continue to play games, older demographics become more highly represented while increasing the overall reach of the video game medium.

And, according to a Nielsen study, product placement adds value to the games! 70% of gamers surveyed considered it a positive feature that increased the realism of the game. Studies have also shown that short-term recall rate of brand names in video games is upwards of 40%, with sports games taking the lead with a 54% brand recall rate.

I also anticipate that Second Life and other virtual communities are going to continue to become hot spots for PR pros. Reverse product placement is a growing trend in the world of avatars. American Apparel launched a line of jeans in Second Life several months before launching them in its real-world stores. And, last year, Starwood Hotels and Resorts launched a sub-brand called Aloft in Second Life shortly before it appeared in the real world. It will be interesting to see what kind of ROI they report on this.

Finally, with more people getting their TV fix on YouTube, I foresee plinking to get some serious attention in the coming years. Companies like Entertainment Media Works have pioneered the tactic and — although it hasn’t become as prolific as using video games and even virtual communities, mark my word — as we begin to see the conversion to Internet TV, plinking will be the new buzz word.

Let me know what kind of successes you’ve had with PP and what trends you see taking form.

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