Product placement green-light a 'victory for common sense', says ITV

Spend on product placement on TV will build steadily from the autumn before settling at about 5% of the spot ad market, or about £160m a year

Product placement is predicted to grow to a £100m-plus industry
Product placement is predicted to grow to a £100m-plus industry

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Last week's confirmation of the Government's U-turn on product placement has cheered the media industry, which has been given the green-light to introduce brands into TV shows from later this year.

Culture secretary Ben Bradshaw may have ceded ground by barring product categories including gambling, alcohol and HFSS foods from running PP, but if blacklisting certain categories was needed to push the legislation through, then so be it.

Rupert Howell, ITV's director of brand and commercial, is unconcerned that sidelining anti-social advertisers may dilute the revenue for broadcasters. He declares: "This is a victory for common sense. The extra restrictions are over-cautious, but it is a step in the right direction."

He adds: "We have been inundated with client requests, although much of this is speculative as advertisers don't necessarily have the budgets. However, the sponsorship market started off small and grew to £100m over five years [of which ITV has a 50% share] and there is no reason why this can't happen again."

Nick Price, head of content at MPG, predicts product placement will increase by about 30% year on year before settling to about 5% of the value of the spot ad market, worth about £160m based on today's spend.

He says: "Media agencies will be central to the deals, but due to the nature of content, producers and broadcasters will have to drive the market, and so they will derive the most financial benefit." Howell confirms: "We hold the relationship with advertisers and we will decide what is acceptable editorially, since we will carry the can for non-compliance."

ITV, in partnership with fellow commercial broadcasters, is working with Ofcom to agree the on-screen signage that will "warn" viewers when PP is in use. Broadcasters will be required to alert audiences to the presence of PP in a programme by signalling this at the beginning and end of shows and after advertising breaks, in line with the EU audiovisual directive.

Culturally sensitive

As a result, the industry predicts the line between editorial and advertising will not be crossed as flagrantly as in the US, where a can of Coca-Cola might be placed in front of American Idol judges. Instead, PP will be tweaked for UK cultural sensitivities.

Howell explains: "Over here, it's more about brand presence than classic American product placement. It will all be really natural, nothing forced. The last thing we want to do is alienate our viewers. Product placement will start cautiously, then both the industry and consumers will relax into it, and it will find its own acceptable level."

However, Simon Ritterbrand, director of product placement agency Seesaw Media, says the business case is far from assured. "Broadcasters, producers and brands are testing the water for what brands are willing to finance and what they might get in return. It is a Wild West situation that is not helped by a lack of standardised evaluation tools."

Mark Boyd, head of content at creative agency BBH, comments: "There is no clarity; everyone is keen to have a go. Broadcasters could capture all the revenue if they were fully funding programmes, but since production companies are having to find new financing for many projects, they stand a good chance of sharing the spoils."

Meanwhile, clients are greeting the news with what can only be described as mild interest, indicating they will not release additional budgets. David Walker, marketing operations and media controller at Kelloggs, says: "From a payment point of view the case for product placement has still to be proven. With the restrictions [on certain product categories] in place, we don't see a big opportunity in this area."

Sally Cowdry, marketing director at O2, adds: "Product placement must be relevant for the consumer and not alienating through in-your-face placement. It will need to be subtle and pertinent to viewers, as well as a cost-effective way of delivering a message for us."

All eyes will be on the UK's first product placement deal when it hits TV screens this autumn. Once one major fast-moving consumer goods brand has tested the water, expect its competitors to be rapidly convinced to take the product placement plunge.