Spot the difference

Will product placement prove the saviour of the beleaguered broadcasting industry or will it spell the death of editorial integrity? Adrian Pennington weighs up the arguments

Product placement: would feature prominently in programmes such as Coronation Street
Product placement: would feature prominently in programmes such as Coronation Street

If all goes according to plan, TV programmes incorporating paid-for product placement could become the norm early next year, following a dramatic U-turn on the issue by culture secretary Ben Bradshaw last month.

The relaxation of restrictions on embedded marketing is subject to a three-month consultation. But by agreeing to review the arguments just six months after his predecessor Andy Burnham ruled against change, Bradshaw would cause
consternation if he backtracked now.

Attention is already turning to the mechanics of how product placement would work and how much revenue it would bring to the UK's cash-starved commercial broadcasters. Estimates of between £60m and £100m are widely reported, although in other markets where product placement has been introduced, it has led to an annual expansion of 30% to 40%, indicating its size could soon rival that of the UK's sponsorship market.

Andy Barnes, sales director at Channel 4, says: "The notion that product placement will generate £100m is folly. Sponsorship has taken a decade to reach £180m and its value to brands is proven. I don't see product placement convincing too many brand managers to invest more money in TV in the short term."

He adds: "Our financial benefit would be marginal. Whereas ITV makes most of its own shows, with the majority scheduled in peak time, C4 would have to share all revenue generated with independent producers."

On the prospect of ITV taking the lion's share of revenue, Rupert Howell, managing director brand and commercial at the broadcaster, comments: "Whether it is £30m or £100m, every little helps. The whole sector needs deregulation so we can compete fairly with broadcast rivals and the likes of Google."

Simon Ritterbrand, director of product placement agency Seesaw Media, which will also look to take a slice of new business, agrees. "These figures shouldn't blind people to the fact that product placement must benefit the production company, the brand and the broadcaster."

Pure incremental revenue is unlikely, but so is total cannibalisation of existing budgets. Since product placement works poorly in isolation, it is expected to fall under the remit of sponsorship, online and interactive teams. James Penfold,
commercial director at etv Media Group, suggests: "The overall pot will be bigger because of a new mix of media spend. Brands will syphon money from advertiser-funded programming, sponsorship and spots, but they will also source new funds."

Nick Price, chairman of trade body Pact's committee on product placement, argues: "The importance for broadcasters is less about taking money from one pot to feed another and more about client retention and even growing total spend. It will be an integrated media buy, with broadcasters and producers able to offer more inclusive packages that prevent bleed onto other media, specifically online."

Embedded marketing already exists in the UK - and not just through imported US programming such as Lost and CSI, or sports stars used as "walking billboards". Prop placement, where items are given free to programmes' art departments, has been rife for two decades and is thought to save the BBC £5m a year.

"About one in 10 placements will continue to have no price attached," predicts Steve Read,
managing director of product placement agency Brandirector. He adds that paid placement will pull in smaller brands that have not traditionally been involved in TV.

Industry consensus is that product placement  will not make media owners a quick buck unless they can justify to advertisers it is worth their while. Standard measurement is needed, combining metrics such as reach, on-screen time and positioning, alongside softer criteria such as interaction with characters, verbal mention and relevance.

Simon Willis, head of programming at Mindshare, says: "If product placement doesn't contrast with the job done by other media buys, it is pointless. It is not about renting space on screen, but about creating an emotional connection for brands with an audience." Read adds: "Product placement must not jar with the audience. You can spot bad placements when they are shoehorned into the script just because of the deal attached."

The crux of the debate is editorial justification. The Broadcasting Code allows Ofcom to penalise programmes where products are given "undue prominence", and this is expected to remain at the heart of new rules (see box, page 25).

Geoff Russell, director for media affairs at the Institute of Practitioners in Advertising, notes: "Measurement will be difficult because there is a very fine line between what brands get for their money, and impinging on editorial independence. The most powerful incentive to get it right is that consumers can look elsewhere. The integrity and quality of the programme is what brings viewers in."

All parties' interests are served by a responsible reading of "undue prominence", although the distinction between subtle and subliminal or transparent and overt seems open to interpretation. ITV's Howell explains: "It comes down to what is appropriate for the content. There will be differences in scale ranging from brand presence where brands add to the realism of a show - such as branded taps in the Rovers Return - through to full product placement as an open and accepted part of the content."

In the latter camp are daytime factual entertainment shows - property, DIY or food - where ingredients, furniture, fashion or tools might be linked directly to sponsorship bumpers, a phone-in competition or other calls to action.
Howell says: "Product placement will be popular and straightforward in daytime schedules where programming has traditionally struggled to pay for itself. If viewers don't like it, they are spoilt for choice - the regulator is the remote control."

ITV and Pact are at pains to stress that product placement will not compromise editorial integrity, but there will undoubtedly be tensions between advertisers' demands and producers' independence. Before handing over the cash, clients may need convincing their product will appear on screen in a positive light and with the coverage they expect.

Pact's Price says: "It's about managing advertisers' expectations. Product placement means brands will be able to integrate to convey a message, but overt placement will be counter­productive. Ideally, it will tell you something about the character or show, so brands will be able to add narrative credibility."

Mindshare's Willis believes the emphasis should be on due diligence. He says: "It's about the context in which the brand appears. Advertisers must believe that what they paid for is being applied correctly and must be able to flag it up if it's not right."

