Licensing: Product placement - the potential

Research shows the public likes brands appearing on TV shows, so. Why is Ofcom dragging its heels?

Ofcom may be getting cold feet about relaxing regulations on product placement, but two separate initiatives that came to light last month speak volumes about the potential of the medium, and therefore of its attractiveness to marketers.

The first bit of news was that John Blakemore, the former advertising director at GlaxoSmithKline, is setting up a TV product placement company.

At the same time, media shop Mediaedge:CIA unveiled the results of a survey that suggests viewer enjoyment of programmes might actually be enhanced by product placement (see box, below right).

Now Blakemore is a marketing heavyweight. He was one of the best-known figures on the UK ad scene prior to his recent retirement and is an industry veteran whose experience in media negotiations is held in high regard.

So his move to launch Ash Blakemore Product Placement, a division of PR firm Ash Communications, and his belief that there is plenty of untapped potential in the medium, will be taken seriously.

As will the Mediaedge:CIA research which, according to industry observers, provides the industry with the first real, substantiated, proof that the medium might also be of benefit to consumers.

VIEWER ENJOYMENT

As media commentator Raymond Snoddy wrote in P&I's sister title Marketing, this research goes far beyond the usual reports on the subject: "This was empirical research with a proper control group reacting to different levels of product placement and integration, as well as to none. The media agency worked with Canadian broadcaster CTV to produce four versions of an entertainment news show with four test brands."

He goes on: "The results were surprising. Viewer enjoyment actually increased for versions with product placement and where products were an integral part of the script. Almost half the respondents said they would be more likely to buy products featured. Awareness levels also rose, by more than 16 per cent for product placement over a 30-second spot, and by 24 per cent when the product was finally integrated into the script."

Yet all this enthusiasm comes at a time when paid-for product placement remains illegal on British TV. And despite earlier indications to the contrary, it looks as if the regulations may not change for some years.

The current regulations stipulate that branded products can only appear if they are requested (free) by the production company. Brands can have no control over the script or the prominence of the product.

Earlier this year, Ofcom held an industry consultation on the issue; at the time, it seemed open to relaxing legislation. When it went into the consultation period, Ofcom was reported to be considering including product placement in factual programmes, such as Mediaedge:CIA's Canadian dummy, and even allowing some form of call to action, around red button activity, for example.

But Ofcom has just published the results of its consultation, and its findings point to an about-turn. For a start, consultees say product placement should be excluded from news and current affairs programmes. In any case, Ofcom seems unlikely to relax the rules until a revision of the EU's Television Without Frontiers Directive (see box, overleaf), under which the EU proposes allowing paid-for placements, becomes law.

So, although a recommendation to relax the laws was made by the Internal Market and Consumer Protection board at the European Parliament in October, the changes are unlikely to happen until 2008 at the very earliest, according to a spokesman for Ofcom. Even then, it is unclear how far Europe will go in giving brands control over how their product is portrayed.

Underlining Ofcom's positioning, the spokesman added: "We are not in a hurry because our hands are tied by Europe. Nothing can happen before it changes the rules, and even then, EU member states can only opt to make their own regulations more stringent, not more relaxed."

Nick Johnson, managing partner and marketing law specialist at law firm Osborne Clarke, believes that Ofcom continues - at least broadly - to support paid-for product placement. But he thinks that political pressure has come off the issue following the consultation. "There were parts of the industry that became less keen - for instance ITV has gone a bit cooler on the idea."

COST EFFICIENCY

And in part, says Johnson, research on the cost of the medium, suggesting that product placement would not be as lucrative as broadcasters expected, is to blame for this rather more subdued stance from broadcasters. He predicts that while the rules will certainly change, Ofcom will not now push for an early relaxation.

In the meantime, brands wishing to dabble in paid-for product placement must look to online content, or cinema-only productions, where the medium is not only legal, but also growing in favour among brand owners.

