"We're finding ourselves in more discussions about product placement, and specifically looking to create opportunities where there is a natural integration between our brand and a programming concept," says Peter Sterling, VP-marketing U.S. for McDonald's Corp., which struck a deal last year to have its brand featured in Electronic Arts' online game "The Sims Online."
Some industry executives say a new breed of product placement deal is on the way, one that will change commercial sponsorship dramatically and generate new opportunities for marketers.
"We're going to start seeing sponsorship used within TV programs that breaks the mold of commercial sponsorship, involving products within the entertainment in ways that have never been tried," says Ferris Thompson, head of entertainment marketing at United Talent Agency.
His company has helped develop a commercial-free, hourlong variety program, "Live From Tomorrow," that will air this summer on the WB. The show will be laced with product placements.
Increasingly, product placement is an additional element in broad media buys, and it's often incremental to the overall deal, says Rino Scanzoni, president-broadcast division, North America, at WPP Group's Mediaedge:cia, New York, which negotiated AT&T Wireless' role in providing text-message voting for Fox's "American Idol 2." He wouldn't disclose expenditures, but reportedly the cost of integrated sponsorships on "American Idol 2" was $26 million each.
How much marketers are willing to pay for a stand-alone product placement deal apart from when it's one piece of an integrated media effort varies wildly, from zero to the single-digit millions, say insiders.
"Product placement is not unlike other types of sports sponsorships -if a marketer makes a larger commitment with us, we are likely to include product placement, but it's on a case by case basis and there is no rate card," says Ed Erhardt, president of customer sales and marketing at Walt Disney Co.'s ESPN/ABC Sports.
effect on sales?
When a liquor brand appears in a product placement on "Sex & the City," it's "well under $1 million," says Robert Tuchman, CEO of TSE Sports & Entertainment, New York, which currently is negotiating such a placement on the HBO cable series.
But there's little consensus among marketing executives on whether product placement within TV dramas, sitcoms or videogames has any measurable effect on sales.
"By measuring how long a product is on the air, and its context within the program, you can get a rough estimate of the impact, but it's very difficult to get an exact `rating' of product placement," says Andy Bonaparte, senior director of advertising for Burger King Corp., whose products are often used in network TV programs.
Nevertheless, brand managers are being pressured to justify mushrooming entertainment marketing expenditures, and a handful of companies have come to the rescue with formulas designed to measure and help establish prices for product placement.
Expanding on its service for measuring the number of impressions for sports sponsorships in stadiums and racetracks, Ann Arbor, Mich.-based Joyce Julius & Associates last year launched Entertainment Marketing Research to track the impact of product placement deals. Based on how central the product was to the plot, which character used it and for how long, the company creates a score for each product placement.
"We're not so naive as to think we can compare product placement directly with a TV commercial's impact, but we are getting a pretty close read on it," says Eric Wright, VP-research and development.
range of effect
New York-based iTVX uses a system of variables to measure product placement's impact, which can range from 20% of the impact of a TV spot to five times higher than a viewer's impression of a typical TV spot, says CEO Frank Zazza.
Subscriptions to iTVX's service vary according to the number of products surveyed, he says, but a subscription may cost from $2,000 to $5,000 a month. Clients include Verizon Communications, Unilever and Kraft Foods.
Despite high ratings and industry envy over several lucrative product placement deals attached to "American Idol," Jon Nesvig, president of sales for News Corp.'s Fox Broadcasting Co., says product placement is likely to be only "ancillary" to general TV advertising in the future.
"It's limited in the number of programs where it really works, and it's certainly not going to take the place of a 30-second commercial," says Mr. Nesvig. "Product placement has its role, but it can't really get the selling job done that marketers look to from a commercial."