A Managerial Investigation into the Product ...

A Managerial Investigation into the Product Placement Industry

CRISTEL ANTONIA RUSSELL San Diego State University

This article reports the findings of a managerial investigation of key players in the product placement industry, including placement agents, clients, studios and production companies, and research organizations. The evolution of the product

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placement industry in North America is reviewed, perspectives on the role and

MICHAEL BELCH

objectives product placements serve in the marketing mix are discussed, and current

San Diego State

means of assessing product placement efforts examined. The data provide insights

University [email protected]

on the relationship-driven industry where power, trust, and commitment play an important role. They also suggest recommendations for how participants should plan, use, and evaluate their placement efforts.

"It's an industry where everyone thinks that they're an expert until you talk to them and you realize they have no idea what's going on." (A9 interview quote)'

A REVIEW OF THE TRADE and popular press over the past few years quickly reveals the interest in and growth of the product placement industry Product placement is one of today's hottest new media, and it is getting increasing attention from advertisers, media planners, and measurement firms attempting to assess its effectiveness and value. Despite this interest and the numerous articles published on the topic—including the academic literature—there are many misnomers about product placement. The purpose of this research is to uncover the underpinnings of this fastevolving and somewhat nebulous industry. As such, the research is designed to provide marketing managers with insights into the product placement industry and the use of product placements as a communication strategy.

This research luns supported by a grant from the Marketing Science Institute.

'See Table 1 for letter and number codes (i.e., A9) used throughout this article.

DOI: 10.1017/S0021849905050038

The strategy of placing branded products in entertainment media is not a new concept. Historically, marketers' approach to using entertainment content to promote their products has been manifested by sponsor-owned shows. Starting in the 1930s, consumer product manufacturers invested in the production of radio programs to reach their target audiences (Lavin, 1995). This phenomenon was particularly visible in the "soap opera" genre, a term that actually testifies to the blending of advertising of soap products and programming. Radio programs were developed directly by detergent companies, notably Procter & Gamble, to promote their brands by integrating them into the scripts (Stern, 1991). When soaps moved to television in the 1950s, the close connection between programming and advertising continued and marketers maintained direct control over the shows' story lines and creative design (Barnouw, 1975). The practice of show sponsorship began to decline as advertisers realized they could better reach their target markets by spreading their advertising budgets across many shows rather than by spending it all on one (Savan, 1996). In the past decade, however, in reaction to the increasing advertising clutter on television, escalating advertising costs, and technological advances that give March 2 0 0 5 JDOBneL OFfiflUEBTISlOGRESEHRCH 7 3

PRODUCT PLACEMENT INDUSTRY INVESTIGATION

consumers more control over what and how they watch television, the trend has reversed and advertisers have returned to sponsorships and product placements. Today's forms of sponsorship range from subtle, with minor brand appearances on a set, for example (see Russell, 2002), to more elaborate product integrations, such as those seen on The Apprentice and movie tie-ins such as Coca Cola in Shrek 2 or Beluga, Turtle Wax, and Playstation in Shark Tale (BrandChannel, 2004). Although communication platforms such as product placements are not necessarily viewed as substitutes to traditional advertising, advertisers' interest in and use of these new media forms continue to increase. Our research focuses specifically on the product placement practice and related industry and academic research. OVERVIEW OF PRODUCT PLACEMENT

Product placement epitomizes the blurring of the lines between advertising and entertainment and, for this reason, has been characterized as a type of hybrid advertisement (Balasubramanian, 1994). There are many working definitions of product placement in both the trade and academic literatures. For our purposes, we define product placement as "the purposeful incorporation of a brand into an entertainment vehicle." This definition reflects the fact that the practice is not restricted to television and movies (Wasko, Phillips, and Purdie, 1993) but also occurs in radio shows, songs and music videos, video games, plays, and even novels (e.g., Friedman, 1985). It also takes into account the different modalities in which the brand may be presented and the multiple degrees of brand integration (Russell, 2002). Finally, it acknowledges the fact that not all placements are paid. One factor that fostered interest in product placements was the use of Reese's Pieces to attract the alien in the 1982 movie

E.T. the Extraterrestrial (Winsky, 1982). Orig-

inally offered the opportunity, M&M's declined to participate, opening the door for Reese's (Darlin, 1995). The results are almost legendary; the success of the movie and the placement led to an increase in awareness of the brand as well as sales increases of 65 percent (Winsky, 1982). (It should be noted that Coors beer, which also had a placement in the same movie, reported no significant impact/success.) Product placement has now grown to an estimated $3.4 billion dollar industry (PQ Media, 2005) and constitutes a part of the marketing mix of over 1,000 brands in the United States (Marshall and Ayers, 1998). A direct consequence of its increased popularity is the boom of a specialized product placement industry. A review of the Entertainment Marketing Association (EMA) membership reveals that, in North America, product placement firms are mainly located in the Los Angeles area, hub of the entertainment world, and in major advertising centers such as New York, Chicago, and Toronto (EMA, 2005). The institutionalization of the industry is evidenced by such professional trade associations as EMA, whose association members include placement agents, studio representatives, and marketers. Since 2000, no less than 544 product placement articles have appeared in the academic and trade literature discussing a range of topics including reasons for growth of the industry, examples of placements, and success stories (Proquest, 2005). Brandweek alone has published 74 articles on the topic over the past four years, and the number has increased exponentially from only 2 articles in the year 2000 to 23 in 2004. Unfortunately, few of these have advanced the understanding of managers' objectives for using product placements or conclusively den:\onstrated whether such placements are

7 4 JDOBIlflL OFflDUERTISlOGflESEflflCHMarch 2 0 0 5

effective and whether placement efforts are truly strategic. Academic research to date has focused on consumer responses to product placements (for a review see DeLorme and Reid, 1999) as advertising and consumer researchers have begun to study product placements' impact on memory (Babin and Carder, 1996; Gupta and Lord, 1998; Nelson, 2002; Russell, Norman, and Heckler, 2004), attitudes (d'Astous and Seguin, 1999; Russell, 2002; Russell and Stern, forthcoming), and behavior (Auty and Lewis, 2004; Russell and Puto, 1999). To date, only one study has examined product placement professionals' use and perceptions of this means of communication (Karrh, McKee, and Pardun, 2003). Although it provided many insights into practitioners' beliefs about the practice and the important executional factors to consider, the study's small sample and main reliance on close-ended survey questions could not fully confront and address all the challenges and opportunities associated with product placement planning. Thus, the purpose of this research is to examine the objectives sought by managers when using product placements, understand the role placements play in the marketing mix, and determine how participants in the industry plan, implement, and evaluate their placements. Specifically, the research had the following objectives:

1. to examine the current structure of the industry 2. to identify the objectives sought by managers when using product placements 3. to determine the means by which product placement efforts are evaluated and measured METHODOLOGY

The research involved two phases. First, secondary data including academic and trade literature as well as proprietary data


that were made available were collected. Second, qualitative in-depth interviews were conducted with participants across the product placement industry (see Figure 1). Structured interview questions were designed for each of the categories of participants in the product placement process—producers, agents, and clients. The original interview guide was modified slightly after pretesting and slightly adapted for the relevance to interviewees. To develop the sample, names were obtained from a variety of sources including industry directories, the EMA, and references obtained through secondary research. However, the most effective method was through snowballing—that is by asking those in each of the industry segments to provide names and contact information of others, as well as a reference or an introduction. All participants were screened prior to the interview to ensure that they were the decision maker in the process. All interviewees were guaranteed anonymity. A total of 56 industry members were interviewed, representing

participants of each group and a significant portion of each industry segment. As shown in Table 1, the sample included interviewees from throughout North America, including the United States and Canada. Every person we contacted agreed to be in the sample and was even eager to participate in the research. Interviews ranged from 20 to 90 min, with an average of 35-40 min. Half was conducted in person while the other half was conducted by phone. Telephone interviews were simultaneously conducted by the two authors. All interviews were professionally transcribed, with the transcripts reviewed and thematically organized and analyzed. The results include findings regarding (1) the structure of the product placement industry, (2) perspectives on the role and objectives product placements serve in the marketing mix, and (3) means of evaluating placements' value and effectiveness. As shown in Table 1, participants were assigned a code so as to facilitate the readers' industry identification, while assuring confidentiality.

