Stamford, CT – While more than 90% of product placement dollars are spent on television and films, savvy advertisers and marketers are also turning to other media, such as magazines, newspapers, videogames, the Internet, recorded music, consumer books and radio, to reach increasingly elusive audiences with their messages. The broader media industry shift toward alternative marketing methods will drive product placement spending in other media up 18.1% to $384.9 million, according to exclusive research released today by PQ Media, a custom media research firm.
The strong growth of product placement spending in so-called “other media” in 2005 is being fueled mainly by solid expansion in the videogame, Internet and recorded music segments, although the magazine, newspaper, consumer book and radio segments are also expected to post double-digit growth for the year. Videogames is projected to be the fastest-growing segment of the seven that comprise the other media sector this year, as the value of videogame placements surges 22.2% to $40.4 million by year’s end, according to PQ Media’s Product Placement Spending in Media. The value of Internet placements is forecast to grow 21.8% to $35.0 million, while the value of recorded music placements will increase 19.2% this year to $30.4 million.
Meanwhile, product placements in the largest other media segment�magazines, including consumer and business-to-business titles�is projected to expand 17.5% to $160.9 million, adding the most dollars of any other media segment. The value of newspaper placements is expected to grow 16.9% to $65.0 million this year, while the value of consumer book placements will increase 12.7% to $26.6 million and the value of radio integrations will rise 15.1% to $25.8 million.
“Advertisers and marketers are scrambling like never before to compete for consumers’ time and money in this era of increasing audience fragmentation, advertising clutter, media multitasking and ad-skipping technology,” said Patrick Quinn, President of PQ Media. “As a result, alternative marketing such as product placement is on the rise, and marketers are progressively using product placements in other media besides TV and film to reach target demographics and strengthen their return on investment in marketing campaigns.”
The double-digit growth of the value of other media product placements in 2005 follows another year of strong growth last year, when the aggregate value of other media integrations jumped 19.9% to $325.8 million, according to PQ Media. Videogames was also the fastest-growing segment of the seven other media last year, as the value of videogame placements surged 36.7% for the year, followed by Internet placements, which grew 24.5%, and recorded music integrations, which increased 23.5%. The value of magazine placements was up 17.7% last year, while newspaper integrations grew 15.0%, consumer book placements rose 22.2% and radio integrations increased 12.9% for the year.
The strong upward momentum of product placement spending in other media demonstrated in 2004 and 2005 is the culmination of more than 30 years of steady growth in the overall product placement market. The value of product placements in all media, including TV, film and other media, climbed at a compound annual rate of 10.5% from 1974 to 2004, reaching $3.46 billion in 2004, driven mainly by the strong expansion of the television segment, including broadcast, cable and syndication, according to Product Placement Spending in Media 2005. The value of product placements in television, films and other media grew at a compound annual rate of 16.3% from 1999 to 2004, and soared 30.5% in 2004, as marketers wary of ad-skipping technologies targeted more of their marketing budgets at reality television programs and media that attract the elusive 18- to 34-year-old demographic. And the overall market is expected to expand another 22.7% in 2005 to $4.24 billion, propelled by strong growth in each of the three media sectors, an increase in paid placements, larger placement deals and deeper penetration of digital video recorders.
Spurred by these trends in the broader product placement market, the other media sector grew at a compound annual rate of 9.2% from 1974 to 2004, and increased 11.7% on a compound annual basis in the 1999-2004 period. The other media sector will account for 9.1% of the value of the entire product placement market in 2005, compared with only 1.3% in 1974, an increase attributable primarily to the tremendous growth of the videogame and Internet segments, which were virtually non-existent in 1974.
