Headline: Product placement to be allowed on UK commercial TV for the first

time

Where you might have read about this: National press coverage in mid-
September.

Official press release: N/A

What is it?
Product placement (aka embedded marketing) is the planned inclusion of
branded products within the body of a programme (eg storylines), usually with a
guaranteed amount of paid-for exposure.

What are the known facts about this subject?

• Culture Secretary Ben Bradshaw announced a three-month consultation
on enabling commercial TV to place products in certain types of
programming.
• EU regulations already allow European broadcasters to charge for product
placement.
• Both the Tories and Lib Dems support the proposals.
• BBC remains unable to take part in commercial product placement.
• European regulations exclude any direct call to action from the placement
– it remains a passive endorsement.

Our point of view on the news/issue:

• Commercially, we welcome the proposed changes – a new, interesting
and potentially cost-effective opportunity for our clients to market to
broadcasters’ audiences.
• Industry estimates of £125m investment by advertisers are over-
exaggerated. Most investment is likely to come from diverted budgets from
spot revenue.
• ITV is likely to want to include this revenue in their station price
calculations, which we will contest. The exposure doesn’t generate
commercial impacts, therefore the revenue is excluded, in our view.
• We believe this is a media-buying opportunity, not a creative one. We will
use both our existing commercial relationships with broadcasters to
negotiate the best value for our clients, as well as negotiating deals direct
with production companies selling licensing packages direct. Our role is
also to safeguard our clients’ brand values and commercial integrity.
 • Calculating the value of the placement requires a new methodology,
based on a mixture of duration, quantity and type of exposure (similar to
the way we accurately calculate sponsorship-exposure value with our
proprietary Sponsorship Evaluation Tool).
• Light entertainment is likely to be the most heavily demanded area for
product placement – it’s mass market, comes with relatively short
production/scheduling lead times and is easiest to place products into in a
meaningful way.
• Sponsorship, AFP and product placement are likely to be governed by an
over-arching set of regulations, helping to protect sponsors’ interests and
regulate the amount of branding/placement in programmes.

Who this might affect in the future:

• Some commercial broadcasters have lobbied for these changes for years
– hoping to attract incremental revenues into commercial TV (outgoing
Channel 4 chief exec, Andy Duncan, is not a supporter, citing concerns
over how product placement may erode the UK broadcasting’s editorial
credibility).
• Independent production companies can potentially make more money by
offering placements within programmes before they are sold to
broadcasters – as part of the licensing packages they already sell direct to
advertisers.
• Advertisers’ products will effectively be endorsed by broadcasters – and
their talent, crucially – potentially deepening the brand’s association with
chosen programming.
• Campaigners concerned with the editorial quality of UK television suggest
the UK viewing public is likely to embrace product placement.

Why it’s important to know about this:

• US product placement market is huge and European market is growing.
• UK relaxation of laws is likely to encourage a flurry of opportunities from
broadcasters.
• Product placement offers a new commercial component to sponsorship
deals – although some types of direct endorsement of sponsors’ products
in programming will not be allowed.
• Unplanned exposure on YouTube begins to take on a clear value for
clients with products placed in viral phenomena (eg Susan Boyle’s
Britain’s Got Talent performance generated 100million+ views on
YouTube, the likes of which could, in the future, include a branded
product).
When this is likely to come into effect:
• Three-month consultation scheduled to conclude by end of 2010
• Significant changes unlikely to take effect until 2011, so a watching brief is
in place

NB: technology (such as Myriad) is already used by some advertisers to add

products post-broadcast to TV programmes shown on catch-up services

Author: Jerry Lloyd-Williams

Contact details: jerry.lloyd-williams@mediacom.com; 020 7158 5103