The growth of product placement and some influences on consumers

Product placement has become an increasingly significant factor of the marketing communications mix. This report examines the influence of product placement in film, television, social media and video games on consumer’s behavior and attitude towards the products. A review of literature is conducted to study the popularity, growth and advantages of product placement. Investigations reveal the effectiveness of brand placement should be measured in three dimensions: reach, impact, and frequency. The literature review also reveals strategies on integrating product placement with social media.

Additionally, the report draws on corporations working with computer games and online games to place their products. The report draws attention to the negative effects of product placement on children. However, the report reveals a lack of practical solutions for responsible marketing to children and ways to combat children obesity.

1. Introduction

The purpose of this paper is to examine the influence of product placement in film, television, social media and video games on consumer behavior and attitudes toward the products. This research paper will focus on the growth of product placement, including the positive and negative influences on consumers.

Total expenditure on product placement was estimated at US$7.6 billion in 2010 (Margaret, Remiko, and Jane 2008). Marketers employ a range of marketing mix strategies such as co-branding, ethical marketing, event sponsorship, publicity and product placement. However, achieving strategic growth by delivering commercial value to the shareholders and consumers (Margaret, Remiko, and Jane 2008) needs to be considered.

Due to changes in technology, consumers can now skip ads using TiVo and DVR (Thomas and Kohli 2011) when viewing film and television. Consumers can change channels or fast forward when commercials appear on the television screen or avoid many commercials completely when watching television online. This presents a new challenge to marketers as to how to influence the consumer’s brand associations, purchasing decisions or simply how to get seen by consumers.

Ultimately, every marketing initiative will be asked and measured by the same basic question: what is the return on investment (Taylor 2005) on every dollar that is being spent on the advertising agenda?

2. Defining product placement

Corporate marketing campaigns aim to serve four overarching purposes (4 P’s): to encourage consumers to purchase a product, to place a product, to effectively price and promote a particular product. The last component of the marketing mix or promotion mix, is made up of sales promotions, direct marketing, advertising and public relations (Pardun and McKee 1999). A tool that is becoming more common is product placement. Product placement in the mass media began in the mid 1890’s (Newell, Salmon, and Chang 2006) with the birth of motion picture projection.

For this research, the definition of product placement is the insertion of products into mass media content with the intent of influencing consumer attitude or behavior (Newell, Salmon, and Chang 2006). Product placement agencies strive to achieve positive attitude (Lehu and Bressoud 2008) in the minds and hearts of consumers as well as potential impact on brand recall. Product placement is a form of marketing which creates an emotional tie between the brand and the consumer.

In this paper, the terms product placement and brand placement are often used interchangeably (Lehu and Bressoud 2009). There are three possible forms of contract between the brand / product and the movie studios.

1. Product placement can be paid by the brand.

2. An exchange in which the brand provides products, logistics or financial assistance for a placement in the film.

3. Brand provides free of charge products, free props (Newell, Salmon, and Chang 2006) or services that are not necessarily identified in the film. This reduces the film’s production costs.

3. The popularity of product placement

3.1 Reasons for the growth of product placement

As product placement seems to be generally accepted by the public, it is considered by many as a more effective measure of delivering an integrated marketing communication tool (Tsai 2005) than other traditional methods. Product placement is less expensive compared to a 30 second commercial during the American Super bowl, estimated to cost marketers $2.3 million on average (Ho, Dhar, and Weinberg 2009). Pepsi, for example, has engaged live show and special events product placement marketing that increases emotional branding, creates an impressive brand community by which product quality improves (Tsai 2005).

Movies are not the only medium used for product or brand placement (Lehu and Bressoud 2008). It can also be found in television shows, online interactive computer games (Reijmersdal et al. 2010), video games, and others. Advertisers are using online games to propagate their messages and have created innovative ways of reaching the Generation Y and Z (Reijmersdal et al. 2010).

Many companies use two of the 7 P’s marketing mix – promotion and people – to help boost their products by partnering with endorsed celebrities. These include Julia Roberts for Lancome, Brad Pitt for Tag Heuer watches, and Michael Jordan for Nike Air Jordan. Celebrities tend to have a greater impact on consumers’ behavior and purchasing habits (Ross et al. 1984). Consumers like to be associated with celebrities and to keep up with latest trends by purchasing these luxury products.

3.2 The advantages of product placement

In an advertising context, the effectiveness of brand placement should be measured in three dimensions: reach, impact, and frequency (Thomas and Kohli 2011). Repetition of product placement will embed brand associations in the viewer’s mind when it is employed frequently on television, movies, interactive games and sports shows.