Another key trend in the other media sector is the growth of paid placements compared with barter and gratis arrangements. Paid placements are defined as those in which the integration is arranged and there is financial compensation; barter agreements are also arranged, but the product serves as compensation; and gratis arrangements are those in which the placement simply happens, often to strengthen a character’s profile or to add richness to the plot. The share of paid placements in other media increased from 7.2% in 1999 to 13.5% in 2004, and is projected to reach 17.4% in 2005, as competing marketers become more willing to pay for placements and media producers increase rates to coincide with demand. As a result of the increased pressure to control costs and grow revenue, gratis placements, which accounted for 15.1% of the other media sector’s value in 1999, have become much less frequent, and will account for only 9.2% of total value in 2005. Meanwhile, barter arrangements will decline from a 77.7% share in 1999 to 73.4% of the market in 2004, according to PQ Media.
Marketers in the transportation & parts category will account for the largest share of product placement spending in other media in 2005, with a 13.7% share, followed by media & entertainment marketers at 11.4%, food & beverage purveyors at 11.0% and the house & home category at 10.1%. Almost half of product placement spending in other media is found in these four of the total 10 marketing categories.
Product Placement Spending in Other Media Will Continue Upward
PQ Media projects the value of product placements in other media will grow at a compound annual rate of 12.9% from 2004 to 2009, reaching $598.5 million and accounting for 8.6% of the entire product placement market. While the other media sector’s share of the overall product placement market will decline over the next five years, videogames, the Internet and recorded music will be among three of the four fastest-growing segments of the overall product placement market in the 2004-2009 period, trailing television which will grow 17.7% during that time. The value of videogame placements will grow at a compound annual rate of 16.4% over the next five years, while Internet placements will rise 15.6% and recorded music integrations will expand 14.5%. Magazines will remain the largest other media segment in 2009, with total spending of $246.0 million.
**Individual Segment Analyses Follow: Magazines, Newspapers, Videogames, Internet, Recorded Music, Consumer Books, Radio**
Although Controversial, Product Placements in Magazines Will Grow 17.5% in 2005
The value of product placements in magazines, including consumer and business-to-business titles, is expected to increase 17.5% in 2005 to $160.9 million, making magazines the largest segment of the other media sector, according to PQ Media’s exclusive research. Product placement spending in magazines increased 17.7% in 2004 to $136.9 million. While brand integration has been perhaps most controversial in the magazine segment of all the other media segments, publishers are becoming increasingly receptive to using the practice as magazines struggle to compete for consumers’ and advertisers’ time and money.
Magazine integrations are growing at a double-digit pace, despite controversy over the growing use of product placements in this medium long known for a staunch border between advertising and editorial. But as the magazine business struggled with the recent economic recession, more competition from other media and low single-digit advertising growth, consumer and business-to-business publishers have become more receptive to new placement deals that will provide them with additional revenue to offset marketing and production costs, while offering marketers the ability to reach engaged and targeted audiences. While consumer and business-to-business magazine ad growth has been in the low single digits in recent years, the value of product placements in magazines grew at a compound annual rate of 10.1% from 1999 to 2004, according to PQ Media.
In the first half of 2005 alone, there have been at least two magazine launches offering advertisers brand integration in editorial content. For example, a planned food magazine called Relish announced in July that it will let marketers buy brand mentions in recipes prepared by editorial staff and purchase product placement among staff-recommended kitchen and home gadgets. Given the magazine industry’s continued efforts to prove the medium’s return on investment to advertisers, these launches may just be the beginning of things to come.
Magazines still account for the greatest share of product placement spending in other media, although the magazine segment has lost a significant amount of market share to other media since 1974, mostly due to the emergence and success of videogame and Internet placements in recent years. Magazine placements comprised 42% of all product placement spending in other media in 2004. Perhaps the best known placements in magazines are those that appear in the many photo layouts published in fashion and other women’s titles, although product reviews featuring brands in the transportation & parts marketing category are also quite prominent. While barter product placement accounted for 81.8% of all magazine placement spending in 2004, paid product integrations are the fastest-growing type of arrangement in magazines, up 28.3% for the year. Barter arrangements increased 19.4% and gratis placements rose 2.2% in 2004, according to PQ Media.
