Lights, camera, brands

NEAR the beginning of “Lost”, an American television drama about a group of plane-crash survivors on a Pacific island, a silver attaché case made by Zero Halliburton takes centre stage. No matter what the characters do to try and force their way into it, only the key to the case finally reveals its contents. This is product placement to die for.

In 2004 the value of product placement in American television grew by 46%, according to PQ Media, an alternative-media research firm. Adding in films, magazines, videogames and music as well as TV, the market was worth $3.5 billion in 2004. Leslie Moonves, chairman of CBS, a broadcast-television network, recently said that three-quarters of all scripted prime-time network programmes will soon contain paid product placement. The growth is occurring because advertisers reckon that it helps to sell their brands, and television firms are desperate for extra money as some of their traditional advertising moves to the internet and elsewhere.

When Channel 4, a British broadcaster, started showing “Lost” in August, it had to decide what to do about the attaché case, because showing products on television for money is mostly illegal in Europe. In the end, it left the incident in, reasoning that British viewers would not recognise the product, or its placement. Such dilemmas are about to disappear. The European Commission will soon alter its laws to allow product placement. It has accepted its television producers' arguments that Europe's ban puts them at a disadvantage to Hollywood, where product placement is an important source of extra funding.

The phenomenon is not new. In the 1930s, Procter & Gamble started broadcasting “soap operas” on the radio featuring its soap powders, and tobacco brands have long used films and TV to lend glamour to smoking. But advertisers are pushing their way into content far more aggressively than ever before. This is chiefly because they doubt the effectiveness of 30-second spot advertisements. Increasingly, viewers are using personal video recorders to skip them, or are choosing to pay for content without commercials.

Even books now carry product placement, and Broadway musicals too. Newspapers are under pressure to do the same, but are mostly holding out. Last week, the American Society of Magazine Editors decided not to change its rules to allow titles to blur the line between content and ads, as many advertisers had hoped it would.

In the film industry, a lot of product-placement deals are made in return for a brand spending large sums marketing the association with the film, as well as for hard cash. Advertisers are becoming increasingly pushy. Brand owners do not just want their car in the film, complains the head of product placement at a film studio, they also demand tickets to the premiere and for the stars to be photographed in front of their brand boards.

In television, the fastest-growing area of the market for product placement, advertisers and TV firms are trying to work out a more structured and standardised business model. Most placements are currently done on a barter basis. An advertiser will agree to lift its spend on traditional 30-second spots around a show, for instance, in return for product placement inside it.

The tricky part is working out exactly what product placement is worth. At the moment, no-one knows how to price it. So far it seems to have the biggest effect when accompanied by traditional ads. The Coca-Cola Company, for instance, found that audience recall of its ads during “American Idol”, a reality show full of Coke placements, was 49% higher than during other programmes.

Oh for the wings of Dove

One of the key variables, says Alan Gould, co-CEO of IAG Research, an advertising-industry monitor, is how much other product placement there is in the show. In some there is so much “clutter” that the value to any one brand may be limited. Another important factor is whether the central character touches the product: is it thereby a “hero placement”, or further in the background?

Product placement is riskier than conventional advertising. Early this year, Unilever, a consumer-goods firm, integrated its Dove body wash into “The Apprentice”, and candidates competed to design a new ad campaign for the product. Unilever's executives were worried when one of the teams came up with an idea full of sexual innuendo and a gay theme.

Some people think that paid product placement is sinister, and that it should be banned, or at the very least clearly disclosed in credits at the end of a programme. German viewers, for instance, are particularly angry about it because several broadcasters this year have been found to have accepted illegally money for product placement. The European Commission says it will allow product placement in fiction, but not in news or factual material, and will require that broadcasters label it clearly. America's Federal Trade Commission, on the other hand, which regulates advertising, rejected a call from a consumer group called Commercial Alert this year to require disclosure.

Most people do not mind having their content stuffed with products as long as it is skilfully done. There have been shows where it has turned viewers off, such as “The Restaurant”, a reality show on NBC in 2003-04 with lots of clunky placements. Product placement is still a small source of revenue for media companies and they would immediately stop it if they thought it was damaging ratings. But the more skilled advertisers become at it, the less likely that is to occur.