ID 8025
Bueß, Johanna: Product Placement - The Analysis of a Marketing Communication Instrument
Hamburg: Diplomica GmbH, 2004
Zugl.: Fachhochschule für Wirtschaft Berlin, Diplomarbeit, 2003
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Printed in Germany
P
RODUCT
P
LACEMENT
TABLE OF CONTENT
1
P
RODUCT
P
LACEMENT
T
HE
A
NALYSIS OF A
M
ARKETING
C
OMMUNICATION
I
NSTRUMENT
Table of Content
INTRODUCTION 4
A
IMS AND
O
BJECTIVES
4
M
ETHODOLOGY
5
PART 1:
BACKGROUND
7
1.1 D
EFINITION OF THE TERM PRODUCT PLACEMENT
7
1.2 T
HE HISTORY OF PRODUCT PLACEMENT
9
1.3 R
EASONS FOR THE INCREASING USE OF PRODUCT PLACEMENT
10
1.3.1 R
EASONS FOR MARKETERS
10
1.3.2 R
EASONS FOR FILMMAKERS
10
1.4 U
SE OF PRODUCT PLACEMENT TODAY AND FUTURE FORECAST
11
1.4.1 M
ARKETS
11
1.4.2 C
ATEGORIES
12
1.4.3 N
EW POSSIBILITIES AND FUTURE FORECAST
12
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TABLE OF CONTENT
2
PART 2:
MARKETERS' AND FILMMAKERS' VIEW:
PLANNING AND IMPLEMENTATION
13
2.1 P
LANNING
13
2.1.1 D
EVELOPING PRODUCT PLACEMENT AS AN EFFECTIVE COMMUNICATION
INSTRUMENT USING
K
OTLER
'
S
8
STEPS
14
2.1.1.1 Target audience
14
2.1.1.2 Communication objectives
15
2.1.1.3 Communication message
15
2.1.1.4 Communication channels
16
2.1.1.5 Communication budget
16
2.1.1.6 Communication mix
16
2.1.1.7 Communication results
16
2.1.1.8 Integrated marketing communication process
17
2.1.1.9 Problems with the development of product placement as
marketing communication instrument
17
2.1.2 D
EVELOPING PRODUCT PLACEMENT AS EFFECTIVE TOOL IN FILM
PRODUCTION
19
2.1.2.1 Opportunities when using product placement effectively
19
2.1.2.2 Problems of using product placement
20
2.1.2.3 Solutions
20
2.2 I
MPLEMENTATION
20
2.2.1 P
ROCEDURE
21
2.2.2 C
OMPENSATION
21
2.2.2.1 Cash
21
2.2.2.2 Products
21
2.2.2.3 Promotional tie-in
22
2.2.2.4 Examples
22
2.2.2.5 Costs per Thousand
23
2.2.3 I
NFLUENCE OF FIRMS
24
2.3 C
ONCLUSION
26
PART 3:
CONSUMERS' VIEW: MORAL ISSUES AND
LEGAL SOLUTIONS
27
3.1 C
ONSUMERS
'
ETHICAL CONCERNS
27
3.2 L
EGAL RESTRICTIONS
29
3.2.1 D
IFFERENCES BETWEEN
TV
AND CINEMA REGULATIONS
29
3.2.2 L
EGAL RESTRICTIONS IN TELEVISION BROADCASTING
29
3.2.2.1 Situation in the USA
29
3.2.2.2 Situation in Europe
29
3.2.2.2.1 Specific situation in the UK
30
3.2.2.2.1.1 Television broadcasting rules
30
3.2.2.2.1.2 Limitations to television broadcasting rules
31
3.2.3 F
URTHER POSSIBLE LEGAL RESTRICTIONS
32
3.3 S
OLUTIONS FOR MARKETERS
33
3.4 C
ONCLUSION
34
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TABLE OF CONTENT
3
PART 4:
EVALUATING THE EFFECTIVENESS OF
PRODUCT PLACEMENT
35
4.1 E
VALUATION OBJECTIVES
35
4.2 E
XISTING
K
NOWLEDGE
36
4.3 L
ITERATURE REVIEW
37
4.3.1 E
FFECTS ON PRODUCT RECOGNITION
37
4.3.2 E
FFECTS ON PRODUCT RECALL
38
4.3.3 E
FFECTS ON ATTITUDE TOWARD THE BRAND AND PURCHASING BEHAVIOUR
38
4.4 A
NALYSIS OF RESEARCH RESULTS
40
4.4.1 E
FFECTS ON PRODUCT RECOGNITION AND RECALL
40
4.4.2 E
FFECTS ON ATTITUDE TOWARD THE BRAND AND PURCHASING BEHAVIOUR
40
4.5 R
ECOMMENDATIONS TO MARKETERS
42
4.6 L
IMITATIONS OF RESEARCH RESULTS
43
4.7 C
ONCLUSION
43
CONCLUSION
44
BIBLIOGRAPHY 46
APPENDICES
51
A
PPENDIX
I :
P
RODUCT PLACEMENT CATEGORIES
52
A
PPENDIX
II:
E
XAMPLES OF PRODUCT PLACEMENTS IN FILMS
53
A
PPENDIX
III:
P
RODUCT PLACEMENT CONTRACT
58
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I
NTRODUCTION
4
Introduction
Aims and Objectives
Product placement in films and television programmes has become increasingly
common today and the aim of this dissertation is to analyse this practice. The
objective is not only to evaluate product placement from the marketers' view
who use it as part of marketing communications, but also to consider the