Consumer magazines accounted for $95.2 million, or 69.5%, of product placement spending in magazines in 2004, while business-to-business titles accounted for the remaining 30.5% share, or $41.7 million, according to PQ Media. Of the consumer magazine titles, general-interest magazines generated product placement spending of $65.1 million in 2004 and special-interest titles comprised the remaining $30.1 million. General-interest women’s titles contributed the highest share of product placement spending at $35.5 million for the year. No other general-interest or special-interest consumer magazine category generated more than $10 million for the year, led by special-interest home titles at $8.7 million. Technology titles were the largest business-to-business category with $15.6 million in product placement spending in 2004.
Product placement in magazines has a long history that has grown more contentious over time, as the editorial and marketing departments at major titles wrangle over the issue of editorial integrity versus new revenue streams. There was limited product placement in magazines in the early 1800s, mostly because the majority of titles were professional or educational like American Mathematical Monthly. As the century progressed, however, more consumer-oriented titles, such as Harper’s, were launched, but most of these were filled with long editorial essays and, therefore, were not conducive to product integration. In addition, graphics and photos were difficult to publish in magazines in the 19th century, further limiting the potential for brand placement. There were some instances of gratis product placement, however, such as certain travel destinations featured in magazines like National Geographic, which began publishing in 1888.
Barter product placement increased in the early to mid-1900s, with popular titles like Look, Life, Time and Sports Illustrated. Barter arrangements grew, as more women’s titles became available, such as Cosmopolitan and Ladies Home Journal, as well as product review titles aimed at men like Popular Mechanics and Car & Driver.
As stated earlier, magazines today are probably best known for the placements that appear in the many photo layouts published in fashion and other women’s titles, although product reviews featuring brands in transportation & parts category are also quite prominent. The increase in paid product placement has led to controversy in the magazine industry as many purists complain that these arrangements soil objective reporting ethics. Magazine publishers have countered that they need to seek new revenue streams to battle lost advertising and circulation revenue, giving rise to advertorials and other forms of product placement. Marketers that are especially active in magazine product placement include American Express, Ford and Computer Associates.
Due to the popularity of product reviews and photo layouts in women’s general-interest magazines, health & beauty is the largest marketing category in this medium, accounting for $18.7 million in spending in 2004, or a 13.6% share, according to PQ Media. For the same reason, apparel & accessories ranks second with $16.9 million in placement spending, or a 12.4% share. The third-largest marketing category is electronics & technology, with spending of $16.3 million, or an 11.9% share, mainly due to the high number of business-to-business technology titles. Other magazine categories with shares exceeding 10% include house & home (11.5%) and transportation & parts (11.2%), titles popular with men. Media & entertainment is one of the smaller categories (8.4%), but it has capitalized on the long-standing practice of placing popular actors and actresses on covers to increase sales.
Product placement spending in magazines is projected to grow at a compound annual rate of 12.4% from 2004 to 2009, reaching $246.0 million. The value of magazine placements will grow at a progressively slower rate over the next five years as the volume and size of deals shrinks a bit and other media, such as videogames and the Internet, capture more product placement market share.
Newspapers Embrace Product Placement as Value to Climb 16.9% this year
The value of product placements in newspapers is expected to increase at an accelerated rate of 16.9% to $65.0 million, as the industry attempts to offset slow advertising growth with new and faster-growing revenue streams, according to PQ Media’s exclusive research. Product placement spending in newspapers grew 15.0% last year, the weakest growth of all other media, except for radio. Similar to magazines, publishers have been hesitant to cross editorial boundaries to push products or companies. Newspaper product placement expenditures grew at a compound annual rate of 8.6% from 1999 to 2004. Newspaper’s share of product placement spending in other media declined from 23.8% in 1974 to 17.1% in 2004. Barter arrangements account for the major share of product positioning in this medium at 83.3%, but paid product placement is the fastest growing, up 22.5% in 2004.
Newspapers have been published in the United States since at least 1690, when the first edition of Public Occurance hit the streets, but most early papers were political opinion pieces authored by historic figures like John Adams and Patrick Henry. By the 1790s, many types of newspapers were being published for various audiences, including the so-called Mercantile Papers, which were aimed at the business class. Some product placement occurred in newspapers by the mid-1800s when the Penny Presses published stories about places and products, not always positive.
