During the early decades of the film industry, Hollywood largely avoided the appearance of known product names in movies. When products were used, studios were required to obtain legal clearances and perhaps pay a fee for use of a copyrighted brand name, such as the appearance of an issue of National Geographic in "It's a Wonderful Life" (1946).
By the 1970s, prop masters and set decorators achieved cost savings and realism by obtaining name-brand props from manufacturers. The manufacturers soon came to recognize the promotional value of such exposure. Studios created product placement departments, and product placement specialists scanned scripts looking for placement opportunities. Companies such as Associated Film Promotions established warehouses of products ready for showcasing in films.
During TV's infancy, advertisers sponsored entire programs such as "Camel Caravan" and "Kraft Television Theater." Product appearance and use was blatant on shows, which were often produced by ad agencies. In the late 1950s, the Federal Communications Commission enacted so-called "payola laws" regulating product placement on TV. Paid placements are no longer permitted unless the featured brand is listed as a sponsor. Theatrical films aired on TV are excluded from FCC rules on product placement, as are cable and first-run syndication programs.
Product placement in motion pictures received a boost from the unanticipated success of Reese's Pieces following its appearance in "E.T. the Extra-Terrestrial." The film, released in 1982, prominently featured Reese's Pieces candy. Its use in the film was credited with stimulating a 65% sales increase. Likewise, Ray-Ban sunglasses experienced a 55% gain in sales following prominent use by Tom Cruise in the 1983 film "Risky Business."
The use of feature films as a strategy for introducing new products has grown increasingly sophisticated. Savvy marketers now build elaborate marketing communication plans cross-promoting films and brands. For example, BMW used the James Bond film "GoldenEye" (1995) as an integrated element in its introduction of a new model, the BMW 328i. That year, BMW was awarded the "Super Reggie" by the Promotional Marketing Association as the best promotion of the year.
Brand placement begins with one of several parties. Studio representatives, aware of script development, may approach brand marketers or their ad agencies pitching the film's placement opportunities. Alternatively, marketers interested in brand placement might contract with an agent to represent their brands to studios and producers.
Different rates are charged for placement, depending on whether a brand is mentioned in dialogue or is used by a star or by other characters. An industry trade group, Entertainment Resources & Marketing Association, operates as an information clearinghouse and works to advance the professionalism and growth of the brand placement industry.
Brand placement offers marketers several advantages over other ad media. Over the life of a film—including its theatrical run, premium cable appearances, other televised broadcasts and home video rental—the CPM continues to decrease, eventually declining to mere pennies on the dollar.
Brands are also featured in a clutter-free environment devoid of competitive messages. Films can be selected that target consumers who may be difficult to reach with more conventional advertising methods. Nearly three-fourths of the audience for theatrical films is between the ages of 16 and 39, a group highly prized by advertisers.
In addition, associating brands with particular actors, films or contexts allows the marketer to associate a brand with congruent lifestyle or usage situations.
Finally, product placements provide a way of overcoming the problem of ad avoidance made possible in TV by the remote control and other devices for skipping spots. In addition, viewers are seated in a dark theater facing the screen with few other distracting stimuli, and brands are featured to fullest effect in naturalistic contexts readily understood by viewers.
Marketers do give up some control in a placement situation. For example, scenes featuring a brand may not appear in the final theatrical version of a film, or scenes may be edited to accommodate TV broadcasts. Also, there is no guarantee of audience size. If a film fails, the situation could be potentially disastrous if the marketer has built a comprehensive campaign strategy around the film. Similarly, other placement support strategies in the retail and distribution channels are jeopardized if a film does not open as scheduled.
One matter of concern to commercial TV is the potential conflict between a program's advertisers and the brands that appear within a program. Coca-Cola would not, for instance, want to sponsor a movie or show in which a character is shown drinking Pepsi. Moreover, commercial TV networks may be averse to selling brand placements for fear that marketers might shy away from more conventional broadcast advertising.
Another important concern is film theme or content. Many brands may be reluctant to associate with violent or overly dramatic material.
The success of brand placement is generally assessed through case studies and anecdotal evidence. Published research has shown only a marginal increase in brand recall as a result of product placement and little change in attitude toward the brand. While some new brands have been successfully launched via placement strategies, many brands featured in films are already familiar to viewers. In this case, placement may best serve as a means of maintaining visibility and top-of-mind awareness.
Reach and frequency are more difficult to quantify. If many people view a theatrical film through any outlet, reach may be high, especially among specific target groups. Generating frequency may be more difficult, unless a film is viewed several times. If a brand is featured more than once in a single film vehicle, frequency can be generated. In the case of a TV program, a product featured in multiple episodes of a series will offer an opportunity to generate frequency.
One area of product placement research has focused on the frequency with which particular branded products are featured in films. Frequently observed product categories include automobiles, fast-food and other snack items, and alcoholic beverages and soft drinks. Tobacco brands also are found to appear frequently in feature films.
Brand placement in feature films and other entertainment contexts has been criticized on aesthetic and public policy grounds. Film critics suggest that brand placement compromises the artistic integrity of films. Many contend that films have become little more than elaborate ad vehicles used by marketers to showcase brands. And, since marketers are more likely to prefer upbeat, positive contexts to promote brands, film exploration of dramatic or controversial material could decline if studios rely more heavily on placement to underwrite film production costs.
Public policy critics maintain that brand placement is nothing more than subtle advertising, interjecting a commercial message where no message is expected. These critics suggest that the selling message is more powerful, given the relaxed state of the viewer.
Some policy groups have suggested that brand placements be banned or identified in opening or closing credits. The Center for the Study of Commercialism proposed petitioning the Federal Trade Commission to force movie producers to run disclaimers acknowledging paid product placements.
Brand placements also appear in other contexts, including music videos and videogames. As new technologies allow producers to develop fully interactive environments, brand placement may be added.