filmmakers' and the viewers' (consumers') point of view. Furthermore it will look
at aspects need to be considered in order to use product placement most
effectively from all angles for everyone.
The aim of part 1 is to give an insight into the topic product placement. The term
is defined and a brief history given. The current trends are mentioned and a
possible forecast for the future. The aim is also to give rationales for the
development of product placement. Marketers' benefits in marketing
communications as well as advantages for filmmakers are analysed.
Picture 1.
Hugh Grant and
Apple in About a
Boy, Universal
Studios, 2002
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NTRODUCTION
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Part 2 investigates how marketers and filmmakers can formulate and implement
a successful product placement strategy. The cost-effectiveness of product
placement as a marketing communication tool and the companies' influence on
the way their brand is placed is analysed. Furthermore, the effect this has on the
quality and costs of the film or programme is evaluated from the filmmakers'
point of view.
In part 3 the viewers' and consumers' concerns are analysed. It is further
evaluated in how far these concerns are considered legally. The legal restrictions
are looked at with regard to differences between e.g. countries and regarding
their effectiveness in practice. Further possible legal solutions are mentioned and
analysed. Another aim is to investigate to what extent companies need to and
can consider viewers concerns.
Part 4 analyses on the effectiveness of product placement in marketing
communications using academic research results. The objective is to investigate
effects on product recognition, recall, attitude toward the brand and purchasing
behaviour. It is studied what needs to be considered to make product placement
most successful. Effects are evaluated regarding type of product placement, type
of film or programme and support by advertising.
Overall product placement will be analysed and evaluated from the economic,
moral and legal perspective. The effects on all involved parties are studied.
Further the best way to use it effectively as a marketing communication
instrument, as a helpful tool in film production while also taking viewers' needs
and concerns into consideration is investigated.
Methodology
Product placement is still either completely ignored or very briefly mentioned in
marketing and marketing communications literature. Furthermore, there are no
current books on the topic, except for a number of theses from PhD students.
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These were used in this study and the general marketing theory was applied to
the case of product placement as marketing communication tool.
In order to get in-depth knowledge of the practice, two representatives with
knowledge in the field of product placement from the marketing communications
departments of Sony Germany and Siemens were interviewed. The interviews
are attached in Appendix I and the answers are included throughout the
dissertation, especially in part 2 and 4, when analysing the marketers' point of
view.
To get a different perspective and an insight into the planning and imple-
mentation process, representatives from numerous Hollywood product placement
agencies and product placement experts of three American film studios were
questioned by email. Their answers are mentioned continuously throughout the
text.
In both cases, the qualitative approach was chosen instead of a quantitative one
(e.g. a questionnaire to a greater number of respondents), as in-depth
knowledge and outcomes were found to be more important than statistical
outcomes.