Product integration became more acceptable by the late 19th century under the auspices of editorial legends like Pulitzer, Hearst, Greeley and Ochs, who divided the papers into sections aimed at specific target audiences. As a result, product reviews became available on topics ranging from business to entertainment.
Newspapers is the second-largest segment of the other media sector with brand placement value of $55.6 million in 2004. Almost one-quarter of newspaper product placement expenditures, or $12.8 million, occur in the top five markets and national papers, such as the Wall Street Journal, The New York Times, USA Today, Los Angeles Times and Chicago Tribune. Including the next 45 markets, the top 50 designated market areas accounted for approximately three-quarters of all product placement spending in newspapers in 2004 at $41.3 million. Daily newspapers commanded more than 90% of product integration expenditures in 2004 with $50.2 million, while weeklies accounted for the remaining $5.4 million, primarily as a result of higher reliance on gratis placements. The major source of product placement in newspapers continues to be product reviews in specific sections of papers, such as business, food, travel and women. To combat shrinking circulation in recent years, newspapers have been extremely proactive in redesigning their papers to target specific niche audiences. As a result, articles containing product placements have become a larger share of the editorial mix, as overall page counts have shrunk due to the relatively weak advertising climate.
Transportation & parts marketers are the largest source of product placement expenditures in newspapers, accounting for 21.2%, or $11.8 million in spending in 2004, driven by the aggressive marketing tactics of domestic manufacturers in smaller markets aimed at loyal purchasers. The other categories with market share over 10% are mainly found in targeted paper sections with product reviews, such as women and entertainment. House & home accounts for 14.8% of product placement spending, followed by media & entertainment (11.6%), and food & beverage (10.6%).
Newspapers will remain the second-largest segment of the other media sector over the next five years, as the value of integrations grows at a compound annual rate of 11.6% from 2004 to 2009, reaching $96.4 million in 2009.
Videogames Will Grow Faster Than All Other Media Segments in 2005 and Beyond
Product placement spending on videogames is projected to grow faster than all other segments of the other media sector in 2005, just as the segment did in 2004 and in the 1999-2004 period, according to PQ Media’s exclusive research. The value of product placements in videogames is expected to rise 22.2% to $40.4 million in 2005, following 36.7% growth in 2004. The segment accounted for 10.1% of all other media spending in 2004, compared with 0% in 1974 when the medium had yet to breakout.
Videogame brand placement expenditures grew at a compound annual rate of 25.8% from 1999 to 2004, as marketers sought to reach the coveted young adult market and videogame makers realized the value of their medium for such purposes. The first videogame, OXO, (based on tic-tac-toe) was developed in 1951 by a University of Cambridge student named A.S. Douglas to prove a theory for his thesis. It was almost 25 years before consumers were playing at home, when Atari introduced its version of the popular arcade game, Pong, in 1975 (although Space Invaders and Asteroids, introduced in 1978, are considered the actual launch point of the modern industry). Because the early games lacked strong graphics, due to limited memory, product placement really did not exist until the early 1980s when competitors like Midway Games, Commodore and Coleco offered titles tied to other entertainment media, such as popular animated TV programs like the Smurfs and Disney-licensed characters.
Product placement spending dropped dramatically in the late 1980s when the industry fell out of favor and many companies went bankrupt. The industry revived in the early 1990s with the surge in use of home computers and 32-bit memory made 3-D graphics possible. Led by Sega and Nintendo, videogame developers coordinated production with Hollywood on movie tie-ins like the 1997 release of GoldenEye 007.
In 2004 and early 2005, the videogame industry saw a dramatic influx of new revenue. In addition to a number of transactions with automobile manufacturers for the most popular titles, Electronic Arts signed a lucrative, long-term contract with Disney to feature the ESPN franchise in EA’s games. Disney already had a major presence in videogames with a number of popular children’s titles featuring their animated figures, such as Kingdom Hearts with Donald Duck. Other major arrangements have been made with apparel makers and telecommunications firms. One problem potentially stunting product placement growth in the videogame segment is the high number of violent titles that marketers attempt to avoid.
