Nestle Breaks First Product-Placement TV Buy in U.K.

But Most Viewers Aren't Aware That Ad Practice Is Allowed

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Nestle made broadcasting history in the U.K. this week by becoming the first marketer to pay for product placement on British TV.

In a $160,000 deal, brokered by WPP's Mindshare, Nestle's Nescafe Dolce Gusto home coffee system is being featured on ITV's daytime show "This Morning."

An ITV spokesman said, "We are currently talking to clients about a number of product-placement opportunities, spanning a range of programs and channels. The editorial integrity of our programming remains ITV's priority."

Under communications regulator Ofcom's guidelines, all commercial broadcasters have to show a logo -- a black-and-white letter P -- for three seconds at the start and end of programs containing product placement, and after any ad breaks.

A statement from Nestle said, "Featuring on 'This Morning' offers the perfect opportunity for us to connect with sociable people who appreciate good coffee."

Awareness of product placement is still low among U.K. audiences. Research from Vision Critical shows that 61% of viewers are unaware that product placement is now allowed. This is despite an on-air campaign by ITV and an awareness drive by Ofcom.

Product placement was given the go-ahead by Ofcom late last year. MirriAd, an "embedded advertising" company, expects it to be worth at least 5% of the TV advertising market, as it is in the U.S., giving it an annual value of $232 million. Media analysts at Screen Digest, however, estimate the value of product placement to be closer to $150 million in the U.K.

The U.K. TV advertising market was boosted this week with the news that ITV -- by far the biggest commercial channel, taking 52% of all TV ad spending -- reported a 16% rise in ad revenue, and pre-tax profit almost triple those of last year.

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