Sampling Frame

STUDIO: Large/Small In-house/Outsource

Large/Independent

THE STRUCTURE OF THE PRODUCT PLACEMENT INDUSTRY

Estimating the monetary size and scope of the product placement industry is a difficult task. Because the formalized development of the product placement industry is relatively recent, there is diversity in the types and sizes of agencies that handle placements, the companies that use them, and the ways the studios are organized to deal with them. This investigation focuses on the television and movie industry, the traditional and most common media for product placement. Figure 1 depicts the various participants in the product placement industry. EMA estimates that approximately 42 specialized product placement agencies exist in North America (EMA, 2005). In addition, the association involves 14 studios/production companies and lists 14 active client members. There are many additional players, from integrated marketing communications agencies that have an entertainment marketing department to companies involved in product placement to various degrees. In fact, the number of advertising agencies now developing branded entertainment divisions is proliferating (Consoli, 2004). The focus of this research is on participants highly involved in this industry, i.e., the various major players, and the investigation included representatives of all such segments.

Studios/production companies

OTHER: Industry Groups Research Firms Interactive TV Firms

Large/Small PP Only/Integrated

Figure 1 Structure of the Product Placement Industry

These are the actual producers of movies and TV programs—for example, companies such as DreamWorks, Universal Studios, and Disney. The bases for identification of potential for inclusion of product placements are scripts. Studios send scripts to clients whose permissions are legally required to use these brands in their scenes, either directly or through

March 2 0 0 5 JDOIinflL OF IIOUEBTISIflG BEBEflBCH 7 5


y« PI p A

the intermediary of product placement

List of Informants by Organization Type

agencies.^

Number of Type

Informants

Agencies

"For a typical movie, there could b e Code

Organization Type

Location

100 to 150 placements in a production

Al

PP on.lX

Los Angeles

* a t the StudiO h a s to obtain to get

A?

PPpn^

NewVbrk

production off the ground." (A12)

2

A3

PP.only

Los Angeles

3

A4

Integrated

Canada

2

A5

Integrated

Canada

1

[ZIIIIIIIl

Brand choices are sometimes made by

1

Total Production houses/

the studios themselves (directors, produc.

x

lu

u

ers, and/or sometimes actors), or through

-

•""

A6

pp only

Los Angeles

1

A7

pp only

Los Angeles

1

A8

Integrated

Los.Angeles

,,j^^^^^ ^^^ ^^^^

1

.A9

.PP..9.n.l:^

Canada

^jjj ^oj aUo^ you to use their likeness

1

AlO

PP.pniy

Los Angeles

to promote a product." (C5)

3

All

Integrated

1

A12

Integrated

5

A13.

Integrated

Chicago.

tic objectives for using placements as their

3

A14

Integrated

Chicago

inclusion, they contend, provides more realism to the stories, as noted by the

2

SI

Large

Canada

1

S2

Independent

Los Angeles

5

S3

Large

Canada

•*

-^

,

.

j . •

these mtermediaries. ^^^^^^

^^t jj^^^g ^^^^.

Canada

....Los.Angeles

26

The directors and producers have artis-

following quote:

studios

"When we start a film I meet with props, sets, wardrobe and the produc, ,

,.

,

. j-

u ^

ers and the director and discuss what i

?^

^?^gS

Los.Angeles

.^ .^ ^^^^ ^^ ^^^^ ^^ ^^ ^^ ^^^^^^ ^^^

....I°tai

?

scene t o m a k e it n u m b e r o n e , w h a t are

Clierits

2

.Cl

In-house (Fortune 100)

Los Angeles+ Oth.er.U.S.

Q ^ J character choices. W h a t d o e s h i s

1

C2

Outsourced (srriaii)

Ptfier U.S.

h o u s e look like? W h a t d o e s h i s w a r d -

2

C3

in-h.ouse (Fortune 100)

Other U.S.

robe look like? W h a t k i n d of s o d a d o e s

1

.C4.

...Ou.t.s.our.c.e.d.(For.tune..io.o.)

Q.th.er..y...s.,

h e d r i n k ? Is h e a root beer g u y or a

1

C5.

.o.ut.s.our.ce.d..(Fqr.t.une..ip.q)

o.t.h.er..y...s,

Pepsi g u y or a D r P e p p e r t y p e of person? D o e s h e d r i n k foreign b e e r ? " (S2)

4

C6

Outsourced (Fortune lOp!

OtiherU.S.

Total

11

others

1

01

Industry group

New York

1

02

Research

Other U.S.

'^

Increasingly, an objective for using product placements is financial. This may come .

.,„

•

T-^/-

i

m various forms. A l t h o u g h F C C rules

Total

Grand total

76

2

03

lr>dustrj,.analysts

New.Vbrk

prohibit p a y m e n t for placements o n tele-

2

04

lnd.ust.r.y..gro.up.

Los.Angeles

^^^-^^^ gj^p^g (but n o t movies), t h e regu-

1

.0.5

Re.search

New.Yp.rk

lations do not prevent other forms of agreements between producers and ad-

1

06

i.yy

Other U.S.

1 1

07 08

ITV Research

other U.S. Los Angeles

10

56

JDORHBL OF iOEBTISIIlG

— ^ We note that, in some instances, produet placements have , , , , J n- , • occurred without the parent company s knowledge, lechnically, however, permissions are required.

RESEflRCH March 2 0 0 5


vertisers and television has in fact become a primary medium for placements as evidenced by Survivor or The Apprentice. A common form involves the provision of the product as payment, similar to trade deals made in the media industry—that is, providing products and services in return for having the product shown at no direct cost. This form of payment reduces the studios' costs and overhead (for example, provision of computers, drinks, food, etc. to be used in the movies and/or by those on the set). In addition, these products and services provide nonmonetary value by creating goodwill, keeping set employees satisfied, etc. However, simply sending products out to a placement agent or directly to the studios often means foregoing any control over the way the brand is portrayed. "Often companies find out about placements from their agent only after the fact and sometimes even after the entertainment property is released or the program airs on television." (C6) In those instances where fees are paid— estimated to be approximately 1 percent of on-air product placements (Schiering, 2003) or as much as $2-$5 million on The Apprentice (James, 2004)—the money generated goes straight to the bottom line. Still, studios are careful with placement agreements on television to avoid conflicts of interests with traditional advertisers: "Television placements are further complicated because conflicts of interest may occur between product placements and advertisers purchasing commercial air times." (A6) Product placement agencies

Analogous to advertising agencies, placement agencies serve as the intermediary be-

tween the production houses and potential clients. These agencies are paid a fee for their services and essentially become agents for the producers (Bohn, 1986). The primary basis for participation in this industry for the agency is to receive direct monetary compensation. The majority of the agents interviewed in this study has been in the industry for over a decade and witnessed its tremendous growth. In fact, many of today's placement agents started as prop masters on the studio side and realized the opportunity for an intermediary to streamline and improve the communication channels between studios and companies— hence the many agency start-ups in the 1980s. At its inception, the use of product placements involved little strategic planning, as the following quote indicates: "What was happening in the very beginning is that people in this business, there were only a handful, were becoming friendly with editors and production people and going on set, seeing dailies, and as soon as they would see a product in the daily, they would pull up a client and say 'would you like to see your beverage in this film and would like to see Al Pacino holding your thing?'" (A2) As will be seen later in this article, such is still the case for many placement deals today. Given the substantial growth of product placement, agent intermediaries have become much more important, although a few consumer goods companies are large enough that they can conduct business in-house. The logistics of the placement through the agency also occurs via scripts. In many instances, agencies are provided with advanced copies of these scripts that are reviewed for placement opportunities, matching existing clients to these opportunities, and/or seeking new participants.