Compared with most other media, videogames has the highest share of paid placements, accounting for 45.3% of segment spending, largely due to a number of large contracts signed in 2004 that increased paid placement spending 111.4%. The value of barter agreements increased 10.1% for the year.
In recent years, a number of marketers�from automobile manufacturers to sports-related vendors�have increased their exposure in videogames in order to reach the elusive 18- to 34-year-old male market, which is migrating away from traditional media. Console videogames accounted for 85.4% of product placement spending at $28.2 million in 2004, while PC games comprised the remaining 14.6%, or $4.8 million. Action titles, such as Grand Theft Auto, generated the most product placement spending in 2004 with $11 million, followed by sports titles like Madden’s NFL 2004 at $6 million. It is difficult to estimate spending per platform, but PlayStation2 games dominate the product placement market because of the high share of exclusive titles. Meanwhile, Xbox is generating faster spending growth because older teens and young adults desire many of its titles. The highest performing PC category is strategy games, like Sims in the City, with product placement spending of $1.5 million in 2004.
Three marketing categories dominate product placements in videogames. Toys & sporting goods is the largest, accounting for 22.0% of expenditures ($7.3 million), followed by transportation & parts (17.9%), and food & beverage (14.9%). Most of this product integration is found in action and sports titles purchased predominantly by 18- to 34-year-old males.
Videogames is forecast to be the fastest-growing segment of the other media sector over the next five years, as the value of brand integrations climbs at a compound annual rate of 16.4% from 2004 to 2009 to $70.6 million.
Internet Forecast to be the Second Fastest-Growing Segment in 2005, Up 21.8%
Driven by the growth of broadband services, the Internet will be the second fastest-growing other media segment in 2005, with product placement expenditures increasing 21.8% to $35.0 million, as high-speed services allow marketers to use rich media and streaming video to enhance placements, according to PQ Media’s exclusive research.
There isn’t much history to product placement on the Internet because the industry is only 20 years old. The first product placement occurred when Sears and IBM formed a joint venture to offer the online service Prodigy in 1984 to promote their brands when one signed onto the service. The Internet didn’t begin to take off until the World Wide Web was developed in 1989, and it later exploded with the introduction of a Windows version of America Online in 1993 and the Netscape search engine in 1996. Once the Internet gained favor, however, the number of product review sites, such as epinions.com, grew quickly, in addition to the cross-branding of traditional print versions of Consumer Reports and Zagat.
Online product placement grew 24.5% in 2004 as marketers continued to search for Web sites aimed mainly at the 18- to 34-year-old market. For years, marketers have also targeted the affluent users, usually early adopters of technology like broadband services. As a result, Internet product placement spending grew at a compound annual rate of 21.1% from 1999 to 2004, accounting for 8.8% of other media expenditures in 2004.
Although product placement spending on the Internet began only 20 years ago, it has already become the fourth largest segment of the other media sector with expenditures of $28.8 million in 2004. Internet service providers, such as AOL, accounted for almost half (47.7%) of online product integration, with spending of $13.4 million in 2004. Search portals, advertising-supported Web sites and e-commerce sites account for a 40.3% share of spending ($11.6 million), while subscription-supported content sites comprise the remaining 12.8% ($3.7 million), primarily through online games and dating sites.
Although the potential for product placement on the Internet is limitless, marketers and Web sites are struggling with methods that make brand integration less obtrusive in an effort to address consumer resistance to pop-up advertising. Some of these obstacles should be resolved as broadband access grows, and streaming video becomes more common. Although marketers have embraced Internet advertising, most of that growth is occurring with keyword searches that have little impact on product placement strategies.