Reach: In 1998, Nick and Nora (Antonia, Barbara, and Stern 2006)pajamas were positioned in the high rating Ally McBeal TV series. Due to the lead character being frequently featured lounging in the Nick and Nora pajamas, the company enjoyed a large increase in sales. Popular TV programs can reach very large audiences. For example, in 2010 American Idol was watched by a total of 24 million (Fixmer 2011) viewers per show. Blockbuster movies and popular sitcom television shows have a broad reach. The movie “Transformers: Revenge of the Fallen” earned $836 million worldwide (Reuters 2010).

Impact: Aston Martin and BMW(Thomas and Kohli 2011) have used the popular blockbuster James Bond franchise movies, to gain high value product placement, influencing the hearts and minds of the drivers and purchasers of those luxury cars. Watching British actor Clive Owen staring in the BMW series The Hire, (Margaret, Remiko, and Jane 2008) viewers associated themselves with the branding message: BMWs are for adventure seekers and these automobiles will help you to escape and fight your enemies. In the television series Sex and the City, characters frequently consumed Cosmopolitan martinis (Antonia, Barbara, and Stern 2006). This resulted in high increase in consumption.

Frequency: For instance, Iron Man II has about 64 product placements throughout the movie. Humans are emotional beings; brand associations that are positive, change consumer responses by influencing their tastes, preferences and purchase behavior. An example of this occurred in the 1982 movie, ET: The Extra Terrestrial. In the film, the young hero Elliott successfully attempts to make friends with the alien by offering him Reese’s Pieces. Hundreds of theaters started selling Reese’s Pieces at the concession counter, some even held contests to deduce the number of Reese’s Pieces in the jar(Newell, Salmon, and Chang 2006). Following this brand placement, Hershey reported a 65% increase in the sales of Reese’s candy. (Thomas and Kohli 2011)

3.3 Stealth Marketing

Stealth marketing targets an audience without the advertisement being perceived as an advertisement as it occurs outside a traditional advertising context, or may refer to covert marketing in mass media (Roy and Chattopadhyay 2010). Product placement has integrated almost stealth like, into mass media and interactive video games. In respect to the four marketing mix – that is product, price, promotion, and place -stealth marketing would equate to hiding and repositioning the product away from the true identity of the product (Roy and Chattopadhyay 2010).

Product placement has been integrated seamlessly into movies without the audience realizing. A successful marketing mix is to have the right product in the right placement. Corporations such as Procter and Gamble, PepsiCo, Nike and Apple work with product placement agencies to embed products to have effective brand recall (Antonia, Barbara, and Stern 2006). Product companies work with studios and placement agencies to position products in a “context of naturally occurring activities” (Pardun and McKee 1999).

3.4 Integration of product placement with Social Media

Today, high profile brands such as Pepsi, BMW and Gap have rushed into social media sites such as Facebook, Linkedin, and Twitter. However brand marketers have realized that significant presence in social media sites, photo sharing sites, and online blogging communities doesn’t work as simply as expected. Web 2.0 is a two way street of communication between consumers. In the online world, consumers contribute to the exposure, messages and rank of a brand (Fournier and Avery 2011). Not marketers.

Nevertheless, consumers visit corporate sites looking for price deals, discounts or a place to vent their frustrations about a certain product. Social networking sites (Flora 2008) can create a hub of information and increase traffic to a company in no time. For instance, United Airlines learned a lesson when an unknown country singer released disapproving videos , voicing her discontent with the company on YouTube that generated over 10 millions views (Fournier and Avery 2011).

4. Product placement in computer and online games

Online games have become a major source of entertainment for a diverse demographic across gender and age. Games nowadays provide an interactive platform that is differs to traditional entertainment. Advergames are a specific type of online game where the brand itself is embedded in game-play (Gross 2010).

Product placements in games are increasingly interactive. It has the potential to create positive or negative effects on the consumer’s attitude and association towards the brand. For instance, in Sims computer game, food franchise giant, McDonald’s offers players the ability to franchise a restaurant. Moreover, car companies work withGran Turismo computer game programmers to position cars such as Subaru Impreza or BMW 120d (Reijmersdal et al. 2010). Branding on billboards along the racing tracks in Gran Turismo resemble real life and thus provide positive brand associations and adding value to the game experience. In the Enthusia race simulation game, Ford position GTs and Mustangs to implement one of the marketing mixes in order to reach the 40 million (Marty 2005) Americans who play video games.

5. Negative effects of product placement on children

Marketing succeeds in transforming products that might be tolerable in moderation but in large quantities, becomes dangerous. Marketers have used television to market high-calorie, nutrient-poor foods to young people for decades. In the United States, more than US$10 billion is spent on marketing food to young people every year (Hawkes 2007).

