Product Placement in the DVR EraThis is a featured page

Posted by: Ars Technica
March 19, 2006

Introduction

Fans of Arrested Development may remember a scene in the second season where actor Carl Weathers meets dysfunctional dad (and longtime never-nude) Tobias Funke at a local Burger King.

 "I'm trying to get them to underwrite a new TV project I'm working on, get some money in exchange for setting a scene here at Burger King," says Weathers as the Burger King sign appears prominently on the screen. "As long as you don't draw attention to it," replies Tobias with a knowing look. A moment later, Weathers points out that drink refills are free. "It's a wonderful restaurant," says Tobias, and the narrator chimes in, "It sure is."

 The scene does not simply mock the rise of product placements on television; it is a product placement. Unusually for a corporate sponsor, Burger King allowed the show to have some fun with their brand, but make no mistake—product placement is not a joke. In fact, over the last five years, it has been quietly helping to reshape the economics of broadcast television, which for decades has relied on high-priced thirty second spots.

 The biggest growth has come in the last two years. In the 2004-05 season, the broadcast networks alone (ABC, CBS, NBC, FOX, UPN, WB) displayed a staggering 100,000 product placements. PQ Media, which tracks the placement business, says that in 2004, the value of all TV placements grew by 46.4% to almost US$2 billion. Entire shows, like the ill-fated The Restaurant, have been financed by product placement alone, while other reality shows (Do you think the American Idol judges really love Coke that much?) use it as a significant source of revenue. Product placement has invaded sitcoms, soap operas, and even the local morning shows in major markets. In short, advertising on television has exploded beyond the boundaries of the traditional commercial.
ars technica: Product placement in the DVR era - dirtylaundry
Tobias loves his flame-broiled Whoppers


What's behind the placement boom? In a word: you. Many (though certainly not all) Ars readers are young, technically-savvy males who are contributing to the two big factors which have pushed advertisers away from the traditional commercial format: audience fragmentation and digital video recorders (DVR). In this brave new media landscape, traditional advertisers have found that their product appeals are losing effectiveness, and to get the message out they are willing to try new strategies. In this report, we'll take a quick look at the past, present, and future of product placement on TV, with a special focus on the technology factors that are driving the change. We'll also answer the burning question, "With product placements popping up in every show I watch, surely the networks will soon show fewer ads?" (Actually, if you have to ask this, you're not thinking like a network executive.)

This headline brought to you by Coca-Cola

Placement isn't a new phenomenon; it's been around as long as moving pictures (hint: they're called "soap operas" for a reason). Even the Lumiere brothers, pioneers in the film industry, weren't above placing Lever Sunlight Soap into some of their films in the 1890's. For much of the next hundred years, placement was fairly casual, until the 1982 blockbuster E.T. showed a reluctant alien being coaxed from its hiding spot by Reese's Pieces. Though no money changed hands, the makers of Reese's Pieces agreed to put US$1 million into advertising the film, and the tie-in was hugely successful for the company, which saw sales of its new candy surge. Movie placement soon became big business and is currently worth more than US$1 billion a year.

But it's in television that placement has really come into its own. The television market for placements now dwarfs that for films, even though it did not take off until much later. Patrick Quinn, CEO of PQ Media, talked with us about the history of the business, and says that the turning point came as we entered the new millennium.
"In the 90s you began to see it more in television. There were some ingenious placements in shows like Seinfeld with Snapple and the Junior Mints episode. But I think the real inflection point for product placement—why we've seen this huge upswing in the growth of the marketplace—is Survivor in 2000. "That show had been shopped around for some time by Mark Burnett and no one wanted to jump on it. CBS was in last place in the ratings at the time and was getting killed by Must See TV on Thursday nights, and decided to take a chance on this little-known Survivor. As part of the deal, Burnett convince them that product placement could offset some of the production costs. In the first challenge, the prize for the winner was a bag of Doritos and a six pack of Mountain Dew. It played so well that that's really where the upswing in television product placement began."


In both television and movies, advertisers waited until they saw proof of the new format's effectiveness. Once they had the evidence, the money began to flow... and flow... and flow. Today, the flow has become a raging torrent blasting from the ad agencies' firehose, and it has seeped into every corner of the television landscape. A few examples:
  • The Apprentice has all but become one giant ad punctuated by shots of Donald Trump looking as though he knows how to run a business (what? no Oscar for that performance?). Burger King, Sony, Verizon, Visa, and others all paid a reported US$2 million to have their products integrated into the show. That's US$2 million an episode.
  • Steve Carell championed Chili's "awesome blossom" (which he ordered "extra awesome") on an episode of The Office that was partially shot in (you guessed it) Chili's. Though Carell may indeed want his "baby back, back back, baby back ribs," Chili's paid for the privilege of having him sing the jingle.
  • The show Medium was required to reference the movie Memoirs of a Geisha three times in a single episode. The writers "had the characters go on a date to an early screening of the movie and bump into friends who had just viewed Geisha to tell them how good it was."




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