Mainly due to the cross promotions of its media products on AOL sites, media & entertainment is the largest marketing category in the Internet segment, accounting for 14.7% of product placement spending at $4.2 million in 2004. Other marketing categories with significant shares are either product review sites or have cross-branded product placement arrangements with other media. The next largest categories include food & beverage (12.8%), transportation & parts (12.7%), house & home (12.4%), apparel & accessories (11.2%), and health & beauty (10%).
The Internet will be the second fastest-growing other media segment during the next five years, as broadband service expands. Product placement spending on the Internet will increase at a compound annual rate of 15.6% to $59.3 million in 2009.
Recorded Music Placements Rock ‘n’ Roll to the Tune of 19.2% Growth in 2005
As a result of more highly targeted integrations, recorded music product placements will be the third fastest-growing other media segment in 2005, with the total value of placements increasing 19.2% to $30.4 million, according to PQ Media’s exclusive research. Marketers targeting older and more affluent audiences have been active in procuring arrangements with popular music artists like James Taylor and Bob Dylan in recent years.
Music in various forms, going back centuries, has often featured assorted types of gratis product placement, particularly music that served as historical reference prior to the advent of printing. While early recordings immediately following Edison’s invention of the phonograph in 1877 were void of product placement, artists began using integration techniques shortly after the turn of the century to push attendance at live performances. Opera star Enrico Carusso promoted his performances with recordings like Vesti la Giubba, later imitated by Broadway stars like Al Jolson and Fannie Brice in the 1920s and 30s, and big-band stars like Benny Goodman and Glenn Miller in the 1940s and 50s.
The launch of vinyl recordings and rock �n’ roll in the 1950s changed the financial model of recorded music. Marketers who desired the 18- to 34-year-old demographic began creating tie-ins with artists, primarily at concerts but also in subtle references on album covers. The industry changed again in the 1980s, when MTV allowed artists to sign product placement arrangements for music videos. The industry model again changed in more recent years when artists began to worry about the impact of illegal downloads, prompting musicians to form relationships with retailers to co-brand albums, such as the relationship between James Taylor and Hallmark Cards.
Recorded music was the fifth-largest other media segment with product placement expenditures of $25.5 million in 2004, a 23.5% increase over the prior year. Marketers over the last five years have been concentrating their efforts on recording artists popular with the 18- to 34-year-old market, especially those reaching minority audiences who are heavy users of recorded music. As a result, product placement spending on recorded music rose at a compound annual rate of 11.2% from 1999 to 2004.
Rock music accounts for the highest share of product placements (35.1%) due to long-term agreements with food & beverage companies, ranging from Pepsi to Anheuser-Busch. Four other categories�rap/hip-hop, R&B;/urban, pop, and country�account for a little more than half of the value of the remaining music integrations.
The share of spending on recorded music in other media has accelerated slightly over the past three decades to 7.8%, compared with 6% in 1974. Due to the popularity of the rap/hip-hop and R&B;/urban categories, and the lack of enough TV programs aimed at this audience, minority marketers are very active in the use of brand placements in this medium.
The media & entertainment marketing category is the largest in recorded music, comprising 20% of spending in 2004 at $5.1 million. As other retailers have become more aggressive in placing their products in music acts, their share has been rising in recent years. Food & beverage is the second-largest marketing category with a 15.6% share, followed by transportation & parts with an 11% share.
Recorded music will be the third fastest-growing segment of the other media sector during the next five years, rising 14.5% compounded annually from 2004 to 2009, reaching $50.3 million in 2009.
Consumer Book Placements Expected to Rise 12.7% in 2005
Publishers, authors and consumer products companies are busy inking an unprecedented number of new book placement deals, allowing consumer products marketers to reach an engaged audience and providing publishers additional revenue that they can use to offset marketing and production costs. As a result, product placement spending in consumer books is expected to climb 12.7% in 2005, reaching $26.6 million, according to PQ Media’s exclusive research.
Books have existed in some form for more than 4,000 years, although most early titles were religious, philosophical or historical in nature, not lending them to product placement opportunities. With the development of the moveable printing press and offset printing by the late 18th century, genres like fiction expanded greatly and offered consumers access to more kinds of titles. While most product placements at this time were gratis, there were some paid placements, such as Charles Dickens’ arrangement with a carriage line in the Pickwick Papers. Additionally, instructional titles became more common, such as The First American Cookbook (originally American Cookery) published in 1796.
