Overview:  BrandChannel interview with Hollywood Branded CEO Stacy Jones on the current state of product placement and brand partnerships with feature films.

Product Placement Sees Global Rises As Fans Face Saturated Entertainment

The upcoming re-imagined Great Gatsby 3D has a slew of roaring ’20s brands going along for the ride. Moet & Chandon and MAC Cosmetics are listed among the film’s partners in its official “Guide to Style.” As is New York’s Plaza Hotel, which will “celebrate the Roaring `20s with period-inspired affairs throughout the spring,” while Brooks Brothers has released a special Gatsby collection. While not listed in the film’s official style guide, Prada has its own major partnership and Gatsby-inpired line. Tiffany & Co. has embraced its tie-in as well.

But one needn’t be at entertainment’s high-end to grab a fashion line tie-in. Clothing brand Opening Ceremony partnered with Spring Breakers to release a line based on the exploitation film: “Accessories include unicorn bandanas, mesh backpacks, lighters, cotton beach towels, ‘HARMONY’ friendship bracelets, and ‘SPRING BREAK 4EVER BITCHES’ wristbands.”

It’s all part of a booming product placement business that grew 11.7 percent in 2012 and promises to get bigger this year.

Recent exact numbers on growth come from a PQ Media report that, in addition to citing 11.7 percent global growth in product placement spend in 2012, noted that China saw the fastest overall growth, up 27.2 percent compared to the US increase of 11.4 percent. The US market is still a bigger pie though, valued at $4.75 billion compared to China’s $103 million.

Within the industry, PQ’s numbers are a bit suspect, as product placement has always been notoriously hard to measure and value and it’s unclear if paid product placements include branded content deals such as Mini’s new Paceman series, Jaguar’s mini-film Desire or Kikkoman’s excellent self-history Make Haste Slowly. That’s to say nothing of the value of in-kind deals and placements arranged through prop masters where no payments occur.

From Dodge’s ongoing deal with Syfy’s new post-apocalyptic series Defiance to its one-off Challenger model’s role in the upcoming summer popcorn flick RIPD to TCL and Audi’s partnerships with Iron Man 3 and Psy’s new “Gentleman” video jam-packed with beer, video games and, yes, office paper brands to the aforementioned roaring tie-ins for Gatsby, without a doubt, the overall spend on product placement is on the rise.

“The practice of product placement and integration is only now just entering its heyday after more than 80 years of quiet existence and build up,” says Stacy Jones, Founder and CEO of Hollywood Branded which, amongst many other deals, arranged for BlackBerry’s role in the 2012 hit Zero Dark Thirty. Jones says paid product placement is well on its way to becoming “a core part of most corporations’ marketing strategies.”

Ruben Igielko-Herrlich, co-founder of Propaganda GEM, the product placement firm behind the original Iron Man-Audi partnership and BMW’s new efforts in films like Mission Impossible: Ghost Protocol, says he expects continued growth due to the “decreasing efficiency of classic advertising.” Conventional advertising’s erosion due to media platform competition and time shifting is no longer even debatable within the industry making product placement a natural next option for brand messages.

One big driver of spending growth is expanded deal structures. While conventional product placement remains popular, partner brands are looking for more unique cooperation offscreen, and they’re willing to pay a premium. For example, Marvel’s Iron Man 3 deal with Audi includes a “Steer the Story” promotion which crowdsources a final chapter for an Audi-themed Iron Man comic story.

“More brands are going to embrace multi-pronged approaches to paid product placement, ” says Jones, pointing to cobranded media and retail space. Social media build-outs will also become standard additions to any deal.

In addition, there is technology. Jones says, “Numerous companies have been working on various software platforms that will monetize product placement through the digital screen.” Though, she admits, “massive hurdles” exist when it comes to copyrights and clearances. But, she calls it a “bridge” that will be crossed.

Nowhere is product placement booming harder than in emerging economies like India, South America and China. One of the reasons for accelerated growth in developing markets, Igielko-Herrlich explains, is because US brands are still reluctant to pay for product placement. “But this is not the case in Europe, Asia or Latin America,” he says. This willingness to pay for placements allows for much more structured deals. Indeed, PG Media’s report notes that in these developing markets “where product placements for years were executed haphazardly, often at the request of a brand to its agency” things are changing. The report concludes, “More recently, product placement agencies have emerged in these countries to work more closely with media producers to integrate brands effectively into scripts, similar to what has been done in the US for years.”
In the developed market of the US, where most product placement is still done by in-kind deals or product loans, both sides are seeing the advantages to a more structured system.

“While the landscape still offers and even thrives on no-fee and barter trade opportunities, the trend for paid placements are absolutely becoming more formalized, with more corporations—and their ad agencies—embracing storyline integration within content,” says Jones.

In the past, Jones points out, producers had a great fear if brand involvement sapping creative freedom. But as production budgets balloon, many are rethinking old positions. “A paid integration can help a producer put more money into a trailer, or hire an editor, or put more money into special effects, or even pay towards marketing the film.”

And with Hollywood’s expanding reach, high-end productions look better to brands. “With the majority of content being globally distributed, Fortune 500 brands as well as those planning on becoming industry leaders will embrace paid placement in the years to come as they labor to broaden their consumer reach to a receptive audience,” says Jones.

Meanwhile, John Barnard, Chairman of NMG Product Placement, which has worked with shows like Sherlock Holmes and Hollyoaks and with brands such as Gillette and P&G, works in the UK where product placement remains restricted even after some loosening. He says that paid product placement has a natural limit. “Too many and audiences react. Only a limited number of opportunities really add value to a brand’s message. Paid for doesn’t work for some products, it generally provides a symbiotic spin for high involvement products like fashion, smartphones, automobiles.”

With this in mind, Barnard says everyone should be focused not just on percentage growth, “but how large the ‘paid for’ sector is, where are we now in exploiting that sector, and how long might it take to get as near 100 percent saturation as possible?”

That saturation isn’t going to be this year if PQ’s study is right. The group is forecasting product placement spending in 2013 to jump another 11.9 percent. Impressive considering there isn’t even a James Bond movie coming out this year.