Product Placement - Consumer Response and Economic Impact

Consumer Response and Economic Impact

As with any advertising, its effectiveness tends to be assumed because advertisers continue to use product placement as a marketing strategy. However, some consumer groups such as Commercial Alert object to the practice as "an affront to basic honesty" that they claim is too common in today's society. Commercial Alert asks for full disclosure of all product-placement arrangements, arguing that most product placements are deceptive and not clearly disclosed. It advocates notification before and during television programs with embedded advertisements. One justification for this is to allow greater parental control for children, whom it claims are easily influenced by product placement.

The Writers Guild of America, a trade union representing authors of television scripts, had raised objections in 2005 that its members are forced to write ad copy disguised as storyline on the grounds that "the result is that tens of millions of viewers are sometimes being sold products without their knowledge, sold in opaque, subliminal ways and sold in violation of government regulations."

According to PQ Media, a consulting firm that tracks alternative media spending, 2006 product placement was estimated at $3.1 billion rising to $5.6 billion in 2010. However, these figures are somewhat misleading in PQ Media's view in that today, many product-placement and brand-integration deals are a combination of advertising and product placement. In these deals, the product placement is often contingent upon the purchase of advertising revenues. When the product placement that is bundled with advertising is allocated to part of the spending, PQ Media estimates that product placement is closer to $7 billion in value, rising to $10 billion by 2010.

In a June 2010 research report, "PQ Media Global Branded Entertainment Marketing Forecast," the research firm reported that paid product placement spending – in television, films, internet, video games and other media – declined in 2009 for the first time in tracked history, as spending decreased 2.8% to $3.61 billion due to severe reductions in brand marketers' budgets. However, paid product placement is also one of the sectors poised for the most growth, with PQ Media predicting the 2009 figures to more than double by 2014, when product placement is projected to be a $6.1 billion market.

A major driver of growth for the use of product placement is the increasing use of digital video recorders (DVR) such as TiVO, which enable viewers to skip advertisements. This ad-skipping behavior increases in frequency the longer a household has owned a DVR.