Because placement agents are not trained as brand managers, their criteria for deciding whether one of their clients' brands is appropriate for a program or movie is primarily based on the opportunity for the product category, as noted in the following quote: "We read the scripts, and we try to match which clients work well within the movie. We try not to make it unrealistic. If it's supposed to be there, then it should be there. It's natural when you open a refrigerator and have some labels pointing toward you and some pointing away from you. What is not natural is when they open the refrigerator and because they didn't get the rights, or the permission, or product placement, they turn all the labels backwards." (A6) Clients

The companies that use product placements to promote their products and/or brands range from small to large Fortune 100 corporations. We interviewed both companies that handle product placements inhouse and those that work with an agent. Clients sometimes review scripts provided by their agents or directly by the studio and production companies. Their perspectives often differ from agents' because they have to consider the placement as part of their overall brand strategy. Still, different levels of sophistication exist among companies that use product placements as the following quotes indicate: "We really don't pick based on who the characters are. . . . We just want to make it make sense. I think that we're more conscious of how we want our brand portrayed than anything else." (C3) "I used to be a brand manager.... It gives us a huge advantage because I

March 2 0 0 5 JOyRilllL OF HDUEBTISIHG RESEBRCH 7 7

PRODUCT PLACEMENT iNDUSTRY iNVESTiGATiON

audience because even if you have an audience of 3 million people, that's still 3 million people. Because an audience on Lifetime is primarily females; we're reaching a core audience of females, probably from 18 to 49, that we may not be reaching on another program. So, you can't discount it because it's not highly rated. But the higher rated shows: do we want to be on ER and CSI and Friends, absolutely." (C4)

am privy to all the information that is going on. I know what the strategies are and I'm an insider. So, I have a much better view of what the objectives are than if I were to hire somebody to do that for me. But I also sit in on their planning meetings. That's why I know what their objectives are for the next year." (Cl) Some clients appeared to have rather sophisticated models for selecting programs. For example, the following quote illustrates the notion of quality versus quantity audience and in fact highly connected audiences are more affected by product placements (Russell, Norman, and Heckler, 2004). "Every year, when the studios announce all of the shows that are planned for the next season, we look at the networks. We realize that UPN is not going to have the same visibility as an ABC or a CBS. We look at what we have in terms of dollars for products for placement. We look at what we have in terms of allocation of products, and we have to put them on the right products that we think (a) have the buzz, (b) have the visibility, (c) have the long term feasibility to stay on the air, because as you know, many shows get pulled after 2 or 3 episodes, if they're lucky. We try to find not just proven shows, not just things like Friends or Will & Grace, but we look for

different shows that are on the cusp of or have a lot of buzz or feature new talent that we think may have some legs. Of course, we look at the ratings on the shows. If we're getting played on a program that runs on Lifetime or TNT, the rating points on that are so much smaller than network television, that you have to say to yourself, 'is it worth it?' In my mind, it's still a viable

One consequence of the inconsistent role of product placement among clients is the lack of standardization of the title and the person responsible within the organizations. Although many of the client-based informants were marketing directors or the equivalent, it was frequently mentioned that: "There is no real set title; (it) could be director of corporate communications, director of advertising, or marketing, brand manager . . . sometimes PR." (A7) Some clients, who may not think of product placement as a fully integrated component of their strategic marketing activities but rather as an accessory tool, delegate such responsibilities primarily to their agents. Surprisingly, these were not just the small clients but also large consumer goods companies. These differing levels of involvement have direct consequences on the sophistication with which product placement deals are orchestrated: "Some clients have a very strong sense of what they want to target, and other clients rely on you." (A12)

cated industry in which product placement agencies are increasingly assuming the role of traditional advertising agencies. At the same time, traditional advertising agencies are beginning to incorporate product placement in their services. As the practice gains acceptance and interest, product placement is being treated less as a tactical tool and is increasingly integrated with other communications mix components. For some companies, the frequency of use of product placements warrants their own in-house department, where the placement tends to be better integrated within the marketing communications program. INDUSTRY ANALYSIS: A SOCIAL EXCHANGE PERSPECTIVE

Throughout the interviews, a key theme transpired in the industry structure—that of relationships. Perhaps a reflection of the Hollywood subculture, the product placement business is often driven by personal relationships established between clients and/or agencies and studios. This notion is crucial to understand the dynamics of the industry because it affects whether placement agreements happen and the way they unfold. In particular, the success of product placement agencies is often based on the development of relationships with clients and production houses. Priorities are given to those agencies that have cultivated these relationships. Social relationships permeate the industry and tend to drive product placement decisions much beyond the rationalization of which brand best fits which script or on the financial aspects of the decision, as is indicated by the following quote:

Structure summary

In summary, the product placement industry is evolving from a simple means for studios to cut costs and marketers to expose their products to a more sophisti-

7 8 JOURnRL or HDUERTISinG RESEHUCH March 2 0 0 5

"You have to understand the business to know product placement, you know. 95%, if not more, of all placements, are done from a relationship that the prod-


uct placement agency has with the art department." (A9) Interactions in the product placement industry can be examined through the perspective of social exchange theory. The industry is founded on strong dyadic ties, characterized by frequent repeated exchanges, and reflecting a highly embedded interorganizational structure (Granovetter, 1985). As noted in previous research in the marketing and management areas (Morgan and Hunt, 1994), power, trust, and commitment were shown to be key drivers of repeated exchanges between clients, agents, and studios. Power

in one scene, it may not fit in another scene. If you've got a bunch of policemen sitting around in a bar after work drinking, they're most likely not going to be drinking Brand A . . . . Whereas I can provide them with Brand B or Brand C for those scenes. I could also provide them with Brand D. Or a scene that's even more up-scale, if it's a nice dinner, or a dinner party, or whatever . . . (I could) provide them with a malt liquor, I could provide them with a flavored alcoholic beverage. Brand E, which we produce. I can provide them with a nonalcoholic beer, if they should need that in a certain scene . .." (Cl) "So when [people] think about using some kind of (INDUSTRY) company, (BRAND) is probably top of mind to everybody.... If we didn't have such a strong brand, we would maybe be the type that you just mentioned. We may be out there, pandering for any kind of opportunity we could to get our name out there." (C3)

