Advertising industry counts the cost as boom in product placements exceeds $1bn

LONDON – The advertising industry is the main casualty of the boom in paid-for product placements in movies and television, which shot up 44% last year in the US to over $1bn (£532m).

According to a report from Connecticut-based research firm PQ Media, the total value of product placement including barter and gratis deals, hit $3.5bn last year with the figure set to soar a further 23% to $4.2bn later this year.

The report revealed the damaging effect product placement was having within the ad industry with expenditure up by only 7% last year, despite increased spending on political ads in the run-up to the US Presidential election.

Breaking down the product placement expenditure PQ, Media revealed TV placements rose 84% to $552m, outpacing movies for the first time in 30 years.

Examples of product placement in recent TV shows include Coca-Cola and Ford spending $26m on 'American Idol' each and Ford again in real-time Sky One drama '24'.

In film, paid-for placements were up 12% to $412bn and have included BMW in James Bond movies, and Nokia and Samsung in 'The Matrix' trilogy.

Other recent examples have included The Famous Grouse and The Macallan whisky brands in 'Be Cool'.

Earlier this year, NBC Universal, the company behind hits such as 'ER', 'Friends' and 'The Mummy', signed a major marketing deal with Volkswagen to feature its products in its movies and TV shows.

In December, Allied Domecq signed a deal with US satellite channel Spike TV to have its brands, which include Stolichnaya vodka and Canadian Club whiskey, to feature in a new reality series called 'The Club', set in a Las Vegas nightclub.

But maybe one of the biggest and most high-profile placements to date took place last December when General Motors pulled off a product placement coup in the US, when chatshow host Oprah Winfrey gave away nearly 300 of the manufacturer's new Pontiac G6 model during the first programme of her new season.

Winfrey gave each of the 276 members of her studio audience a new G6 car, which GM is banking on being one of its biggest hits in 2005.

PQ president Patrick Quinn said: "Marketers have substantially ratcheted up the pole of product placement in their buying strategies."

PQ Media said the 100-page study was compiled following six months of research via interviews with dozens of executives and account managers at ad and marketing agencies. as well as consumer product companies and media and entertainment corporations.

The study includes 30 years of trends and five years of spending forecasts.

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