A correction has been made in this story. See below for details.

John Ellis

The third quarter of 2008 illustrated why paid product placement will be crucial for brands wishing to compete for exposure in entertainment. Nielsen reported that network TV saw a 6% drop in ad spending in the first half of 2008 compared to year-ago period; networks, pressed for additional sources of revenue and fully aware of the value placement has for a product's awareness and purchase intent, limited unpaid brand exposure.

There were 8,945 brands that received exposure in the third quarter, which represents a 19% drop from the same period last year. Meanwhile, brand exposure levels, which include things such as placement type, duration, frequency and other factors, were down 24% for the same period.

Better placements
But despite the drop in exposure level, the exposure quality -- referred to as NextMedium's Embed Intelligence Quotient (EIQ) -- was up 4% due to better organic placements. Marketers were able to seamlessly weave the product into the production, often as a prop or placed in the foreground of a scene while remaining true to the action or character.

Despite the overall slowdown in spending, there are a number of marketers with price-sensitive products that are spending even more money to build their brands, increase share of voice and maintain or even gain market share. Competitive brand spending is on the rise in key non-luxury categories such as consumer packaged goods, beverages and other products where consumer spending increases during an economic slump.

Starting in the third quarter, NextMedium saw a number of its large and small CPG clients increase paid placement because of the cost-effectiveness of this marketing channel and the association their products could have with a particular show and/or character.

ABOUT THE AUTHOR

John Ellis is chief marketing officer and chief operating officer for NextMedium, where he is responsible for the executive strategy and management of NextMedium's marketing initiatives, client services and general company operations.

Marketers, content producers and consumers are benefiting through paid placement. Networks are offsetting production costs, consumers are watching productions that seem more lifelike, and marketers are receiving guaranteed exposure while helping their branding objectives.

Positive response
Nielsen reports that nearly 60% of consumers exposed to product placement have positive feelings about the brands they've seen in content. Looking ahead into initial planning discussions for 2009, many of NextMedium's clients are turning to branded entertainment and specifically paid product placement for a cost-effective solution to reach their audience.

These are just a few of the highlights available in the third-quarter edition of The NextMedium Report, which tracks recent trends in branded entertainment. You can download the report and learn more about how scalable product placement can work for your brand by going to Nextmedium.com/report.

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CORRECTION: An earleir headline stated that paid product placement had decreased in the third quarter. Unpaid product placement instead declined, along with brand exposure.