Power is important in the product placement industry but the nature of the industry allows for different forms of power on the client side. Company size, diversity of product portfolio, and market leader position may all provide clients a position of power, primarily as a result of their strong brand images. Some companies, regardless of size, benefit from a distinct niche image that appeals to movie makers and "Seagram's owns Universal so you canTV producers. For instance, Apple Comnot show anything but Seagram's prodputers seems to be the computer brand of ucts." (S2) choice in Hollywood productions, because of its image and popular designs. Power can also be expressed finanOther computer manufacturers recognize cially. Cost cutting has always been a baApple's edge and have even agreed to sis for studios' use of product placements modify some of their products to look and the industry is still "looking to cut "cooler" for the movies, as the case of the costs . . . whatever it takes" (C5). Product specially designed pink laptop by Gateplacement deals can bring in much needed way for the movie Legally Blonde (Eben- production and marketing support. The kamp, 2003). On the other hand, large result is that many of the smaller compamanufacturers have their own advannies simply cannot compete. tages, be it the variety of their brand portfolio or their instant brand recogni"It's a lot harder to battle against Budtion, as the following quotes illustrate: weiser in the motion picture product placement world.... You're not going "With many movies, there are different to get in nearly as many movies, becharacters and there are different drinkcause Budweiser has a lot more coning situations. Where Brand A may fit tacts. The few you get in, if you don't

pay, you're going to get buried; you're not going to get good placements. The few you do, you're going to have to pay." (O2) Cross-promotional opportunities and financial support may play into the power exchange, and although many directors do not want blatant placements in their productions, they may compromise their values if they bring significant promotional support. "Lots of deals get killed for reasons like the director, or producer, or writer, or actor; they get too blatant and they don't want to be. But, on the flip side, these people are also just people. They see the benefits and they are probably doing well. If they think the placement is too blatant but is also going to deliver a very good promotion which will give them additional millions of dollars worth of media, they most certainly will sometimes set aside their creativity." (A12) Trust

As discussed earlier, client-studio relationships occur with or without the intermediary of an agent. Sometimes those relationships appeared to rely more on trust and social relationships than on pertinence. They are directly linked to the historical evolution of placement agents who started on the studio side and thus are still well connected and, to some extent, vested in the production side of the placement equation. Trust is foremost in placement deals because the nature of the production logistics creates great uncertainty regarding the exact outcome of a placement. "One of the most important points that I want to emphasize is trust. Pertinence and trust." (A5)

March 2 0 0 5 JOOROIIL OF eOUERTISIIlG BESEBBCH 7 9


Sometimes, however, pertinence and trust are not one and the same, leading to potential conflicts in the exchange process. As pointed out by one agency owner: "It is very difficult to explain to your clients what they can do with product placements, and to which point they must ask for it and when it is really too much and they must stop and the producers have to explain to them what it is that they can gain from placements. For them, of course, it's revenues, but for us, we want to establish a partnership when these people work together. Currently what is not working is that there is no collaboration, because the producers want money and the clients want visibility, visibility, visibility—it has to be pertinent and they have to have a way to integrate themselves to the plot and it has to have value." (A5)

Early entry into the product placement industry provides a distinct advantage regardless of size . . .

"They were buying media during X-Files, and we started that relationship with Fox way back when, and it's still ongoing. So, basically whenever X-Files needs computers they come to us." (A12) Early entry into the product placement industry provides a distinct advantage regardless of size. The agencies and client companies that are most active (and most successful) are those that established relationships early on. "Fortunately we developed a good relationship a couple of years ago before many thought about i t . . . I really have a good relationship with them (the studios). That's what is really necessary, because while they don't have control of their director . .. they do have control over which brand or product they place in their movie. It's all about who you know." (C5)

"We have a great relationship with them [the studios] as well. I know the whole cast, I know the producers. We work with them directly. We supply them products for use behind the scenes. . . . So we have a very mutually beneficial relationship with them, and we like each other, and they like the products." (C4)

"The production houses themselves are probably starting to look for perhaps a little bit more of a closer relationship, sort of more hand in hand." (C4)

Commitment/relationships

One way of shifting the power balance is to develop long-term relationships with few partners. Many agent-studio relationships were described as close and committed relationships. Commitment was sometimes a product of the economies of scale of having a single supplier. From a studio standpoint, it often makes sense to rely on the same agent for props and even on the same agency for traditional advertising time and product placement.

The focus on relationships is accentuated by the nature of the entertainment business and characterized by the fact that: "Hollywood is one of those relationshiptype of industries." (Cl) And:

8 0 JOUROHL OF ROOEOTISIOO RESEORCR March 2 0 0 5

"This is a town based upon relationships. I think you need to physically

be here, to be honest with you, to cultivate those relationships and to derive the benefits from them." (C4) Los Angeles-based agents and clients were more likely to express the benefits of being in the "in-crowd" of the rather shielded and somewhat restricted entertainment world. Members of the in-crowd like to name-drop, throw "invitationonly" cocktail parties, and entertain on private yachts. This exchange is driven as much by their own ego gratification as by business motives. The dynamics of the industry are described rather well in the following quote: "I wanted to proactively go out there and cultivate relationships with different folks from all levels, whether it be celebrity talent, whether it be producers, writers, property masters, etc. Sort of covering all gamuts of the business. We have been able to forge relationships with many of these people by the sheer ability to sort of be here in town. We've been able to forge these relationships with people, so that it's not just about writing a check to be a part of something. We're getting invited because oi'who we are and hozu we treat people, not because we have a lot of money in the bank account. We're being asked to participate and being given opportunities because we've been good to people. Because we've been generous with people and because they respect us and we respect them. It's a very give and take relationship." (C4) Placements often occur because the artists request certain brands. The recent


surge of brand references in rap songs has been attributed not to negotiated contracts but rather artists' genuine affinity for the product, or even name dropping in hopes of generating interest from potential sponsors (Skinner, 2003). Many of Seinfeld's frequent and numerous placements are said to have occurred merely because Jerry Seinfeld liked the brands (Padnick, 1997). In turn, consumer goods companies, realizing the importance of close relationships with talent, cultivate these opportunities by sending them free goods and establishing partnerships with the hope that the talent will ask for their products to be used in the productions in return: "Sandra Bullock came in the office, we spent some time with her. We hit it off, gave her some products for her own personal use. She came back to us a week later and said, 'I'm filming a movie. I'd love to get you guys involved with this thing.' Great! Products have been put forth, provided to the folks in the production and we're actually looking, based on how the placement turns out, we may do a 4th quarter promotion tied around the products that are in the film." (C4) This "Los-Angelization" of marketing practice may also prove to be a drawback, as some informants expressed their dislike of the Hollywood glitz and attitude. In fact, many of the New York- and Chicago-based agencies view their geographical location— away from Hollywood—as an advantage. They believe they can be more objective and business oriented, and not overcome by the personalities and social aspects of the transaction. In addition, being closer to their clients—many of whom are not based in Los Angeles—allows them to better integrate product placement in the overall brand strategy and communication mix. In many

circumstances, those located away from the Hollywood "scene" considered themselves to be more independent, relying less on personal relationships and more on strategic decisions. As can be seen, product placements are not always driven by formal marketing strategies. The next section examines the role of product placement in marketing. PERSPECTIVES ON THE ROLE OF PRODUCT PLACEMENTS IN THE IVIARKETING MIX

The exponential growth in popular and trade press coverage of product placement implies that it has become a popular component of integrated marketing communications strategies. This research suggests a different reality of the role and integration of product placement in the marketing mix. In instances when product placements occur as stand-alones, strategic goal setting rarely drives decisions, leaving instead a more shotgun-oriented approach:

"Agencies can do a kind of cookiecutter approach and do like a shot-gun approach by throwing (products) everywhere and whatever sticks is what they end up with." (A7) As frequently noted, motivations for employing product placements vary widely. Small companies sometimes construe it as the only way to get significant exposure with a relatively small budget. "And you have the people that really have no clue, but they want to get involved somehow because they have a small marketing budget." (A7) At other times, companies use placements to achieve competitive parity with their competitors.