In order to measure the effectiveness of product placement on consumers, a
quantitative approach with large numbers of viewers would be suitable.
However, there is already a considerable amount of academic research in this
area, which is published in journal articles. In part 4 these research results are
analysed and recommendations are made for marketers.
Part 3 is concerned with legal restrictions, the rules and regulations from the ITC
programme code and the BBC producer's guidelines are mentioned and
evaluated.
Furthermore, a great range of newspaper articles was used and information from
websites on this topic e.g. from product placement agencies.
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ACKGROUND
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Part 1:
Background
1.1
Definition of the term product placement
Although most people have spotted some brand products such as cars or
watches in movies like James Bond, many are not aware of how common
product placement is in today's films and television programmes.
So far, there exists no one uniform definition of product placement, but
researchers have made a range of suggestions. One of the first suggestions
came from Nebenzahl and Secunda, who stated that:
"Product placement is defined as the inclusion of consumer
products or services in motion pictures distributed to theatres
by major Hollywood studios in return for cash fees or
reciprocal promotional exposure for the film in marketers'
advertising programmes." (1993, p.1)
Picture 2.
BMW Z8 in
James Bond
The World is
not enough.
MGM Studios,
1999
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However, this definition does not include all aspects of product placement. First
of all the reference "inclusion of consumer products or services" is not complete,
as the actual product is not always shown. Product placement can also be the
demonstration of a company's name or logo (for instance on a billboard in the
background) or a brand name mentioned by an actor.
Secondly product placement not only occurs in Hollywood movies, but in every
type of film or TV production. This includes national and international films, as
for instance the latest British example, About a Boy with Hugh Grant. (see
pictures, p.4, 13, 27, 35). Products are also placed in series like Friends, TV
shows such as the biggest European show Wetten, dass..?, documentaries and
even news programmes (Spiegel Online, 2003).
The practice of product placement has lately also been adopted in novels, music
videos and computer games (see figure 1). However, this will not be discussed in
this paper, as the emphasis is on product placement in films and TV
programmes.
Thirdly a complete definition of product
placement should state that there are
numerous ways of compensation. The
products' manufacturer in some cases
provides the (often very expensive) product,
is sometimes involved in the promotion of
the film or programme, or pays a fee.
For these reasons Baker and Crawford's
definition is best, which define product
placement thus:
"The inclusion of commercial products or services in any form
in Television or Film productions in return for some sort of
payment from the advertiser." (1995, p.3)
Figure 1. Source: Hormuth (1993), p.26
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1.2
The history of product placement
Product placement has only become increasingly popular in the last two decades,
but it is by no means a new practice. "It has been around since the silent era"
states Jay May from the Hollywood product placement agency Feature This! in
his email on 24 February 2003. In the 40s and 50s large companies such as
Procter & Gamble financed TV series by placing soaps and washing powder, and
so created the expression "Soap Opera" (Product Placement Awards, 2003).
However, in the following years the practice was
forgotten about, and only occasionally companies lent
their products to production firms in return for some
brand exposure. One famous example is the Red Alfa
Romeo Spider Dustin Hoffman drives in The Graduate.
Product placement's big breakthrough came in 1981
when Steven Spielberg's extraterrestrial E.T. chose
Reese's Pieces as his favourite food on earth.
Consequently the manufacturer's (Hershey's) revenues
increased by 65 percent, and suddenly companies
became aware of the potential product placement has
as a marketing communication instrument (Especially
Mars who had turned down the offer to place M & M's in
the film (Business Week, 1998)).
During the last 20 years the business of product placement has started to boom
and became a common practice.
Picture 3. "everyone wanted to
look like Tom Cruise" (Robinson,
2003): early successful product
placement by Ray Ban and
Porsche in Risky Business, 1983,
Warner Studios
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1.3
Reasons for the increasing use of product placement
Causes for the increasing use of product placement as a marketing
communication instrument can be distinguished into reasons for marketers and
for filmmakers.
1.3.1 Reasons for marketers
During recent years marketers were confronted with the multiplying costs of
traditional advertising on the one hand and its decreasing effectiveness on the
other hand (Guardian, 2002). This is especially evident in TV commercials, the
marketing communication tool that is closest to product placement. Costs rose
dramatically while the viewers' reactance
1
grew and they started avoiding TV ads
more and more (see figure 2).