All of which begs the question of why, in the face of such grinding limbo, does Blakemore believe that now is the time to embrace product placement?

One of Blakemore's aims is to make product placement more attractive to brands by making the process more scrupulous and accountable. "Free product placement has had bad publicity in the past," he observes. "Some companies have behaved badly, and it hasn't always been as transparent and accountable a marketing tool as it could be. Consequently, brands have shied away from it."

Ash Blakemore, he says, will reassure clients about accountability, making sure it sticks to the current rules of unpaid placements. "We will make sure brands don't end up on the front page of the Sunday Times for having upset Ofcom," he claims.

Meanwhile, Blakemore intends to sit tight and wait for what he believes will be a gradual and inevitable relaxation of the rules over time. "We still thought the time was right, and we will be there when the rules change," he asserts.

Another of his aims is to improve evaluation of the medium. According to Blakemore, many clients are put off dealing with product placement firms because they aren't sure what they are going to get for their money.

Evaluating product placement involves measuring how long, in seconds, a product is on screen, but firms can also put a "score" on whether the brand is visible.

For example, at one end of the spectrum, if viewers cannot decipher the brand, there is no value in the exercise, says Blakemore. But at the other, if a key character mentions or uses the brand, this might "score" very highly. Costs are worked out on this basis, at a rate relative to the cost of a traditional ad.

But, of course, a product placement company can give no guarantee beforehand that a product will be used in a satisfactory way.

Blakemore agrees it's difficult, without control over the production, for an advertiser to know whether their money will be well spent, but he advises brands to give it a try. "We are not talking hundreds of thousands here. For a very small capital outlay you can try the medium out and see whether or not it works. If it doesn't, you don't have to continue with it."

PRODUCT PLACEMENT MEDIALAB FINDINGS

New quantitative research on product placement's benefit to consumers and brand-owners, by Mediaedge:CIA's consumer insight and ROI arm, MediaLab, suggests for the first time that viewers may be in favour of paid-for product placement.

MediaLab worked with Canadian broadcaster CTV to produce four versions of one programme - an entertainment news show - featuring four test brands (pictured above). One version was the "control", with no advertising or placement; one featured ads for the brand in the ad breaks; a third showed visible brand placement of the brand in the programme, and the final version showed product integration (mention and use of the product in the show).

- Results showed viewers exposed to integration and product placement had higher enjoyment scores (22 per cent and 20 per cent respectively) than those who watched the "control".

- 45 per cent also said they would be more likely to purchase if they saw brand placement or integration in a TV programme, with only 9 per cent saying it would make them less likely.

- Product placement also lifted brand awareness by 16 per cent over the 30-second spot, while integration increased awareness by 24 per cent.

- Product placement improved viewers' "affinity" (trust etc) with a brand by 22 per cent, but this dropped to just 8 per cent for brands using product integration.

THE EU PROPOSALS

As it currently stands, the EU's Television Without Frontiers directive bans "surreptitious advertising" and requires strict separation between advertising and "other parts of the programme service".

In its proposals to update the directive, the EC suggests paid placements should be allowed, subject to certain controls:

- Any paid-for product placement would need to be appropriately flagged at the beginning of the programme "to avoid any confusion on the part of the viewer".

- Programmes would not be allowed directly to encourage purchase or rental of products.

- Brand-owners would not be permitted to influence content or scheduling so as to "affect the responsibility and editorial independence of the media service provider".

- News, current affairs, children's programmes and documentaries would not be permitted to contain product placement.

- Product placement would not be permitted for certain goods, such as cigarettes and other tobacco products.

The changes proposed would help create a more level playing field for European productions, as the current ban does not generally apply to US imports or films made for cinema, while keeping restrictions on editorial influence in place.

The proposal must now pass through the European Parliament, so it is likely to be two years or more before any change is implemented.

Source: Nick Johnson, managing partner, Osborne Clarke. (P&I, February 2006).

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