"They see either other brands getting lots of exposure and that interests them, or they see their competition getting exposure and that prompts them to want to participate as well." (A12)

Or:

"You get involved because somebody's mother said something . . . you know they said oh this is a great idea. People find the money and then they hand it over to you, and you have to do it." (C5)

In such cases, product placements are used in a stand-alone effort to gain exposure. The services of a placement agency may be sought but limited strategic marketing information is provided resulting in agents' reliance on basic, perhaps simplistic, means of integrating the placement into of the marketing program. Some small agents even promote product placement as a catch-all technique, one that can fit into any existing marketing mix or play a role of its own:

"(Product placement) is something that can exist in any creative that a company already has existing. It doesn't have to follow any methodology of what the company's advertising is already about. It can be totally separate, unique." (A9)

Often lacking the sophistication of trained marketing managers, these agents nonetheless attempt to match their clients' target audiences with the demographic profiles of the audience for the movie or TV program and, to the best of their ability, to match their product placement efforts to their clients' stated strategic marketing plan.

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"We do our best to target programs that would have their demographic." (A7) "You have to go in there with your total strategic planning, in terms of letting them know you're results oriented, how tangible the program is, how it's closely monitored, if you give Nielsen or BBS figures, or audience figures, number of impressions, you send videos to the account, try to make sure that the brand fits the demographic target of the client, that your program has captive audiences." (A9) As a result, many placements are unintentional, occurring with limited or no client involvement in the planning process. "A lot of times it's placements that we didn't really choose. . . . We get kind of a lot of product placement just by accident. . . . At other times, there've been great opportunities for us to showcase new technologies that we've had." (C3) Even then, inexperienced clients tend to be cautious because they realize that the rules in product placement are different and the message communicated is not as controllable as that of company-controlled messages. Several agents recounted instances where deals fell through at the last minute because the clients were not comfortable with the way their brands were portrayed. In at least one instance, the aborted placement realistically integrated the brand into the entire plot of a popular situation comedy but the client deemed it potentially negative and thus elected not to participate.

low cost relative to other media, the potential for high exposure in noncommercial contexts, addressing the threat of commercial zipping and zapping, and the ability to capitalize on source associations (Karrh, McKee, and Pardun, 2003). Product placements may also serve to bypass government or industry regulations, especially in product categories such as alcohol and tobacco, where direct advertising for the product is highly regulated or even illegal (Pechmarm and Shih, 1999; Sargent et al., 2001). This research uncovered numerous additional uses. Product placements sometimes serve in a fully integrated promotional campaign but they may also supplement public relations efforts, both internally and externally, motivate the sales force and/or dealers, or support new-product introductions or sales promotions. As a communications tool, product placements should serve a specific function in the overall communications program. In a well-integrated program, the role of product placements should be delineated, with specific objectives established. Surprisingly, this situation was not typically described in the interviews. For the most part, objectives were either not formally established or were stated in anecdotal terms. In fact, many expressed frustrations with not being able to readily "load product placement into the system" (A13) and indeed product placement simply is not often considered the same as other communications tools, as noted:

PRODUCT PLACEMENT AS A COMMUNICATIONS ELEMENT

Practitioners and the trade literature have long acknowledged some of product placement's obvious advantages such as the

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"Traditional advertisers would have a difficult time envisioning what it might mean to buy a 30-second spot on Friends that would run forever, every time the episode is on syndication, that would be on DVDs of the program, and that has immediate potential for a worldwide campaign." (C5)

Many of those responsible for placements see themselves as serving a specialized function, not as brand or communications managers, and often had a difficult time expressing exactly what role product placement plays in the communications mix. Many articulated product placement in rather general terms, as a "very viable piece of advertising" (S2) or simply "a part of advertising" (Cl). For others, it was simply "branding," although they recognize that it cannot be the sole instrument for achieving this objective. "(Our top executives) are all about the X brand, protecting the brand, going out and developing the brand and things like that. But we don't think that product placement is the A, number one way, to get out our brand." (C3) A number of movie studios require that the company placing a product provide much of the marketing effort behind the movie, essentially reducing or eliminating the marketing costs of promoting it themselves. As a direct result, crosspromotions have become increasingly popular, especially to cover today's enormous marketing costs in the cinema industry. "What the studios are looking for is— the industry has very much become all about opening weekend and opening a film big and recouping as much money as they can. Well, to do that they have to spend a lot of advertising dollars and it can cost them as much to advertise to promote the movie as it does for them to make the movie.... if they can get other people to pick up those costs, why not?" (Cl) Clients often enter the realm of entertainment marketing via small product


placements that eventually develop into larger promotional programs. For this reason, some view product placement as "the entry drug into more extensive entertainment marketing plans" (A13). EVALUATING THE EFFECTIVENESS AND VALUE OF PRODUCT PLACEMENTS

Directly related to the unclear role for product placement in the communications mix is the core issue of assessing effectiveness and value. Despite recent academic research addressing the effects of product placement on consumers (e.g., Auty and Lewis, 2004; d'Astous and Seguin, 1999; Russell, 2002), industry practitioners have only recently started to develop tools to systematically assess placements' effectiveness. A number of firms are competing to develop key measurement formulas in an attempt to establish an industry standard (O8). While many of these (Nielsen Media Research, Deutch/ iTVX, among others) focus on the monetary value of the placement and/or media equivalencies, others (IAG Research, NextMedium) rely on outcome-oriented assessments including recall, association, and other consumer responses to the placement (for an excellent review, see Schiller, 2004). There is, however, little consensus on how to determine their value. Despite these advances, many of the informants expressed a strong reluctance to adopt any such measures. Several explanations for this situation emerged from the interviews. Product placement agencies do not advocate any form of measurement thereby avoiding being held accountable for their performances. Many agents simply provide clients with video clips of the final cuts displaying the brand as evidence of their work. Some clients have been convinced that it is not possible to get accurate measures; others are simply satisfied with impressions and/or ego involvement objectives. Thus, anec-

. . . some view product placement as "the entry drug into more extensive entertainment marketing pians"

dotal evidence prevails and some expressed the beliefs that clients or agents may in fact have data but "are not really proud of the numbers" (A8). Thus, there is a tendency throughout the industry to "only talk about the good things" (A8). "They might seem evasive to you because you're thinking that they just don't want to give this confidential information and be quoted. They just don't know!" (A9) One commonly mentioned justification for avoiding the issue of measurement altogether is the minimal cost of standalone placements. Many believe the limited financial investment does not necessarily warrant much attention be paid to the returns (Schiering, 2003). "I don't attempt to measure it. It's like a branding for me. If you see a 1% increase over a year you're happy with it, it's worth the minimal amount that you spent on it. . . . We try to measure, but you know there's just so much going on in so many different areas that you really can't rely on your assessment. But our investment I'll tell you is extremely minimal." (C5) At the same time, with one exception, informants lamented the lack of standard means and the availability of data for assessing effectiveness. As the industry matures and opportunities for large-scale placements and integrations grow, valuation systems will be needed but, so far, there is little sophistication in this realm and value—like effectiveness—assessment

is essentially considered a subjective measure as indicated by the following: "Whatever the market will bear, whatever a client, based on the pitch, will believe it is worth. And it is really based on how good you are to convince them based on the director, the cast, the previous information we had, the release date, the promotional window." (A2) "Especially since we don't know what works!" (A5) An important issue in assessing product placement efforts is the distinction between effectiveness and value. In fact, agencies, clients, and research firms alike tend to use the terms interchangeably. Capitalizing on clients' wishes to determine their placements' ROI, a number of companies have begun providing valuation services, proposing a series of factors that should be considered in determining the value of placements (Steinberg, 2004). Such factors usually include placement characteristics (e.g., screen time, character building, etc.), context characteristics (competitive messages, opportunity for distraction), and audience characteristics (size, demographics). Although these criteria may assist in assessing value, they are usually not based on effectiveness measures, particularly in the more traditional ROI sense. Without knowledge of how and when placements work, the value of product placement in marketing planning is greatly reduced. Several research organizations (including research departments within in-

