On 1 March 2011, paid-for product placement will be allowed in UK-commissioned TV programmes for the first time, thanks to long-awaited rule changes by media regulator Ofcom.
Agencies, broadcasters and producers have all welcomed the news, despite a lack of clarity on the impact. Advertisers are more cautious, but if the US' experience is anything to go by, they will be hammering down the branded-content door soon.
In simple terms, Ofcom has been persuaded to soften its tough stance on placement for two reasons. First, because broadcasters and producers are under financial pressure. Although the market is expected to be worth only £25m in its first year of operation, some observers expect this to grow to an annual worth of £150m (a figure that would be in line with the US), once advertisers begin to grasp how it changes the dynamics of the market.
The second reason is Ofcom's recognition that a blanket ban is out of step with the times. Not only are British audiences familiar with seeing brands in imported US series, movies and sports events, but there is already a well-established practice of semi-official product placement within the UK TV-production sector.
Known as 'prop placement', it is this process that puts authentic brands into the background of TV shows (including those on the BBC). Ad hoc and unstructured, there is an official assumption that TV props are sourced for free, although in reality money is sometimes involved.
So Ofcom has decreed that broadcasters will be able to charge for product placement providing they do not transgress three key rules. 'Placements cannot be promotional, they have to be editorially justified and they should not be too prominent,' says Mark Wood, a branded-content veteran who runs his own branded-entertainment agency, Krempelwood.
Clearly, this leaves room for interpretation, but Wood does not expect anyone to take on the regulator, at least not in the first six to 12 months. 'Ofcom wants to protect viewers, which is why it has imposed restrictions on the programmes and products where placement is allowed,' he says. For example, the regulator has limited placement to categories such as films, entertainment and sport, excluding children's, news and religious programming, and current affairs content produced in the UK. It has also banned any placement of alcohol and high fat, sugar and salt food products.
In any case, says Wood, advertisers and broadcasters are arguing for a softly, softly approach. ISBA director of media and advertising Bob Wootton, for example, has cited two concerns: that the shift to paid-for product placement will drive up advertiser costs; and those inflated costs will encourage placed brands to demand more prominence, which will lead to 'viewer disenfranchisement and complaint'.
Warning signs
In the short term, this latter concern is exacerbated by Ofcom's decision to flag up shows with product placement by trailing them with a warning symbol. For some brands, the prospect of viewers actively hunting out their products simply to moan about them will be enough to keep them on the sidelines.
Fortunately for Wootton, his cautious view is echoed by broadcasters. Channel 4 and Channel Five both expect product-placement revenues to be modest, while Sky1 director of programmes Stuart Murphy says he is not looking at more than two or three placement vehicles in the first 12 months.
The approach outlined by ITV head of branded entertainment Gary Knight, who is likely to be at the fulcrum of most deal-making, is perhaps most significant. Speaking at a recent event hosted by the commercial TV industry's marketing body, Thinkbox, Knight said there is no intention to replicate the US market, where it is not uncommon to see 11 product placements per hour in primetime and as many as 17 off-peak shows (see box, right). In the context of ITV1, he predicts two to three placements per half-hour, with only a handful of shows offered in the first year.
On the subject of revenues, there is little consensus. C4 is concerned that money may be shifted from areas such as sponsorship and spot ads. ITV's Knight is hopeful that it will come out of PR and direct-marketing budgets, but until the rules come into force, no one can be certain. As for placement valuation, Knight refuses to be drawn, stressing that there are too many variables. 'In the US, product placement is wrapped up in trading deals, so you can't just separate it out and say it is worth "x",' he says.
Even if product placement could be stripped out from spot ads and sponsorship, it would still be difficult to place a value on it, says Paul Rowlinson, head of Mindshare's trading unit, The Exchange UK. 'The calculation might start with the value of 30 seconds of airtime, but after that there are so many factors to consider,' he says. 'Is the placement verbal or visual? Is it a full or partial view? When does it occur during the show? How long is the product on screen?'
There are ways of evaluating the impact of brands in sports TV. However, placement is not necessarily analogous to perimeter boards or shirt sponsorships. 'How do you put a price on the relationship between lead characters and brands?' asks Rowlinson.
