With the advent of the DVR (TiVo, et al), the continued erosion of attention spans, and ad clutter of the density of a collapsed star, advertisers need to find more interesting and meaningful ways to engage a prospect.
A way of getting in front of a potential consumer by being where they are already spending their time willingly is product placement. Product placement is experiencing a kind of renaissance in commercial media and for many who are unfamiliar with advertising's history it is striking them as wondrous and new.
Product placement, however, is nothing new in television or films or radio. "Kraft Theater," "Camel Caravan of Stars," and "Star Texaco Theater," are examples of entire shows being owned by advertisers. Remember the quiz show scandal on the "$64,000 Question?" That show was bank-rolled entirely by Geritol. The movie, "Wayne's World," has a funny albeit over-done bit poking fun at product placement, with Wayne and Garth eating Pizza Hut pizza, wearing Reebok gear, and pretty much doing an ad for Nuprin.
No doubt that the sky-is-falling fear of DVRs in the home is driving the upswing in product placement usage, but product placement had found its way into TV before much was being made of DVRs. "Survivor" is an example of a show that early on was doing product placement. They had hungry contestants playing for helpings of Doritos Nacho Cheese Flavored Corn Chips and bottles of Bud Light.
If done right, product placement can be a lot more effective than a standard commercial. The problem, of course, is just how much product placement can one have in a program to both subsidize costs AND earn the network a profit? Again, the "Wayne's World" example gives one an idea of what too much can look like.
The other factor to consider is just how the product placement is done. On a program like "Queer Eye for the Straight Guy," the product placement is pretty innocuous, demonstrating the product in use (representative of what I've called "Flow experience marketing"), always serving as the trusty side kick rather than the hero, playing Robin to the Fab Five's Batman.
This stands in stark contrast with the ham-handed product placements done with Bravo/NBC's brief-run "The Restaurant." American Express, Mitsubishi and Coors Light were the major sponsors for that program. In fact, Coors, Mitsubishi, and American Express each paid for one third of the show, and shared fifty percent of the regular advertising time. When something like that leads to slow, sexy, lingering camera shots of AmEx cards sitting in shot glasses on queue to pay a tab, or waiters recommending Coors Light with an order of "Mamma's Meatballs," in addition to spots going out of and coming into program starring Rocco DiSpirito, the celebrity chef who served as the protagonist of this program (since the restaurant itself didn't seem up to it), it seems to me that the idea of product placement becomes so shameless that it can create a kind of psychic backlash with an audience. Anecdotally I can say that everyone I have spoken with about the show all mentioned the product placement and how repulsive it was, particularly the waiters and waitresses recommending Coors Light with meals in what is supposed to be a quality New York City restaurant.
Regardless of this, people are going to see a lot more product placement before we see a lot less of it. But there is only so much "room," as it were, for product placement; it cannot entirely replace more standard advertising because there simply aren't enough opportunities to satisfy all categories of advertisers. But there is only so much of it audiences are going to be able to stomach before rejecting product placement, anyway. If at any point in time viewers feel that the integrity and quality of the programming is suffering as a result of product placement, they are going to revolt against being revolted.