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tegrafed communications agencies or companies with in-house placen\ent departments) stated that models were in place for determining a placement's "media value." Most of these models (O5, A13, Cl) compute factored impressions as a function of media impressions (Nielsen ratings for television or box office + video + cable viewership for film) and as a function of the "level" of the placement itself. Such levels are determined based on exposure and potential for recall with more prominent placement and/or auditory placements perceived as better. The dependent variables proposed range from awareness and recall, to media equivalenci(;s, to demonstrated purchase behaviors. Often though, the main metric for determining the effectiveness of product placements is recall (O2), even though academic research has demonstrated the limitations with this view (Russell, 2002). One of the most sophisticated companies with an internal assessment system reported using recall measures as well as some focus groups to see how placements were perceived by the target consumer audience. The importance of such a qualitative perspective has been noted in previous academic research (DeLorme and Reid, 1999) but attempts to capture the net effect of a placement remain limited. When combined with a cross promotion, one agency noted, placements can be evaluated more readily, using "direct response tools rather than advertising equivalency" (A14). Coll(5ctively, interviewees agreed that value measures are a necessary ingredient to the achievement of marketing goals but, in and of themselves, are not the proper measures to determine their effectiveness. Many noted that the reliability and validity of most available measures have yet to be determined—thus, leading to questions regarding their ultimate value. The interviews, however, did uncover ad-

ditional considerations that must be accounted for in assessing product placement efforts. These are reviewed next. PRESCRIPTIONS FOR ASSESSING PRODUCT PLACEMENT EFFORTS

A major finding of this research is that clients distinguish between two audiences for product placements, and this distinction in turn affects how placements' effectiveness should be measured and value determined. Of those clients that did attempt to measure, most evaluated their product placement efforts both in terms of the external consumer audience and in terms of internal audiences (the company's employees, its distributors, and sometimes other B-to-B constituents). Product placement research to date understandably has focused on the impact on the consumer audience but the impact on internal audiences must also be acknowledged, especially when it comes to evaluating placement efforts.

about perception. We operate on the basis of perception and the clients have their own perceptions, we have our perceptions, the broadcasters have their perceptions, the producers have their perceptions, so we don't get anywhere." (A5) Many realize that evaluating product placements' effectiveness simply "cannot work the same way than when you buy a 30-second spot" (A9) but the temptation is great to think in terms of media equivalencies and force placement valuations into existing models of advertising effectiveness. "What they do is they realize or recognize the value of what we've done in comparison to how much they would typically spend in advertising." (A12)

A variety of dependent measures can be used to assess placements' effects on consumer audiences, ranging across the traditional hierarchy of effects (for example, awareness, interest, evaluation, trial, adoption) to attitudinal measures to brand image effects. In some instances, a direct impact on sales itself can be demonstrated. For instance, sales of pinot noir increased an estimated 15-30 percent after its placement in the recent movie Sideways (McLaughlin, 2005). Often, attempts at measuring effectiveness have resulted in the common, albeit flawed, tendency to compare product placements to traditional advertising and to consider them a substitute for the same:

Such analogies typically result in expressing effectiveness in terms of awareness and exposures, leading to common use of the relatively unscientific terms "eyeballs" and "media impressions." When pressed to explain what objectives clients or management (for in-house placement departments) sought as a basis for determining placements' effectiveness, the majority of responses dealt with the number of exposures; the primary objective was to get the product seen and exposed to consumers—particularly in association with a celebrity (Karrh, McKee, and Pardun, 2003). Most practitioners rely on the belief that a well-placed brand is "more like an implied endorsement by that character" (A7) and that the effect of placement is generating "buzz" (C4) or similar perceptions:

"I understand why advertisers think that way; there are no specialists currently on product placement in the market, there is no data, so it's all

"All we can do is by customer feedback . . . There's just no real way to monitor that. We don't have any other statistics other than word of mouth

Consumer audience effects

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and what people say when then come in (to the point of purchase)." (C2) Clearly, part of the perceived value of a placement is as an implied endorsement. While exposures constitute the main objective, association with the celebrity and the resulting brand image are highly sought—particularly when the buyer is willing to pay for this association. "The amount of impressions you get from a placement—for a small amount of money. For example, a show like Friends can have sometimes 20 million viewers on it. And if I place a (BRAND) in Joey's apartment on the microwave—on his microwave and it shows up on the television show then it counts towards what I contracted with my client as a guaranteed exposure—one of their guaranteed exposures. And once they have 10 exposures—and this is just for simple math reasons, they are not real numbers—but let's say the account is $100,000 and I promised them 10 exposures, that means each exposure—or if f only get them 10, that would give us $10,000. So, let's say one of those exposures happens to be on Friends and there is the (BRAND) in the foreground for 15 seconds. Well, a 15second spot on Friends is $250,000. One of their exposures is $10,000. And, it remains in television property and it will be rerun. And, a commercial where there is that company selling their own product saying aren't we great, then the 30-second spot goes away as opposed to being in Joey's apartment for several episodes. It is more like an implied endorsement by that character." (A7) Borrowing from attempts to measure the impact of sponsorships and public

relations, some clients have considered the use of media equivalencies. However, these measures have not met with much acceptance.

"I'm not a big fan of advertising equivalency. I think it's an archaic way of doing a measurement. But for some ways, it does give you a sort of roundabout idea of where you're at and what your visibility is at." (C4)

"Usually the most important thing is to get the exposure and to get the media impressions." (A8)

Internal audience effects

Interestingly, and perhaps less obvious, are some of the "by-products" of product placements. Product placements serve internal purposes such as "company hype" (C5), "employee pride" (A15), or as an ego booster for higher level executives. "Perhaps it could be an ego thing. Say for example we have a company that wants us to just get them several mentions so that when they are at a cocktail party they can talk about their company being mentioned on The Practice." (A7)

Placements can improve morale and productivity of employees and franchise operators alike:

" . . . Now they go around saying "my company was in the movie," and they feel good about that, and their productivity goes up." (A6)

"The franchise operators, they're the ones that keep pushing us to continue the relationship." (C2)

Clearly placement decisions must also consider the internal audience, as the following excerpt shows: "Truthfully, I work for a company that has a 70-something year existence and I would never want to be on a program that would be embarrassing to them. There's a lot of things we turn down. We turn down opportunities all the time that don't feature the products appropriately. We have had things that we don't think will keep people happy. We just had a music video with an artist that is very controversial, who I personally love, but I don't want to have to deal with employees or stockholders that say, 'how could you possibly have given that product to this person to use.' And I have to respect that. I have to remember who my audience is. My primary audience is my internal employees and our stockholders, as well as our customers.... I do feel I have an obligation to all of them. . . . I learned that the hard way. They probably are right. Now we sort of look at things and we analyze them and say, 'Does this make sense? Is this what we want to do? Is this where we want to be seen?' I also think, not like I'm going to have someone calling me and bitching at me, but I'm going to think to myself, 'Can I understand how this could possibly disturb or upset somebody? Or is it in a way that it would not appear appropriately for who our company is and what we're about?' " (C4)