Assuming a trading currency is formed through practice, a question remains as to the benefits of placement. For Knight, the critical point is that 'it's not about awareness, but brand feel and essence. It's another commercial spoke in the wheel of franchising opportunities based around content'.
This is the line taken by Amanda Winch, business director at media agency MEC Access.'Product placement should be a boost for advertiser-funded programming (AFP),' she says. 'We've done some good AFP where the activation occurs off-screen. But the ability to place brands in shows will be additive - as long as it is done appropriately.'
Wood agrees. 'There's no question that the inability to place brands in shows has made some advertisers reluctant to invest in AFP. But we're taking a lot of calls about the new opportunities.'
Tess Alps, chief executive of Thinkbox, also concurs. 'Many viewers like to know what brands are being used in cooking, travel and DIY shows,' she says. 'Placement might be sensitive in high-quality dramas. But with instructional shows, viewers often go online to find out about tools or ingredients.'
Alps is nonetheless cautious about placement's potential. 'For broadcasters there's a realisation it could mean a lot of work for relatively small sums,' she adds.
'It took sponsorship 20 years to reach £150m-£200m, so we need to keep this in perspective. After all, agencies, producers, brands and broadcasters are involved.'
This last point is not solely a reference to the potential for conflicts between the editorial vision and commercial imperative, but also about the allocation of these new revenues. If, for example, a brand wants to be associated with a star, there's no guarantee that the broadcaster will control that deal: it might be a producer or an agent instead.
Heroes' field day
From a brand's perspective, though, Alps agrees there are opportunities. 'You can see scope for hero brands - cars and laptops. Luxury brands might go into shows, because they can control the environment better than during breaks.' Alps is quick to clarify her point, however. 'Brands won't be allowed to request that rivals are cast in a negative light or excluded from a show. All I mean is brands will be able to see scripts and exercise a judgement on whether they're right.'
Winch emphasises the need for careful pre-planning. 'A genre like drama has long lead times, whereas new models of mobile handsets and cars are unveiled on a regular basis. So brands need to avoid placements which soon look obsolete,' she says.
To address that concern, digital product-placement pioneer MirriAd is developing technology that will allow products to be added in post-production, thereby ensuring the most up-to-date brands hit the screens. Meanwhile, Rowlinson points to the difficulty of marrying up TV scheduling with product marketing. 'Schedules change. Shows can get shifted and suddenly reach the wrong target audience,' he says.
Perhaps the biggest issue for Alps is ensuring placement does not undermine the airtime sales story. As she concludes: 'Some agencies pitch it by saying viewers all skip spot ads. Not only is that untrue, it puts a £3.5bn business at risk for the sake of a few million pounds.'
PRIME PLACEMENTS - THE US EXPERIENCE
Marketers searching for product-placement ideas could look to the US market for inspiration.
Dream Home and Disney (HGTV)
HGTV's Dream Home is a popular cable TV show that focuses on interiors and furnishings. It also happens to be product-placement nirvana. In 2010, Disney decorated a children's room on the show with Alice in Wonderland paraphernalia to coincide with the movie release. Toy Story 3 got similar on-screen treatment.
Celebrity Apprentice and Snapple (NBC)
Reality TV is the hottest genre for placement in the US, with shows like Hell's Kitchen and America's Next Top Model rife with examples. In the final of Celebrity Apprentice 2010, contestants had to develop Snapple Iced Tea flavours. The campaign was highly effective, partly because the task involved making a 30-second TV spot.
Hawaii Five-0 and LG (CBS)
The best placements in scripted content tend to be high-tech hero endorsements - lead characters using branded laptops, mobiles or cars. In the Hawaii Five-O remake, Kono (Grace Park) uses Microsoft's Bing for search on an LG phone.
What we don't want to see
This NBC placement has to be seen to be believed. Watch 'Days Of Our Lives - Melanie & Nathan eat a bowl of Cheerios' on YouTube. This is exactly what Ofcom is guarding against, although it's so funny it almost works.