Branded Entertainment Will Continue to Grow

PQ Media Survey Finds Advergaming and Webisodes at Forefront of Nontraditional Spending Increases

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NEW YORK -- The branded-entertainment marketing sector is expected to continue seeing double-digit growth through to 2012 despite a slowing economy, according to a PQ Media survey released this week. By shifting their ad dollars to alternative channels, more marketers will seek to maximize their value in the face of faltering traditional media and elusive audiences.

Branded entertainment, which covers event sponsorship and marketing, paid product placements, and advergaming and webisodes, has seen spending nearly double since 2002 to an all-time high of $22.3 billion in 2007, making it one of the fastest growing segments of the $254 billion marketing services sector. Spending in the category is expected to reach $40 billion by 2012, according to PQ Media's "Branded Entertainment Marketing Forecast: 2008-2012," which was released Feb. 12.

'Entertaining by nature'
"The overall trend is movement away from traditional advertising -- that is to say in broadcast television, radio, etc. They are all experiencing low single-digit growth, and with things like the writers strike, brands have definitely been looking elsewhere," says Patrick Quinn, president-CEO, PQ Media. "A lot of these alternative mediums are entertaining by nature, and therefore create powerful impressions on consumers. Brand recall on [them] has been much higher than the traditional 30-second spot. In the long run, they will come to play a more important role."

Event sponsorship and marketing remained the strongest segment in 2007, attracting $19.18 billion (a 12.2% increase from 2006) for marketing campaigns that prime face-to-face engagement and experiential tactics to attract new customers.

Marketers have increasingly turned to paid product placement as a way to thwart consumer use of digital video recorders, which allow viewers to skip past commercials. Product integration into TV programming has cut into traditional TV advertising, as marketers last year spent $2.9 billion in the category, an increase of almost 38% from 2006. Mr. Quinn said product placement scores strongly on recall.

Reaching a hard-to-reach demographic
But advergaming and webisodes remain at the forefront of marketing efforts to reach the 18 to 34-year-old demographic, and showed the largest growth in PQ Media's survey: The segment grew 34.8% to $217 million in 2007. "Marketers are trying to reach a demographic that is digitally multitasking and exposed to more media than in the past," Mr. Quinn said. "It's also a demographic that consumes 48% of its media outside the home and on the go. A lot of heat and focus is here because of that."

And the heat is on: PQ expects spending on webisodes in particular to increase by as much as 46% in 2008 as the major broadcast networks deploy full-length online episodes to tap into the youth market. Despite recessionary fears, PQ projects 2008 event sponsorship and marketing spending to reach $25.4 billion (up 13.9%), and product placement, especially with the influx of reality TV shows, to reach $3.5 billion (up nearly 25%).

"We've got a record $4.5 billion in political ad spending, European soccer, the Olympics [in 2008]. ... There's just too much cyclical spending coming in 2008 for it to slow down," Mr. Quinn regarding fears or a recession affecting ad spending. "2009 will be another matter."

TV is safe
Marketing services in general are less affected by an economic downturn than traditional advertising, Mr. Quinn said, so while overall media spending is growing at a solid mid-single-digit rate, traditional advertising is growing at a low-single-digit rate, and it is clear that nontraditional mediums (once known as below-the-line services) are cannibalizing some of its much needed juice. But to those who see the double-digit growth as the death knell of broadcast advertising, Mr. Quinn said not to get carried away.

"There's no question that money is moving out of broadcasting. But I think claims of the death of broadcasting are overrated and greatly exaggerated. There will always be a place for a medium that can reach a record 100 million people like television did with the Super Bowl this year. None of these alternative mediums can do that. What they are about is reaching the niche audience."
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