Paid Product Placement Outpaces Traditional Advertising

by Jack Loechner, Sep 19, 2006, 3:00 AM

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Paid Product Placement Outpaces Traditional Advertising

According to the PQ Media Global Product Placement Forecast 2006, 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. 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 toward a paid placement structure from a barter and added-value model.

The transition is moving slower in Europe due to stricter rules governing the use of product placement. The PQ Media's Global Opinion Leader Panel believes this will change by year-end 2007, when the European Union is expected to liberalize restrictions encumbering growth in this region.

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. This trend is significant in that 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."

The US is by far the world's largest paid product placement market at $1.50 billion in 2005, up 48.7%. Additionally, in 2005:

• Brazil ranks second with paid placement spending at $285.3 million
• Australia at $104.3 million
• France ranks fourth
• Japan, fifth

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.

PQ Media 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, says the report, including the barter/exposure value of non-paid placements, will increase 18.4% compounded annually to $13.96 billion in 2010.

For more information from PQ Media, please visit here.

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