As a result marketers looked for
innovative alternatives such as
sponsoring of sports and events and
also placing products in films or TV
shows. Product placement avoids
the problems of traditional
commercials, as viewers' attention
is captured.
Another reason why product placement has become more attractive to
marketers is globalisation. Films are watched nation- or even world-wide in the
cinema, later on video or DVD and on TV. This offers especially global brands an
audience capacity that is hardly reached by any other marketing communication
instrument (Kleinmann, 1999).
1.3.2 Reasons for filmmakers
The producers of movies and TV programmes also have reasons for using
product placement more frequently today.
1
Reactance: As a reaction to the growing number of TV commercials, viewers' attitude
becomes more negative toward it.
TV commercials - percentage of
effectively reached viewers
20%
15%
35%
30%
Effectively
present
Mentally
absent
Physically
absent
Zapping
Figure 2. Source: Bente, 1990, p.61
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Their main aim when placing brands in a programme is to reduce production
costs, which have grown immensely over the last few years (Guardian, 2001)
(see table 3). As Bettina O'Mara from Castle Rock Entertainment states, the
percentage of production costs covered by product placement "varies depending
on the budget of the film and how many placements", but it is "in the 1-10%
area".
Furthermore, it is necessary that a
film, which is supposed to reflect
today's world realistically, includes
consumer brands to some extent, as
they are seen more and more in
every-day-life. The former practice of
labelling bottles with the word "soda"
instead of the product name is
presumed to have kept viewers from
identifying themselves with the story
(Baker and Crawford, 1995, p.4).
1.4
Use of product placement today and future forecast
As a result of growing interest of both marketers and filmmakers, the product
placement's market had already grown to an estimated size of $4 to $8 billion
per year world-wide in 1990 (Bente, 1990, p.45). This leads to the assumption
that the market is even larger today.
1.4.1 Markets
The US is the biggest national market with revenues of $4 to $8 billion. Graeme
Atkinson from the product placement agency Prop Portfolio claims that in any
Hollywood film 98 percent of the products are placed with marketing purposes
(Kleinmann, 1996, p.3). Also it is estimated that product placement is part of the
marketing mix of more than 1000 products (International Public Relations
Association, 2003). Jay May from Feature This! claims that, although placing
0
1
2
3
4
5
6
7
8
9
£ m
illion
1995 1996 1997 1998 1999 2000 2001
Average cost of production of UK films
Figure 3. Source: Mintel, The Film Industry February 2002
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brands is even more common in countries like Brazil, New Zealand and Japan, it
is not yet as advanced in European countries such as the UK and Germany.
1.4.2 Categories
Researchers have found ways to categorise product placement, as they assume
that the kind of product placement has an influence on its price and effectiveness
on consumers (See Appendix I for the categories that are mentioned in the
majority of literature).
1.4.3 New possibilities and future forecast
The technical possibilities that emerged in recent years opened up a whole range
of possibilities for product placement. In theory it is already possible to place a
brand after taking the shot using digital editing. Although this practice is so far
only used in sports sponsoring, e.g. labels on football pitches, it has great
potential for product placement in films and TV programmes as well.
As production and marketing costs are still growing and technical possibilities are
increasing, product placement is probably here to stay and gaining importance.
Mr. May from even forecasts that product placement will eventually replace
traditional TV commercials. However this is not very realistic as brand placement
cannot fulfil the same requirements as TV ads and has some limitations. These
will be mentioned in the next part, with an analysis of how marketers and
filmmakers can effectively use this growing practice.
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ART 2
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Part 2:
Marketers' and filmmakers' view: planning and
implementation
This section will investigate the planning and implementation of product
placement. It analyses the process of using product placement as a marketing
communication instrument from the point of view of a marketer and using
product placement as a helpful tool from the point of view of a filmmaker.
2.1
Planning
During the planning process both sides need to take a number of aspects into
consideration. There are also limitations to the implementation of product
placement into movies or TV productions that need to be dealt with.
Picture 4.
Product placement by
Bang & Olufsen and
Philips in About a Boy,
Universal Studios,
2002
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