Latest Research Study by NMG Product Placement values UK “Paid for” Product Placement Market Size at £9.7m to £29.1m
Exclusive Data Released today from NMG’s Tracker™ 2012 Database
“Paid for” product placement began its journey in November 2007 within the EU’s Audiovisual Media Services Directive 2007/65/EC. This sought to harmonise television practices across Europe. Member states could adopt limited “paid for” product placement subject to these provisos:
- Exclusion of certain products such as tobacco
- No placement in news, current affairs or children’s programmes
- Signalling of placement at the beginning, end and after every commercial break
- The product placement must not influence editorial content
- No undue prominence
- The placement cannot promote buying the product
Ofcom conducted an extensive consultation in order to formulate its recommendations for implementing the Directive. In March 2010 the Department of Culture Media and Sport published its summary of the consultation responses.
Specifically, paragraphs 14 to 17 of the summary dealt with future market estimates, which varied at year 5 from £10 to £25m to £175m+.
Ofcom settled on a year 5 estimate of £25m to £30m and this was incorporated into the explanatory memorandum laid before Parliament wherein the DCMS laid out a 10-year benefit of £215m
On 28th February 2011 Ofcom permitted “paid for” product placement in a limited range of programmes, for limited brands subject to restraints on undue prominence, protecting editorial integrity, and preventing placements from being able to influence sales.
Why was there such a wide range of market size estimates?
When examining the Ofcom summary broadly the lower estimates came from agencies already experienced in UK product placement or services allied thereto.
The higher estimates came from media related companies with a vested commercial interest in the largest possible market. Their estimates were based on extrapolating the US and Australian experience with product placement achieving 5%, after 5 years, of total advertising revenue. There appear to be flaws in this approach:
- • The UK, uniquely, has a buoyant PBS broadcaster in the BBC. Excluded from the “paid for” market, but having a 27% viewing share. In the States, for example, PBS scores a Prime Time rating of 1.3, versus the top four networks 19.3
Source: BARB Feb 20-28 and Nielsen.
- • Madigan Cluff/Screen Digest reports that US branded entertainment figures are 14% of total TV advertising revenue. This includes all forms of branded entertainment – for instance digital videos shown alongside a branded sponsor or events tied to a broadcast, not just paid for product placement. In their research for last year’s Screen Digest’s report Madigan Cluff estimates the UK market for “paid for” placement in 2011 at 0.1% of total advertising revenue (£7m), rising to 0.9% (£38m) in 2015.
- • Other estimates were based on the UK TV Sponsorship market. However, ISBA noted to Ofcom that the market for TV sponsorship had taken 25 years to reach around £200m. Further, NMG believes the TV sponsorship model is not relevant on two levels:
- ♣ It competes for the same budgets as “paid for” placement.
- ♣ There was no previous TV sponsorship market, hence its rapid adoption, however, “paid for” placement competes with the established free prop placement industry created by NMG Product Placement in 1984.
John Barnard, Chairman of NMG Product Placement said: “Clearly in the light of such varied estimates there was a need to find an alternative methodology to assess the “paid for” placement market size. Without a new approach then comparing the relatively low deal take up in the first 12 months is meaningless.
NMG’s unique database, Tracker 2012, provides a flexible resource, which allows us to apply empirical methodology that is refreshingly simple and transparent. In January 2012 NMG recorded and analysed 85 hours of the programmes most likely to contain “paid for” placement opportunities from these commercial TV channels: ITV1, C4, E4, C5, MTV UK and Sky 1
NMG’s Chief Visual Brands Analyst, Chloe Thompson was briefed to enter into NMG’s Tracker 2012 database opportunities that appeared on screen, which were, in our experience, commercially viable and complied with Ofcom’s Guidelines.
NMG examined all these scenes and noted opportunities where a brand appeared in the right context and with likelihood of repeated exposure. The brand could be present due to free prop supply or serendipity having been bought by the production.
To this universe we added opportunities where a brand could have been present. For example, frequent dialogue at a shop counter where a counter top display unit might be added or exterior scenes where posters or display boards would, in reality, be appropriate.
John explained “Our logic is simple; since Ofcom’s Guidelines do not permit a brand to interfere with creative content, the “paid for’ opportunity has to already naturally occur within the script with sufficient frequency, relevance and quality to justify any brand allocating scarce budget. Typically, this will be lead cars, high involvement products such as smartphones, tablets, distinctive fashion wear and set dressing in fixed sets such as the Nationwide ATM in Coronation Street”.