Barter and paid product placement didn’t become more commonplace until the mid-1900s with the publication of more instructional titles, such as the Betty Crocker Cookbook. As for fictional titles, publishers sought out more paid product integration as a means to help defray costs associated with the lucrative advances given to authors. In more recent years, business titles have helped push product placement spending as authors often highlight products or companies to help advance a management theory, such as Built to Last: Successful Habits of Visionary Companies.
Compared with other segments of the other media sector, like videogames and the Internet, consumer book integrations are growing more slowly, but still at a strong pace relative to the book industry’s overall growth rate in recent years. Total consumer book spending grew at a compound annual rate of 1.8 percent from 1999 to 2004, while the value of consumer book product placements rose 11.2% on a compound annual basis in the same period. Total spending on consumer book product placements reached $23.6 million in 2004 as marketers jostled to reach coveted demographics.
Other growth drivers include more consumer marketing campaigns designed to integrate products almost seamlessly into storylines. Among some of the recent deals that have been done include Disney’s release of The Chronicles of Narnia: The Lion, The Witch and The Wardrobe, which will feature tie-in book titles through a relationship with movie production company Walden Media and book publisher HarperCollins. The recent Fantastic Four film release also featured product placements in companion comic books.
In addition, Rachael Ray has released six titles through the Clarkson Potter Books imprint, one of which�Rachael Ray’s 30-Minute Get Real Meals�is among the top-10 bestselling books in its genre. Ray also recently launched a new magazine, titled Every Day with Rachael Ray, as well as a new television program, Day to Day with Rachael Ray. The new TV show will complement her existing program, $40 a Day, which will be retitled Tasty Travels in September and won’t limit Ray’s spending to $40 a day. Each of Ray’s books have placements relating to the meal program and other products.
Meanwhile, clothing product placements have become hot in the fiction category. Theory pants were featured in the recent Bergdorf Blondes, as well as Lacoste, Juicy Couture and Chloe Jeans. Theory also foot the bill for several book-related parties to promote Alison Pace’s If Andy Warhol Had a Girlfriend. Prada, Ralph Lauren and Elizabeth-Arden’s Red Door Salons are featured in Simon & Schuster’s Happiness Sold Separately, while Juicy Couture showed up in The Perfect Manhattan.
Nonfiction titles accounted for 44.5%, or $10.5 million, of total product placement spending in books in 2004, driven mainly by product reviews in health & beauty and travel & leisure titles. Fictional titles accounted for 33.9%, or $8 million, of all consumer book placement expenditures for the year, primarily in the mystery & detective and romance categories. Juvenile titles represented the remaining 21.5%, or $5.1 million, more than half of which is found in series/tie-in titles.
Interest in consumer book product placement has grown over the past few years for a number of reasons, ranging from the high concentration of affluent readers to renewed interest in nonfiction titles that are tied to niche instructional programs on cable television. However, with the rapid growth of product placement in videogames and the Internet, the share of book placements in other media has fallen from 8.2% in 1974 to 7.2% in 2004.
Similar to other print media, such as magazines and newspapers, book authors have become less cynical about integrating products into plot lines. As more authors cross-brand into other media�such as Tom Clancy titles being developed into videogames�marketers have been able to negotiate placements in additional media. Concurrently, as brands developed in other media formats are spun into book titles, such as Ray’s 30 Minute Meals, product placement contracts negotiated elsewhere are finding a new market in books. Driven by the integration of tie-in products in juvenile books, media & entertainment is the largest marketing category for the overall consumer book segment, accounting for 14.3%, or $3.4 million, in spending in 2004. The “other” marketing category is the second largest (13.8%), due mainly to the large religious and new-age book market, while travel & leisure is the third-largest segment with an 11.9% share of total placement spending, followed by food & beverage (10.5%).
