Product Placement to Offset Ad-Skipping

by Jack Loechner, Aug 24, 2006, 3:00 AM

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Product Placement to Offset Ad-Skipping

According to research released by PQ Media, global paid product placement spending surged 42.2% to $2.21 billion in 2005 with double-digit growth expected to continue in 2006 and beyond, as brand marketers scramble to effectively engage consumers worldwide.

Patrick Quinn, president of PQ Media, said "Product placement has evolved from a novel marketing tactic to a key marketing strategy on a global scale, as brand marketers seek more effective methods to make important emotional connections with consumers... there is a new media order emerging worldwide in which fear of ad-skipping technology, doubts about traditional advertising's effectiveness, and declining government media subsidies have fueled a dramatic increase in the value of seamless brand integration."

Global paid product placement spending in TV, film and other media is expected to climb another 38.8% to $3.07 billion in 2006, driven by the continued shift in the world's leading markets toward a paid placement structure from a barter and added-value model, according to the report.

Global Paid Product Placement Spending: 2000 to 2005 ($US Millions)
	Television		Film		Other Media*		Total
Year	Spend	Growth	Spend	Growth	Spend	Growth	Spend	Growth
2005	$1,429.3	56.8%	$ 721.8	20.5	$58.1	32.3%	$2,209.2	42.2%
2006	2,113.1	47.8	876.1	21.4	77.7	33.7	3,066.9	38.8
2010	5,561.6	--	1,768.5	--	221.3	--	7,551.4	--
Sources: PQ Media, iTVX

*Other media, including magazines, newspapers, videogames, Internet, music, books, and radio

The transition is moving slower in Europe due to stricter rules governing the use of product placement. But, opines the report, this will change by year-end 2007, when the European Union is expected to liberalize restrictions encumbering growth in this region, fueling significant upside in some European markets.

The US is by far the world's largest paid product placement market at $1.50 billion in 2005, up 48.7%, making the US the world's fastest growing market as well. The US market tends to be much more advanced than other countries, and it is the model to which most other countries aspire. The majority of spending in the US and abroad is derived from five key product categories: transportation & parts, apparel & accessories, food & beverage, travel & leisure, and media & entertainment.

The report forecasts that global paid product placement spending will grow at a compound annual rate of 27.9% in the 2005-2010 period to $7.55 billion, as product placement growth continues to significantly outpace that of traditional advertising and marketing. The overall value of the worldwide product placement market, including the barter/exposure value of non-paid placements, will increase 18.4% compounded annually to $13.96 billion in 2010.

A free executive summary of the PQ Media Global Product Placement Forecast 2006 is available here.

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