Summary of the Empirical Study Results:
The universe of opportunities in January was found to be:
|PROGRAMME||LOCATIONS||MEDIA VALUE (£k) Tracker ™|
|LAW & ORDER UK||2||48|
|THE BIGGEST LOSER||3||243|
However, some of these appearances were fleeting, or of poor quality, so NMG applied a number of reasonability filters, first excluding appearances on the Tracker scale 1 to 3 star, then those whose overall monthly total duration was less than 15 seconds and finally those whose total monthly appearance was under 30 seconds. This data trail followed:
|4 & 5 STAR|
|PROGRAMME||LOCATIONS||MEDIA VALUE (£k) Tracker™|
|LAW & ORDER UK||0||0|
|THE BIGGEST LOSER||2||231|
|15 SECONDS & ABOVE|
|PROGRAMME||LOCATIONS||MEDIA VALUE (£k) Tracker ™|
|THE BIGGETS LOSER||2||231|
|30 SECONDS & ABOVE|
|PROGRAMME||LOCATIONS||MEDIA VALUE (£k) Tracker ™|
John continued: “The next challenge is to evaluate a commercial value range based on Tracker Media Values which benchmark exposure to averaged 30 second spot advertising rates. Broadcasters have been discrete about the market values actually achieved so far, so NMG applied a reasonability approach.
Further NMG excluded from our considerations activation opportunities, which are sometimes packaged with the “paid for” offer, since these in themselves require the brand to allocate additional budget, and might be problematic. In an earlier NMG study, Paul Herbert, a specialist in media law and regulation at Goodman Derrick LLP voiced concerns that some activation opportunities might indeed contravene Ofcom Guidelines:
… “Additional sensitivities will also arise because of the off-screen promotional opportunities offered. Where those involve, for instance, members of the cast promoting products with which they interact in the programme, there is a danger that this could be regarded as an endorsement of the product by the character, which is a form of promotional reference.”
John Barnard said: “We acknowledge that we are trying to evaluate an ever changing basket of opportunities. No two are the same. Some like this Peugeot in Emmerdale lead car, cast in an on-target role could be worth many times more than our Tracker Media Value.
Conversely, others like say, the Dolce Gusto machine in ITV’s “This Morning” might have a declining value as the viewer progressively ignores the product, as it becomes part of the everyday set dressing.
Likewise, the requirement to flag “paid for” placement with the “P” sign, which does not apply to free prop placement, could lead the consumer to believe that the product is being “plugged” and gratuitously inserted in their entertainment thereby creating a negative reaction.
A further dynamic is the financial efficiency of the free prop supply route to brand integration. NMGs’ clients typically enjoy a multiplier where the ratio of fee to Tracker Media Value can be from 1:10 up to 1:50. Thus their propensity to pay even Tracker Media Value may be diminished.
NMG’s experience leads us to believe that only those opportunities in the final table – over 30 seconds per month exposure, 4 star and above would be sellable. For example, Nationwide’s ATM and advertising board, viewed as a successful “paid for” example, clocked up 149 seconds in January.
Accordingly NMG factored January’s results of £1.6m and applied a +/- 50% rating to take into account the above commercial dynamics. Thus, we establish:
NMG’s estimate of the “paid for” market is within a range of £9.7m to £29.1m p.a
Commenting on these results, Sarah Curran, NMG’s Business Development Director said:
“Over 12 months NMG has carried out pioneering, innovative product placement research. Sometimes interested parties focus on the messenger and not the message. With this latest study NMG provides a realistic range of market values.”
John Barnard added:
“NMG’s research reconfirms Ofcom’s initial estimates and those of the product placement industry as a whole.
This provokes the question: Why has the first 12 months deal take up still been so relatively small?”
One of the leading product placement commentators is Professor Chris Hackley of Royal Holloway University of London. In his latest analysis he identifies a number of issues: the pre-existing and successful free prop placement industry; commercial TV’s adoption of a new computerised evaluation system derived from sports sponsorship; and competition from overseas programmes; but overall the failure of the broadcasters to understand and work with the free prop placement agencies and relate their offers to this alternative route to screen.”
John Barnard: “There are many companies who have adopted product placement as a major communications tool and already commit significant budgets, measured in £s millions. For example, today, here at Pinewood James Bond’s latest epic adventure “Skyfall” in in full production and rumoured to have raised US$45m in product placement deals.
Paradoxically, when TV broadcasters across Europe screen this movie all of the placements will remain in place whilst at the same time our own TV production industry struggles to raise incremental finance hamstrung by a series of restrictive guidelines.”
NMG Product Placement is based at Pinewood Studios and founded the UK product placement industry in 1984. NMG commenced measuring product placement in 1987.
NMG Product Placement is retained by over 90 major brands.
Tracker™ 2012 records and evaluates over 6000 brand appearances each year from over 1135 programmes on over 21 TV channels. Each brand appearance is measured to the nearest second and categorised into 5 levels of saliency. Brands are further segregated into over 110 product categories.
For comment or interview please contact:
John Barnard, FCA, Chairman, NMG Product Placement: firstname.lastname@example.org
Sarah Curran, Business Development Director on email@example.com or 01753 655866