Therefore, a primary consideration for developing product placement strategies and subsequently evaluating the results is to identify the audience. Although the audience is most often viewed as external consumers and effects are evaluated at that level, placements may also be tar-

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Although the audience is most often viewed as external consumers and effects evaluated at that level, product placements may also be targeted at internal audiences. also take our product placements that we did get . . . and they would take it even further. They would get us some publicity in newspapers and other trade magazines that are important to us." (C2)

geted at or expanded upon for internal audiences, including employees, the sales force and shareholders, as well as for publicity and PR through the distribution channels.

try. Rather than looking for companies to pay for placements, studios are seeking partners to defray the cost of marketing their entertainment properties through promotions and to capitalize on the marketing expertise of the clients. All respondents, on both the client and agent sides, viewed product placements as evolving rapidly toward cross-promotions and fullyintegrated branded content. "It's getting more aggressive than ever before." (C4)

PRODUCT PLACEMENTS AS PLATFORM FOR PUBLIC RELATIONS, CROSS PROMOTIONS, AND NEW PRODUCT LAUNCHES

A second important factor in evaluating product placement efforts lies in the recognition that they can operate as stand-alone tools or provide a platform for public relation campaigns, sales promotions, and even new-product introductions. Such a distinction is crucial in planning and assessing placement efforts. Indeed, while a standalone placement may simply serve to generate awareness or reinforce an existing brand image, a placement combined with a carefully planned and coordinated public relations or promotional campaign may have stronger effects on trial or sales.

Because of the increasing use of crosspromotions, placements tend to be associated with sales promotions. Although television-based cross promotions have occurred in the past [Friends and Diet Coke, Survivor and its "Visa Immunity Challenge"), such deals are more difficult because television programming does not provide a long advance notice. Movies thus tend to be the vehicle of choice for cross-promotions. Increasingly, these tie-ins require early and often costly involvement. "The ideal situation is to be about six to nine months ahead on a movie and to be able to lock in some of your promotional business before you start shooting so that you can be involved in placement." (A8)

First, placements may serve both external and internal roles in public relations. The external function treats placements as an opportunity to obtain press releases and exposures. In fact, some companies use placements like other PR components, often employing a public relations firm (Pardun and McKee, 1999). "It can lend credibility and give the clients a PR angle, if that's what they're looking for. It can give the client a basis for a back-end promotion." (A12)

"When you find a partner that will partner with you on a leveraged promotion, they won't pay two cents [for the placement itself]. They'll just do a leveraged promotion. That's the business. What's $100,000 if you can get somebody to commit to $5 million in cross-promoting your movie on television?" (A9)

"We had a public relations firm, too, that we paid a retainer to who would

It is this last statement that is gaining impetus in the product placement indus-

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"Taking product placement a little further and actually doing promotions with some of the movies." (C2) "There will be a continued push from the studios to get promotional partners in exchange for placements." (A12) "The studio would like to maximize the partnerships that are created through placements, and it helps them to promote the film, and it gives us an opportunity for brands to align themselves with that." (A7) The opportunities for interactive promotions are also growing as the technology becomes available for consumers to directly respond to a promotion associated with a placement (O6, O7). Possibly because of product placement's inherent ability to demonstrate the product in natural usage context and associate it with a lifestyle, a product placement can also serve as a vehicle for new-product launches. The BMW Z3 is, of course, one the most famous such cases in recent years but there are many other more subtle examples. "We're putting products in there that are timed to market at the same time the film is going to come out, so that


we can increase our opportunity for awareness and we can create a demand for product." (C4) Product placement also provides a rich emotional context for brand building. However, as with the cross-promotions, such efforts require great coordination regarding the timing of the releases, which is why many companies are actually going back to sponsorship, as with the original soap operas. For example, in 2002, Roxy—a manufacturer of surf and snowboard clothing—announced plans to produce an MTV series Surf Girls featuring snowboarding and surfing not currently available on network or cable TV (Tkacik, 2003). "Whereas a movie, on the other hand, they'll have a build up to the movie two months before it's released, that is the studio will build up the movie's release two months prior to it being released, and then it might be in theaters for four or six weeks. So, there's a longer window where it will be applicable." (A12) While product placements offer a variety of communication and marketing opportunities, industry participants also recognize some of their downsides, a topic discussed next. POTENTIAL PROBLEMS AND LIMITATIONS OF PRODUCT PLACEMENTS

Many of the variables identified in previous research on the effects of product placement on viewers examined the impact via plot connection (d'Astous and Chartier, 2002; Karrh, McKee, and Pardun, 2003; Russell, 2002). This notion was often mentioned as the need to "organically weave the brand into the plot" (A13). Of course, such plot connections are not

always feasible, as they encumber the production side's artistic freedom: "We get to a point where what we requested is too constraining for the producer and then we dream of the facility of execution of this, because if I am Coke, for instance, and I want a product placement in this sitcom and I want this character to handle it, I want to be integrated to the plot, now we enter the intimacy of the writers." (A5) One risk related to plot integration is the inappropriate or unnatural fit for the brand that previous research has identified as detrimental to persuasion (Russell, 2002). Across the board, the informants were well aware of potential pitfalls, in particular the overuse of the medium and the risk of inappropriate placements. Although many agree that placements enhance realism, many productions run the risk of involving too many or too blatant placements. "You don't want to go over the top. You don't want it to seem like a commercial, and our clients are aware of that . . . (if) they feel that it's too commercial they just won't put you in there." (A12) "So that they become a part of the show, but they're not an obvious placement. That's the one thing that I don't want to ever see happen. I don't ever want to see such a blatant product placement in a project that people go, 'God, it's so annoying to see it like that.' It should have a feeling of subtlety to it." (C4) These quotes speak to the potentially reduced effectiveness caused by an overabundance of product placements as they

become too common, irritating, and a blatantly obvious attempt to sell. In addition, it is not possible to control the context in which the placement occurs that may generate distraction or interference: "I remember sitting and watching the movie and in the middle of a scene, on a kitchen table, I see Crest toothpaste and about six other products, just sitting on the table, that had nothing to do with the scene." (O2) Subtlety is the key strength of product placement, as illustrated here: "I'm not too sure that (advertising) media dollars are the best spent for me to promote my (product) because it then shows that this is a business and it is advertising and it's just not a natural thing in why that product ended up in the movie." (Cl) Clients and agents alike recognized the risk that oversaturation could eventually lead to wear out among consumers: "I think that people are getting tired of seeing people drink the Pepsi in front of them. They're there for entertainment and they're there for other reasons besides a product being pushed in their face." (C3) "I think what happens is consumers are a lot smarter than we give them credit for sometimes. They're very cognizant of what they're seeing. You gotta be careful that you don't overdo it. It can't be a turn off for people." (C4) "That's disgusting. It stops the magic of the show itself." (A6) In fact, many practitioners avoid crosspromotions that may attract too much

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attention to the product placement. The risk for advertisers who "try to get as close to content as possible" (A13) is that the quality of programming may decline at the expense of increasingly commercial content.

The risk for advertisers who "try to get as close to content as possible" (A13) is that the quality of programming may decline at the expense of increasingly commercial content.

