Close-Up: Live Issue - Does product placement really work?

Plugging brands in films and during TV shows is a big, and growing, business.

The marketers at Coca-Cola believe it's worth spending millions of dollars to have their logo displayed during American Idol, so they have placed laughably large Coke drinks on the judges' desks.

Welcome to product placement. In the US last year, the marketing spend for this form of "stealth advertising" reached $2.9 billion, and it's growing steadily. This is a situation that is being mirrored in Asia.

So far, however, European Union members have been prohibited from selling product placement on TV, but this could be about to change because of a new bill being voted on that, if passed, will allow the UK, and other member states, to permit product placement in certain types of programme. A Department for Culture, Media and Sport spokesperson says: "It is up to each member state to decide whether to change current rulings."

It is unlikely, however, that the UK will allow anything close to a US-style free-for-all on product placement, but those in the know estimate that if the rules change, the UK market might be worth up to £50 million.

It's hard to estimate how valuable product placement might be for a brand, but there have been studies that show the potential benefits.

Mediaedge:cia's MediaLab recently published a report where 45 per cent of viewers of a test show said that they would be more likely to purchase a product if they saw it in a commercial followed by product placement or integration (where the product is mentioned by name) in a TV programme.

However, this does rely on product placement being done intelligently. The huge Cokes in American Idol are generally viewed as overkill, and ridiculously obvious placements, such as Taco Bell in the Sylvester Stallone film Demolition Man, just invite derision.

But when done well, it can work. Tony Manwaring, Lab@Initiative's creative director, cites the successful association between Audi and the upcoming movie Iron Man. He says: "When the product fits and is receiving exposure all the way, then that can be exceptionally powerful. But it has to be relevant and be something to do with the overall storyline. If done badly, there's a danger of leaving a brand exposed to smart consumers who identify you being there for no reason."

So there are instances that might make viewers think twice, but some clients still believe that it can clearly play in favour of the brand.

Ford's placement of the Ford Mondeo in Casino Royale was a huge departure for the luxury car-loving spy, but Mark Simpson, the director of marketing communications at Ford of Europe, says, as part of an integrated on-screen and off-screen campaign, it was a success for the brand and researched well with consumers.

And there are plenty of brands in the UK that believe product placement is one way forward. It might be banned on TV, but movies are full of it and it's thriving on the internet, despite impending UK legislation making it unlawful in made-for-internet programmes. Shows such as Sofia's Diary on Bebo are peppered with paid-for brand appearances.

However, Tess Alps, the chief executive of Thinkbox, adds a note of caution: "It needs to be approached cautiously and in a way that is culturally sensitive. No brand wants to leap in and do anything stupid. After all, who wants to be the brand that messes up a favourite TV programme or film?"

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MEDIA SPECIALIST - David Fletcher, head of MediaLab, Mediaedge:cia

"Product placement works best when it's subtle. Brands add reality to drama, but to heighten reality overtly is to undermine trust. Anything that breaks the broadcaster's unwritten covenant with the viewer damages both the broadcaster and the brand's reputation. The Truman Show-style packshot-with-USP-voiceover insults the viewer's intelligence and gives you salient irritation.

"Product placement works best when it's the viewer joining up the dots between brand, character and context. When it's a result of them owning the relevance of the placement, it's a more enduring, and thus more potent, brand discovery."

CLIENT - Mark Simpson, director of marketing communications, Ford of Europe

"The Ford Mondeo was displayed at the Paris Motor Show, but the first time anyone saw the car being driven was in the film Casino Royale.

"In bright sunshine, the car was being driven along a wide open road with the sea behind it and James Bond at the wheel. Life just doesn't get much better.

"The film appealed to our core target audience, Daniel Craig probably has a 99 per cent strike rate with females and men enjoy the aura of James Bond, the sensuality and excitement and the stunts.

"James Bond selling our car in a softer entertainment medium has real style."

TRADE BODY HEAD - Tess Alps, chief executive, Thinkbox

"We would like Ofcom to interpret the European Union's Audio Visual Media Directive in a positive way. It's hard to construct an argument why we shouldn't have product placement in the UK.

"One would wish to have a level playing field, particularly now that we are all watching imported series and films with product placement - we haven't seen any rejection by the public and I don't think they have been corrupted in any way."

CREATIVE - Damon Collins, executive creative director, Rainey Kelly Campbell Roalfe/Y&R

"Product placement is a way for film-makers to offset production costs, and, as stealth advertising, it's not going away. Done well, it can add credibility to both the brand, the film, the programme or the video game it sits within. Done badly, it can do the opposite.

"When the product fits perfectly, such as Nokia's launch of its futuristic Banana phone in The Matrix, or Apple's PowerBooks in Mission: Impossible, it feels like a natural bit of film propping and no-one questions it.

"When its inclusion feels forced, it can leave the audience loathing the film-makers for selling out and the brand for convincing them to do so."