• by Joe Mandese  @mp_joemandese, June 29, 2010

The Internet is the fastest growing segment of the paid product placement industry, according to a new outlook from media industry economic analyst PQ Media. While still one of the smallest product placement mediums in the branded entertainment category, paid product placements grew 11.1% to $40 million in 2009, a year in which the overall marketplace declined 2.8% to $3.61 billion, according to the PQ Media Global Branded Entertainment Marketing Forecast 2010-2014 being released today.

PQ said the erosion in 2009 was a direct result of the global economic recession, and the fact that brand marketers reduced their budgets across all media, including branded entertainment spending, marking the first decline ever recorded for the product placement industry.

"Television and film is where the vast majority of product placement takes place," says Patrick Quinn, the founder and CEO of PQ Media. "The biggest trend in the product placement sector is the shift from non-paid placements to paid placements. Product placement has been in film for at least 100 years, and it has been in TV for at least half that time, but it was considered added value. Now we are seeing a secular shift to a paid model, and that will continue."

He said that shift was a direct result of changes in consumer media behavior that have resulted from increased penetration of new technologies, especially devices such as DVRs, which enable consumers to avoid conventional forms of advertising, driving up the "value of branded entertainment strategies."

Quinn estimated that paid placements on the Internet would grow 15% this year to $46 million.

Total U.S. branded entertainment marketing spending, including consumer events and paid product placement in media, is projected to increase 5.3% in 2010 and accelerate 2014 at a compound average annual rate of 9.2%.