The majority (99.7 percent) of Australian(Baker and Mullan 2011) households have a television, which exposes the viewers to advertisements. A recent National Health Survey in Australia showed 49 percent of the adult population to be overweight, with 16 percent obese (Baker and Mullan 2011). There seems to be a correlation between the amounts of time spent watching television and the rate of obesity. This has created a lot of interest in understanding the content that is being displayed on television, whether it is helping or harming children and adults’ mental and physical health.

Marketers have been utilizing television to subconsciously bombard viewers with product placement. Children in low income families tend to watch more television. Food advertisements account for more than 50% and target children (Nicklas et al. 2011). In the online environment, food companies partner with game makers to create interactive games to lure children into buying their products.

Importantly, children don’t have the ability to differentiate between fantasy and reality. Young children can be preyed on due to the vulnerability of their cognitive limitations (Ross et al. 1984). Products that are endorsed by celebrities and without(Ross et al. 1984) have different sales outcomes. Products that are with celebrities have higher sales than those that don’t. One of the main reasons is that children have the ability to identify and remember the names and movies the celebrity has been associated with. For example, automobile advertisements in cinemas and product placement tend to go hand in hand: Mini’s placed in the film Italian Job (Royal 2004), Angelia Jolie drove a Jeep Wrangler in Tomb Raider – The Cradle Of Life (Royal 2004) and a small fleet of Audi cars paraded in The Joneses (Times 2010).

At shopping malls, a by-passer would often see children pestering their parents to eat at McDonalds, Pizza Hut or KFC. Sadly, many busy parents do not consistently supervise what their children are watching on television and video games they are playing. Parents need to be informed and aware of the fact that television, video games and other mass media educate their children on what they should consume.

5.1 Food nutritional and health effect analysis

Breakfast cereals are highly advertised. The ratio of sugar per serving vary considerably: cereals (34-47%), McDonald’s Happy Meal (19%), sweet snacks and deserts (13%) and juice drinks (11%) (Folta et al. 2006). Figure 1 shows the number of food advertisements by food category. The diet that’s been typically advertised on television sells convenience and fast foods. This has led to obesity, cardiovascular disease, diabetes and certain cancers in adults (Nicholas, Robert, and Osman 1999).

Figure 1: Number of food advertisements by food category (Nicholas, Robert, and Osman 1999)

High levels of unhealthy or non-core food advertisements appear to be consistent across other advertising studies in the UK, the USA, and Australia (Baker and Mullan 2011). Child targeted advertising are significant in developed countries and in developing countries such as South Korea (25%) and Malaysia (70%) (Hawkes 2007). Children in developing countries have less understanding of modern marketing techniques of product placement in television and movies.

In New Zealand, qualitative research has suggested that food advertising on television might be contributing to less healthy eating among young people (Nicholas, Robert, and Osman 1999). Food that has been advertised during prime television time for children (3.30 – 6.30 pm on weekdays and 8-11am on weekends) is high in fat, salt and/or sugar (Batada et al. 2008). A good example of product placement occurs on American Idol; judges on the TV show, endorsing Coke as an excellent soft drink choice might influence viewers to drink Coke. Also, the production set where contestants wait is colored red, which has been chosen for a reason: association with the Coke brand (Thomas and Kohli 2011).

Government, regulators and employers need to be reminded that to have a healthy economy, you need healthy citizens and employees. This in fact has to start from the grass roots, which is proper education to our young people.

In the article “Regulating Food Marketing to Young People Worldwide: Trends and Policy Drivers”(Hawkes 2007), the writer identifies countries that started to regulate food marketing. For example in Ireland, statutory regulations now prohibit celebrities from being used in children’s television advertising (Hawkes 2007). Restriction on sales of soft drinks, high salt products and junk food has been banned in schools. Celebrity chef Jamie Oliver has taken up the responsibility of making more nutritious food at school to the applause of many (Thomas 2005).

6. Conclusion

Studies undertaken into brand recall, impact and positive attitudes on consumers have concluded that product placement in movies, games and mass media can be an effective marketing strategy. Product placement is an important tool within the marketing communications mix. As mentioned in the previous examples, product placement can bring about greater sales results than other marketing initiatives.

TV food advertising and advergames are one of the major factors of increasing obesity among children. Food that has been advertised during prime television time for children is high in fat, salt and/or sugar. Parents and health professionals need to urge food companies and the government to stop marketing low nutrition foods to children and to promote healthy foods instead.

7. Recommendations

Further research on the responsible marketing and effects of product placement on children in advergames has not been properly addressed. Additionally, practical solutions for negative effects of product placement in movies need to be addressed.