"We don't like blatant placements, .. . because all that is going on, the consumer is starting to see through it. Starting to realize that all this is paid advertisement. We don't really do a whole lot with the promotional end of it, just because it is a bit commercial." (Cl) "Our tactic is kind of less is more .. . It's something that's not thrown in your face . . . We really want it to make sense in a movie because we don't want to overexpose ourselves to that." (C3) Clients, realizing the potential damage of negative placements to a brand, were particularly careful with the ways their brands are portrayed. "We try definitely to keep them out of certain types of movies, and we have a written agreement which states we will not be placed in an x-rated movie or an R-rated moving that we feel is not appropriate." (C5) "A lot of them are based on demographics for our target audience, but the ones that we mainly turn down are ones that have not necessarily violence, but sexual contact that we don't like or maybe we don't want our product associated with." (C2) "We really scrutinize the script and if we feel that the language is a little off-color, or it's racist in some way, or it's kind of biased towards something.

we just won't do it. We just say no. We're very picky. Maybe even a little snooty, to say we're not going to let our brand be used that way or we don't feel like this is the correct way to use us and we just turn them down. We say no, thank you for thinking about us, but we're not interested." (C3) CONCLUSIONS AND RECOMMENDATIONS

"It might be sophisticated for a few companies, but there's another 300 companies that aren't at that level, yet." (A9) The above quote effectively summarizes the state of the art of the product placement industry at this time, though it should be noted that, like other young industries, the placement industry is evolving fast and participants are still searching for the best model under which to operate. Senior industry practitioners believe that it will be another few years before we can truly assess the effectiveness and determine the value of product placements or, as they are increasingly referred to, product integrations. Nonetheless, this managerial investigation of key players across several subsegments of the industry has provided many insights into current practice and many factors that should be accounted for in evaluating placements' effectiveness and value. The product placement industry is still very much a reflection of the Los Angeles/ Hollywood subculture where personal and

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social relationships drive the business. When used, few—if any—concrete marketing objectives are established. As a result, there is no sophisticated operating model for how product placement should be evaluated, and few participants currently measure its effectiveness. At the same time, many would agree on some of the threats that exist, such as the potential for overexposure and the increasingly skeptical consumer audiences. This research indicates that there are multiple target audiences for product placements, leading to various potential roles for product placement in the marketing mix, either as stand-alones or combined with other techniques. Figure 2 summarizes the factors that must be taken into account for assessing the value of a placement, the different roles that a placement can play in the marketing mix, and suggests some corresponding measures to assess effectiveness.

"As money becomes more available, I think it's going to get worse again instead of better." (C5) All indications are that the product placement industry is alive and well and will continue to prosper. All parties recognize that, as the industry grows, so does the number of media where product placements and integrations are possible. Developers of sports and car racing videogames have long sought to include brands associated with their sports to make the games look and feel more real (Gunn, 2001). Users cite the ability to target a specific segment as well as the frequency


Variables for Placement Value Assessment

Placement Characteristics: Amount of time on screen Size and visibility (foreground or background) Modality of presentation (visual versus audio) Level of plot connection: Interaction between product and actors Product usage by character/star Implied or direct endorsement Creative quality Context Characteristics: Competitive images on screen Distraction/lack of distraction factors Match with entertainment image Audience Characteristics: Demographic profile of the viewing audience Audience size (potential exposures) Rating for exact minute of placement occurrence Audience size based on syndication and reruns Media equivalencies CPM Sponsorship equivalencies

Role in Marketing/ Communications Mix

Measures of Effectiveness

Stand Alone Placement: Stand Alone Placement:

Brand exposure Source association Branding/brand image Stimulating interest Bypassing regulations

Memory (explicit or implicit) Perception of fit Attitude toward brand

Integrated Placement: Publicity Public Relations (Internal or External) Cross-Promotions Sales Promotions Interactive Television New-Product Launch

Integrated Placement: Publicity generated Standard PR measures (internal and external) Positioning studies Sales < Promotion redemption Trial measures Number of consumers who purchased or showed interest (on internet or at point of purchase) Tracking studies (internal and external)

Figure 2 Assessing Product Placement Efforts

of exposure as positive benefits of employing this medium. One videogame company, Brandgames, even develops custom-built videogames that prominently feature a brand, starring an animated brand mascot (Nakamura, 2000). Music videos and songs have taken up celebrity endorsements with increasing references to brands. From Run-DMC's 1987 My Adidas song to Busta Rhymes' song Pass the Courvoisier,

hip-hop artists have helped the sale of certain products by wearing the brand names in videos, at rock concerts, or mentioning them in their materials (Holloway, 2002). The next generation of product integration is developing in the form of branded entertainment properties such as BMW and SKYY Vodka's short feature films and the U.S. Army's official videogame Ameriea's Army. Brands are essentially becoming entertainment properties

in their own rights. This emerging trend reiterates the pressure for marketing professionals to establish clear, measurable objectives for product placements as well as other brand integration strategies. Many advertisers, concerned about the impact of TiVo and other personal video recorders (PVRs) that allow consumers to skip commercials, are thinking of product placements as a substitute means of getting their products noticed. Revenues from PVR services are forecast to hit $1.2 billion in 2007 (Elkin, 2002), and many predict that product placements will rise as a result. Digital insertions increase the range of placement options in postproduction, and interactive television technology extends the realm of promotional options that can be associated with product placements. However, to focus attention on the role of product placements as a direct

substitute for advertising and viewership of TV commercials vastly overstates its potential. Product placements may aid in this regard but may actually have more potential in other areas. "The advertising community would love to figure out more ways to break Hollywood." (A9) As the product placement industry matures and attracts ever larger communications budgets, it is critical that a more formalized model be established to allow accountability (Donaton, 2004). Product placements must be integrated into the overall communications strategy, and, as a new medium, they should be integrated into the media plan. As in any strategic planning, the target audience (internal, external, or both) should first be identi-

March 2 0 0 5 JDUniiRL OFflDOERTISlOGRESEHRCH 8 9


fied. Second, product placements need to adhere to the criteria defined for establishing communications objectives. Not all placements are designed to directly affect sales; instead, as Figure 2 shows, they can be used to develop brand awareness, build a brand image through association, enhance internal public relations, establish "buzz," support the launch of a new product, etc. Like other media, the effectiveness of product placements needs to be assessed against the objectives set. Standards other than exposures or impressions generated must be established, and methods must be implemented for establishing effectiveness and measuring the resulting brand image and equity. Currently, there are no bona fide companies offering valid and reliable measures, and most of those in the industry do not care or, for that matter, want to know if their placements work. Consider the following interview exchange: Q: "If I were your boss, and I asked how you knew the placements were working, what would you tell me?" C4: Because I told you they were." And Q: "Why do companies not measure effectiveness? O2: Companies are scared. What if it is not working?" The product placement industry is still in the early growth stages. As product placements start to comprise a larger portion of communications budgets and marketers demand more accountability, the use of this medium, like others, will require greater substantiation of their contribution (Donaton, 2004). Those involved in this industry should learn from the internet advertising industry, which at one

. . . those companies that realize the value of product placement tend to keep the business in-house.

time was in a similar high growth market. Eventually, they will be asked to prove their worth and to demonstrate their effectiveness relative to other media. One likely trend in the industry is that more of the product placement efforts will be conducted in-house or within integrated marketing communications agencies. Many of the interviewees commented that those companies that realize the value of product placement tend to keep the business in-house. Indeed, fitting product placement into the broader brand management scheme is difficult for product placement agencies and perhaps better suited to inhouse entertainment marketing directors who understand the brand, its target market, and the other components of the marketing strategy,

for Integrated Marketing Communications at San Diego State University (imc.sdsu.edu), he is also coauthor of the number one IMC textbook. An Introduction to Advertising and Promotion: An integrated Marketing Communications Perspective.

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