Media Forum: Will brands in shows take off?

Can product placement become a whole new revenue stream, Alasdair Reid asks.

Product placement is an older phenomenon than you'd think. The practice began to be subjected to regular lampooning from the late 80s onwards and the most famous set piece example is a sequence in the 1992 film Wayne's World (the scene features Pizza Hut, Pepsi and Reebok among others) that's regularly edited out of the movie when it airs on television.

We've always known that product placement has a longer provenance, however; and media historians regularly point to the Bond films of the early 60s as the true inspiration for this advertising genre - but we reckon we can come up with an even earlier attempt to get things moving.

When Jules Verne began serialising Around the World in Eighty Days in Le Temps magazine in 1872, various transport and shipping companies began offering him sums of money to be mentioned within its pages. The winning brown envelope was tendered by Thomas Cook.

This breakthrough aside, however, continental Europe has taken a dim view of the practice over the years, and its scruples have survived into the 21st century in the form of European Union broadcast legislation - legislation that Ofcom must use as a start-point when it deliberates on this issue.

But last week, the EU voted in principle to give the go-ahead to product placement on TV - and though the fine detail has yet to be worked out (one bizarre proposal calls for a warning symbol to begin flashing every few minutes throughout programmes carrying any product placement whatsoever), pressure will now be on for local market regulators, such as Ofcom, to liberalise.

Is this a big deal for advertisers? After all, as Wayne's World tends to show (in however backhand a manner), the practice is commonplace in the US and is a multimillion-dollar business.

Laurence Munday, the founding partner of PHD's content agency, Drum, argues some broadcasters would benefit more than others. ITV makes a lot of its own programmes, whereas Channel 4 uses independent producers - so there would be an issue of how the revenue is split. But he welcomes the fact that the whole issue is back on the agenda. He says: "UK advertisers need to be able to play on the same playing field as their global competitors, and that becomes an increasing issue as the internet and mobile becomes ever more important. We must have regulations that are consistent across the whole market."

Still, there are many ifs and buts involved before this becomes a real opportunity, Andrew Constable, the head of media at Coors Brewers, argues. And he adds: "Even if European legislation changes, what happens here is entirely down to Ofcom. In the UK, quite rightly, the notion of 'undue prominence' will remain an issue even if overall attitudes to product placement were liberalised. There would be a fine line between the sort of prominent product displays likely to alienate viewers and the sort of subtle placement that goes completely unnoticed and is therefore a waste of effort."

He does acknowledge that we've witnessed a step forward at EU level, however. David Charlesworth, the head of sponsorship at Channel 4, agrees. He says that this can potentially become a genuinely new revenue stream. And he now believes Ofcom has come round to the view that product placement will be a way of protecting programming investment levels - and therefore quality - in the commercial broadcasting sector. But, significantly, he doesn't think it will evolve into a major money spinner. For a start, it might start to jeopardise longer-standing and more lucrative sponsorship deals. "It is a viable revenue stream, although it will inevitably take a while to find its feet as with any new skill," he says.

And Mark Boyd, the director of content at Bartle Bogle Hegarty, agrees that it's the principle rather than the cash that's important here. It's also true that the whole issue will be sensitive in the UK, where viewers are especially savvy, so if product placement is handled crudely, viewers will be alienated.

But he concludes: "I don't think that the EU has any real choice because the danger is that money will increasingly leave the European broadcast market - at a time when broadcasters are finding the going more challenging than ever before. Product placement is commonplace in the US and in areas like online and mobile. The European Union has a responsibility to keep pace with changes in the broadcast market."

YES - Laurence Munday, founding partner, Drum

"In the US, product placement accounts for 1.7 per cent of TV revenues and in recent times it has been growing at around 20 per cent [per year]. In the UK that would translate into revenues of around £50 million."

NO - Andrew Constable, head of media, Coors Brewers

"It's nonsensical to ban this in the UK when shows made in the US, with product placement, routinely appear over here. That said, the devil is in the detail and it would all depend on how broadcasters would sell it."

NO - David Charlesworth, head of sponsorship, Channel 4

"Ofcom's predictions for product placement value are only £35 million after five years. This will be a drop in the ocean compared with more predictable losses through possible junk-food ad restrictions."

NO - Mark Boyd, director of content, Bartle Bogle Hegarty

"Product placement was talked up in the US, but hasn't lived up to the hype. Some advertisers will consider it a lot of work for what is a small outing for the brand. I'm not convinced money spent will be new money."

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