Frank Capra's 1946 movie, It's a Wonderful Life, features a young boy who dreams of becoming an explorer while flicking through the pages of National Geographic magazine. As far back as 1927, the first film to win the Oscar for Best Picture - Wings - contained a plug for Hershey's chocolate.
Eighty years on, and subliminal on-screen product placements are everywhere: from Manolo Blahniks in Sex and the City to Ford cars in 24. While predominantly seen online or in US drama, movies and reality shows, product placement also exists on British television. "Under regulator Ofcom's code, brands are allowed to be placed on the BBC and commercial networks by prop management companies," says Nick Walford, chief operating officer of WPP-owned Mindshare Performance, Mindshare's specialist branded content arm. "While the brand pays the prop company, there is no payment to the production company or broadcaster, unlike the paid-for-placement scenario in the US."
Paid-for placement is banned in the UK and ministers are consulting on whether to implement it as part of a European directive that would allow it here from as early as 2010. Under proposals, advertisers would pay for products featured in most TV programmes with the exception of news, current affairs and children's programming.
"It's no secret that the traditional spot advertising model is increasingly coming under pressure," says Alastair Roberts, corporate development manager at Big Brother production group Endemol, which has used product placement in some of its US shows such as Extreme Makeover: Home Edition. "Largely due to the advent of personal video recorders, ad-skipping technology and video on demand, advertisers are looking for new ways to reach their audience."
Data is encouraging from the US, which can largely be seen as a 50-year case study into product placement. According to research firm PQ Media, advertisers spent $2.9bn (£1.5m) in 2007 to place their products in TV shows and movies, up 33.7% from the year before. In 2008, spending is projected to hit $3.6bn (£1.9m). In the UK, media regulator Ofcom has moderately estimated that product placement would generate £25-£35m after five years.
Product placement's biggest problem is that many people do not understand what it is - integrating brands into entertainment in a relevant way, if not enhancing the content through realism. "In the old days the connection to the consumer was somewhat more obvious," says Brian Terkelsen of Connectivetissue, the branded content arm of US media agency MediaVest. "The mindset of the consumer was if James Dean drinks Coca-Cola, then I drink Coca-Cola."
Cultural artefacts
Terkelsen argues that today consumers are incredibly intelligent about advertising solutions and if anything, over the last few years, brands have made TV feel more real. As cultural artefacts, they can bring inherent story value to a show.
He may have a point. Would Carrie's character in Sex and the City be credible without Manolo Blahniks, Jimmy Choo's or Nars cosmetics? The women in that particular TV show are expected to know about fashion and use certain brands.
ITV has maintained that the subtle integration of brands such as Barbour clothing in Emmerdale would not damage editorial integrity. "An effective regulatory regime would guard against some of the excesses seen in the US and protect the interests of viewers," says Rupert Howell, ITV's managing director of brand and commercial.
In the US, brands increasingly want to be part of the picture. "Today we want to be more involved because we are actually funding programming that is directly associated to the brands we are promoting," says Terkelsen. "In US TV the networks appreciate and need the financial contribution from the marketers."
Positive regulation
Transparency and viewer trust have become important issues in British TV following the spate of call TV scandals that rocked the industry last year.
Mark Eaves, managing director of Drum, the branded content arm of media agency PHD, claims that the current situation in the UK means product placement is not transparent to viewers. "If we had positive regulation, then viewers would be far clearer about what the relationship is between the programme and the products in it," he argues. "In the UK that isn't clear. In a funny way, by legalising product placement in the UK and regulating it properly, you actually serve the viewer better."
Whatever happens, European member states still retain the right to reject product placement. While product placement is unlikely to be the saviour for new revenues in British TV, it is a significant weapon for the future of funding content and it is already out there.
Weblinks
Endemol: endemol.com
ITV: ITV.com
PHD: phd.co.uk
Mind Share: mindshareworld.com
Media Vest: mediavestww.com
