NEW TRENDS IN

PRODUCT PLACEMENT
Lilia Gutnik, Tom Huang, Jill Blue Lin, Ted Schmidt
Strategic Computing and Communications Technology, Spring 2007
Agenda
 Introduction
 Product Placement in TV
 Product Placement in Films
 Product Placement in Video Games
 Analysis: Advertising Models
 Future:
 Reverse Product Placement
 Plinking

 Q&A
Introduction
 Product Placement: a promotional tactic where a
real commercial product is used in fictional or non-
fictional media in order to increase consumer
interest in the product
 Media: TV shows,
films, games, virtual
world (Second Life),
books, music videos,
etc.
The 30 Second TV Ad
 Long-standing king of advertising
 Losing significant efficacy
 DVRs allow skipping of commercials, 90% regularly
skip ads
 Prominent demographics are moving to more
interactive forms of entertainment (video games,
internet)
TV and Film
 Never a significant ad strategy until surprise turning points
in TV and film in late 20th century
 Increased demand in the wake of DVR threat
 $4.24 billion market in 2005 and rapidly growing
 Benefits:
 Provides funding to the studio
 Enhances realism of the story and characters
 Gives advertisers a way of reaching out to TiVo audience
who skip commercials
 Complementor websites
Reality TV
 Products as prizes
 Survivor 2000 saw surges in sales for Doritos and

Mountain Dew
 30% increase in 2006 of product placement on

network prime-time TV reality shows: 106,808

occurrences
 New reality TV models
 NBC’s The Restaurant funded solely on product

placement, brings in a new wave of television

product placement: “advertainment”
Scripted Television
 Placement in scripted shows
started as props in the
background of story
 ABC, CBS, NBC, FOX, UPN, WB
displayed 100,000 product
placements in 2004-2005 season
 Script Integration
 Seinfeld broke the barrier with
products as part of the plot, not
just props
 Barter, gratis deals instead of
formal contracts
 Sopranos, Porsche Cayenne Turbo
 CSI: Miami, Hummer
Television : Technology
 Virtual product placement
 Editing technology allows
advertisers to insert products
in scenes after episodes have
been shot, United Virtualities
 Expanded into regional editing
that can insert different brands
for the same show in different
geographic locations
 Complementors
 SeenOn.com leads to real-time Jimmy Choo
product linking in the future Desperate Housewives Mar 11, 2007
Tags:jimmy choo, desperate
housewives, shoes, bree van de kamp
Film : Success Stories
 Effectiveness of product placement
 Reese’s Pieces, E.T.
 $1 million marketing contract agreement in exchange for
product placement
 80% increase in candy sales as a result
 Overall value of the global product placement film
market, including the barter/exposure value of non-
paid placements $1.57 billion for 2005
Product Placement Backlash
 Ad Resentment
 Negative criticism from movie
reviewers, bloggers for blatant
or superfluous product
placement, Fantastic Four
 Detract from plot or story
realism if the product seems
inappropriate
 Tacky Ad Placement
 Negative brand image
reflected on product itself for
poor placement
 I, Robot, Minority Report,
James Bond franchise
Video Game Product Placement
 Historically, billboards placed
in-game to enhance realism
 Push to monetize by big
publishers (EA, Ubisoft,
Activision)
 $300m spent on in-game
advertising this year
 Expected to reach $1bn by
2010
 Placements can range from
$20k to $1m depending on
prominence
Interactive opportunities
 CSI: 3 Dimensions of
Murder by Ubisoft
 Visa Fraud Protection
provides murder-
mystery clue
 Visa billboards
prominently displaced
 Minimum of 10
minutes interaction with
Visa during the game
Other Examples
 Tony Hawk’s
Underground 2
 Product placement by
Jeep, purely decorative
 Jeeps send messages to
Nielsen for market
research purposes
 And1 Streetball:
 Billboard advertising for
several products
 billboards rotate content to
prevent ad-blindness
Industry Motivation
 Game prices are fixed
 $50 for new releases
 Development costs and
time are skyrocketing
 Halo 2 cost $40m to
produce over 3 years
 Publishers looking for
new income streams
Video Game Market Size

 148m+ current
gamers, predicted to
increase 26% this year
 Gamer households
generally above-
average in income
 Average gamer
spends 7.6 hours per
week playing video
games
Effectiveness
 70% of gamers polled said product placement
added to the gaming experience
 Makes settings more realistic
 Compliments realism found in next-gen titles
 Study indicates short-term recall rates of 40+%
 Sports titles are most effective: 54%
 Compared to 10-20% recall of TV ads
Future Trends
 Dynamic Updating
 Leverage internet connectivity
 Allow for time-based advertising (Movie premieres)
 Mobile Games
 Rapidly growing market (61% last year)
 2/3rds of mobile games bought by females
Video Game Ad Resentment
 Hard to develop ad-
blindness due to
interactivity
 Video games are not
network television
 $50 initial investment
 Connected, vocal fan base
 Product placements must
remain subtle, and relevant
to the storyline
Advertising Model - 30 sec. TV Ad

Show Ad Spot

Production Studio Broadcaster Advertiser

Show + Ad
Product or
Service

 Broadcaster-centric
Consumer
 Production Studio’s only
revenue source is licensing fee
Advertising Model –
Product Placement
Placement Spot

Show w/ placement
Ad Spot
Production Studio Broadcaster Advertiser

Show w/ placement
Product or
+
Service
Ad

 Studio controls and sells

placement spot Consumer
 Studio gets additional revenue
(a portion of the ad $$)
 Broadcaster lost power
Advertising Model –
Virtual Product Placement (VPP)
Ad Spot
&
Show Virtual Placement Spot

Broadcaster
Production Studio + Advertiser
VPP

Show w/
Targeted
Placement Product or
+ Service
Ad
 Broadcaster sells “virtual”
placement spot to advertiser
AFTER the show is completed Consumer

 Broadcaster gains back ad $$

 Experiments: virtual billboards
in sports games
Advertising Model – Video Game

Placement Spot

Production Studio Advertiser

Product or
Game w/ Service
Placements

 No broadcaster Consumer

 Ad effectiveness can be
measured (online games)
 Pay-per-click model?
Future: Reverse product placement
 Creating a fictional brand/product in a fictional
environment and then releasing it into the real world
 Initially opportunistic in film/TV/novel
 Bubba Gump Shrimp Co. (Forrest Gump)
 Every Flavor Beans (Harry Potter)
 Extremely difficult to plan ahead
 New media: Second Life
 Interactivity (test market)
 Low to zero risk
 PR / Word-of-mouth (speed of information dissemination)
 FREE!
Reverse product placement
 Example (Second Life):

 American Apparel’s Virtual Store

 Selling clothing at $1 each for avatars

 Launched (Test-marketed) their first line of jeans in Second Life two

months before they hit physical stores

Future: Product-linking
 Product-linking (Plinking): The process of adding a
product or service link to a visible object in a video.
 Example:
 EMW plans to enable
plinking in consumer-
generated media.
 Monetization model
for YouTube?
http://www.unitedvirtualities.com/demo/shoshmosis_friends/expandable_banner/
Questions?