His colleague Sean Jefferson, leader in Mindshare's Invention group, is concerned that if broadcasters demand seven-figure sums for placement in shows such as The X Factor, clients may require agencies to negotiate exposure commitments. Under existing European regulations,
producers and broadcasters are not allowed to give contractual exposure guarantees to advertisers.

Positive returns

Jefferson says: "Without these guarantees, brands will find it difficult to assess whether any placement would definitely generate positive returns. This could be circumvented if producers share scripts and programme treatments informing brands where their product will be given exposure. Brands could subsequently be invited to bid for exclusive placement rights based on this information."

Pact chief executive John McVay says the producer and broadcaster will carry the can for any breach of code. He says: "Advertisers always want total control; they are used to having a spot where the client is king. Advertisers moving into product placement  must be sensitive to the fact that people watch TV for entertainment, not to be sold to."

As it stands, there is no predetermined fee model  and it is unclear who will be the lead trader and recipient of the revenue generated. Brands are more likely to purchase placements directly from production companies.

Where programmes are commissioned by a broadcaster, the channel might retain the right to trade the placement with brands, with revenue going directly into the broadcaster's coffers or, more likely, being shared or offset between production and commissioning costs.

Etv Media's Penfold says: "The impact of product placement is less the accumulation of net revenue and more how it shakes up the business models for programme funding."

Advertiser-funded programming deals will be easier to construct. Price says: "AFP can make no reference in the editorial to the brand and so it is over-dependent on the sponsorship boardsmaking the link between the brand and themessage. But product placement will make it possible to link the two more closely throughout the content."

The link will be strengthened when video-on-demand moves into the mainstream: it will become possible to target advertising around content, with clicks leading to transactional sites. But although broadcasters are champing at the bit, the process will not become reality overnight. Kelly Williams, sales director at Five, cautions: "It will take most of next year to work through how this will be implemented."

Mark Boyd, content director at creative agency BBH, is also dubious. He says: "I don't believe for a second that advertisers will be able to do very much with product placement. It's a step in the right direction, but so many caveats will be inserted before the regulation is passed that it will have a minuscule impact."

However, others wonder if the line between editorial and commerce has been irrevocably blurred. Marc Sands, director of marketing at The Guardian, says: "A war of attrition will ensue and regulation will be pushed to the limit. News and children's shows may be enshrined now, but the door has been opened. Product placement is a small price to sell your soul for."

Product placement in practice
Leading broadcasters - including ITV, Discovery and Virgin Media - and Pact agreed a product placement code in response to the Department for Culture, Media and Sport consultation of 2008, guided by the EU's Audiovisual Media Services Directive. It is expected the final regulation from the DCMS will not differ greatly from the following guidelines:
•  Opportunities will be identified in the script by the producer and agreed by the broadcaster at an editorial level. Brands will then be approached as part of a separate commercial process. Brands will not be guaranteed prominence or hold.
•  Products will be passed to the producers with no prescription regarding the manner or length of their exposure. The producer will decide how to incorporate products.
• There will be transparency in the price for PP. The value will be based on actual screen presence in terms of prominence and hold, and only ascertained once the broadcaster has agreed the programme is compliant.
•  Sport, entertainment, drama or other series made for TV or on-demand delivery will be allowed to contain product placement. News, current affairs, consumer advice and children's programming will be excluded.
•  Product placement will have to observe existing restrictions on advertising products around certain genres.
•  A visual indicator to signpost paid-for product placement  in UK-originated programming will be shown before and after shows, and when programmes resume after a break.

Gold rush or fool's gold? Clients argue the case

Carl Pring, head of brand and advertising, Sony UK
Product placement already features prominently in properties we own. A Sony Pictures' James Bond movie might as well be an ad for a Sony Centre, and Sony brands are cross-promoted in PlayStation 3 games. But if we don't own the platform, we will do very little product placement, as it is hard to measure and its cost effectiveness is unproven. For the amount of money producers are asking, it may be better to devise a dedicated ad campaign. That said, if one of the judges in The X Factor name-checks a song for playout on Sony X Series, we'd chew their arm off.

Marc Sands, director of marketing, The Guardian
Product placement is a line that marketing and editorial shouldn't cross. The separation between content and commerce is well understood by the viewer. The great get-out clause is that viewers will vote with the remote, but I don't buy it. Product placement has no benefit to viewers and I don't believe in the strength of those defending the regulations - if the licence fee is threatened, even the BBC won't be immune. I have no problem with free placement: if you're a brand with integrity, people will want you in their content, but if product placement is allowed, we won't pay for it.

Claudia Nicholls-Magielsen, marketing director, Pizza Hut
The new advertising medium will need to meet our regular criteria, such as the overall communications objective, who we are talking to and what kind of ROI we can expect. We are a restaurant brand and we market an experience. Food and drink is part of that, but we would rarely advertise an individual product. Sponsorship seems to make more sense for us than product placement, but I wouldn't rule it out. If customers see it as disruptive, then it's not effective for any advertiser.

David Kisilevsky, vice-president of marketing, Burger King
Product placement could drive incremental revenue in the short term, but the long-term prospects are unproven. There needs to be a credible reason for using a particular brand or product in a programme, so the product's key messages are clearly communicated. Justification shouldn't come down to viewing figures alone. If the right opportunity arose, Burger King would certainly consider it. However, measuring its impact is a challenge, which will no doubt affect whether people will consider it a good return on investment versus sponsorship.

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