However, consumer books will be among the slowest-growing media used for product placements over the next five years, as the size and volume of deals shrinks a bit as the market evolves and the cross-branding of products in multiple media begins to decelerate going forward. Consequently, product placement spending in books will post progressively slower growth from 2004 to 2009, expanding at a compound annual rate of 9.2% to $36.5 million in 2009.
Value of Product Placements in Radio is Expected to Grow 15% in 2005
Product placements have long been a staple in radio, therefore growth has lagged most other media segments. But due to the unique relationship between satellite radio providers and their subscribers who expect minimal advertising, product placement is proving to be a breakout strategy by which marketing messages are integrated into this medium. As a result, spending on product placement in radio is expected to grow 15.1% in 2005, reaching $25.8 million, according to PQ Media’s exclusive research.
Almost from the moment radio was invented, product placement was utilized. In 1906, Reginald Fessenden’s first radio broadcast mentioned that the signal was being sent to a ship crew of the United Fruit Company. In 1920, many of the first licensed radio stations were owned by radio manufacturers or retailers who needed programming like Westinghouse (KDKA) and Sears & Roebuck (WLS). Much of the early programming was live music aired from ballrooms, nicknamed “palm tree” music, because plants were located at the entry doors.
Once networks formed, such as CBS and NBC Red, programming became sponsored through scripted programs like Carter’s Liver Pills’ Inner Sanctum Mysteries and General Mills Radio Adventure Theatre. Additionally, product placement occurred during air checks (time, call letters, etc.), such as NBC’s Coca-Cola Orchestra. Product placement on radio fell dramatically in the late 1940s and 50s when the new medium of television pilfered many leading stars. Product placement returned in force in the mid-1960s when disc jockeys became celebrities and used their influence to tout new rock bands, live tours and contests for free tickets to these events.
As a result of growth in other segments, such as videogames, the Internet and recorded music, radio has gradually become the smallest medium in the other media sector with expenditures of $22.4 million in 2004, an increase of 12.9% over 2003. From 1999 to 2004, the compound annual growth rate of 8.1 percent was the slowest of all other media because national marketers have not embraced radio for product integration. As a result of slow growth, radio’s share of product placement in other media has dropped from 10.3% in 1974 to 6.9% in 2004.
The top 10 designated market areas accounted for 35.6%, or $8 million, of radio product placement spending in 2004. Expanding out to the top 25 markets, the share climbs to 57.5%, and expanding to the top 50, it increases to 76%. Contemporary formats accounted for 24.4% of product placement spending at $5.5 million in 2004. The news, talk & sports, country, and rock formats are the next three largest formats, combining for a share of 51.1% of the value of radio placements.
Radio stations have a long history of barter arrangements with local retailers, such as restaurants, which exchange on-air product plugs for services rendered mainly for the station’s sale staff, such as the ability to wine and dine clients. This type of barter arrangement is not growing especially fast. Additionally, the other major form of product placement in radio�the practice of plugging entertainment venues like concerts�has long been a staple and is not expected to grow rapidly in the future.
The major types of product placement in radio are related closely to contests (such as concert and sporting event tickets) or barter arrangements made through the sales staffs. Media & entertainment is the largest category of product placement, accounting for 17.4% of spending ($3.9 million) in 2004, followed by food & beverage (14.4%) and transportation & parts (13.9%).
Product placements in radio will be among the slowest-growing other media in the upcoming five years. With the growth of satellite radio, national marketers will begin to seek arrangements not previously on terrestrial radio; however, product placement by current local providers will not rise substantially. As a result, product placement spending on radio will increase at a compound annual rate of 9.9% from 2004 to 2009, reaching $35.9 million in 2009.
An executive summary of Product Placement Spending in Media 2005 is available at the following link: http://www.pqmedia.com/product-placement-spending-in-media.html. PQ Media’s website is located at www.pqmedia.com. PQ Media is a custom media research firm that provides clients with exclusive business intelligence, strategic consulting services and original research publications in multiple formats.