Evaluating Product Placement For TV Nets, Int’l Distribution

Product placement it’s an old hat newly dusted and used as a financing tool for producers and advertisers. Companies are now finding ways to quantify its effectiveness and letting nets in on the action. But when it comes to U.S. syndication and international distribution, product placement can still cause headaches.

“In the late ’70s, there were four or five of us [in the U.S.] doing product placement,” said Frank Zazza, founder of New York-based product placement-analysis company iTVX. “Now, there are 600 companies doing it [and] working diligently to get their products placed.” Zazza explained that TV product placement is primarily dependent upon a company’s relationship with a show’s set directors. “There’s not a lot of space, literally, to show products. It’s a very competitive environment, and 97 percent of the placement that gets done is because people have established a relationship. As set directors move from one production to another, certain products will move with them.”
Product placement has traditionally involved the supply of products to a producer, such as free food for the crew or free clothing for the cast. Often, money would also change hands. But putting a dollar figure on placement was difficult, and no concrete business model was ever established. “A producer or director working with Coca-Cola, for example, can do whatever he wants to do,” remarked Zazza. “There’s no absolute guarantee that how he uses the product is going to be effective. What if it ends up on the cutting-room floor? What if the show doesn’t happen at all?” So-called “make-good” deals were offered - which promised that if a placement failed to happen on one show, it would happen down the line - but the whole process made advertisers uneasy. And meanwhile, networks weren’t really part of the picture. As Zazza explained, it wasn’t until recently that product placement became a real financial boon for the nets. “For instance, a lot of the Seinfeld product placement that happened, which is so well-known now, was never paid for in terms of results.”

Since that time, it has become apparent that if the networks could prove the value of a product placement to an advertiser, they could reap financial rewards for themselves, primarily by pitching surrounding commercial spots to brands that are prominently featured in a program. Meanwhile, from an advertiser’s perspective, there is less risk-taking involved, because only an effective placement will be rewarded with an advertiser’s dollars.

Zazza developed a valuation tool that allows nets and advertisers to quantify the effectiveness of a product mention. “Product placements are judged on a 10-level scale that goes from a background placement to a verbal plus placement, where the product is actually mentioned and held in someone’s hands, for instance.” Zazza’s system takes into account things like clutter, (where products are competing for a viewer’s attention), the level of interaction between an actor and the product, and the point at which the placement appears in a program. “People want to know how a program’s going to end. They will always come back in for the resolution, and their awareness [of a placement] will be higher.”
To get a final price tag for the placement, the cost of a 30-second spot is divided by 30. Each level of the product placement scale is worth a certain percentage of one second. “At around level seven, which is an implied endorsement (such as [Jerry] Seinfeld eating out of a box of cereal), the placement becomes equal to one second of a commercial segment,” Zazza explained. “This gives networks and advertisers a methodology for doing business.”
CBS has announced a partnership with iTVX wherein the company will derive values for placements in programs on both CBS and its sister network, UPN. Fox is expected to announce a similar partnership shortly. On the advertising side, iTVX is working with major companies like Verizon, Kraft, and Snapple.

Networks and advertisers now have a way to deal with product placement in primetime, and the business model is becoming less about guesswork and more about outcomes. But when it comes to U.S. syndication and international distribution, complications arise. First, as time passes, products may evolve or even be discontinued. On top of that, logos and trademarks can change. Virtual brand-switching, where computer technology is used to alter a product placement, has already been used in a few instances to address this problem, but Zazza admitted it’s not a great option. “Don’t buy into all the hoopla about virtual product placement. The truth is, the technology sucks. You have to worry about things like shadows and lighting. It’s hard to pull off. And to do it in post [-production],” said Zazza, “doesn’t pay. It would cost you more than actually buying a commercial. You want to do placement in the original airing and have it there for a lifetime.”

In general, Zazza doesn’t anticipate syndication causing many problems. “I see it as an adjunct. If a network knows product placement is going to happen and the program is going into syndication, they can contact the agency or the manufacturer directly to buy the commercial right after the placement. It’s an opportunity for the broadcaster to persuade advertisers to spend.”
What about when it comes to international distribution? “If a product that is not available internationally is featured in a program, how does that transcend to international sales?” wondered independent producer Vince Scarza. “A producer has to think about this,” he continued. “For instance, [U.S. cabler Bravo’s] Queer Eye for the Straight Guy is product placement head to toe. But most of it is very American. In one of the shows, they take someone to Bed, Bath & Beyond. But that store doesn’t exist in Europe,” he observed. “In another episode, they go to Ikea. Now, that’s a store that’s all over the place, so internationally, that’s a good product placement. If I use Bertolli olive oil or DeCecco pasta, things that are available everywhere, that’s going to work well. Producers have to think about bringing international products into their shows.”
Scarza pointed out another conundrum when it comes to product placement: “There could be a potential conflict between featuring a product or brand in a show, and then selling a commercial to a direct competitor of that product or brand. In other words, there’s a cross-marketing problem, and the sales departments and the legal departments are going to have to stay on top of that sort of thing. What if Queer Eye features Bed, Bath & Beyond, and Bravo’s selling commercial time to Ikea? What kind of problems is that going to cause? It’s a potentially touchy issue.”
But Scarza added that reality shows “can get away with murder, because they generally get sold as format rights. It’s much more problematic with drama. You have to be far more subtle.”
Still, Scarza, like Zazza, feels that product placement is generally a very beneficial tool. “It’s a big business that will continue well into the future. It’s a win-win situation. The producer wins because they either get money from companies or free products or both. The companies win because their products get shown to millions of people, practically for free.” And for the networks, the bonanza is only beginning.

Finally, international distribution of programs featuring product placement is complicated by the fact that, in some foreign countries, placement is considered ad time, and therefore is subject to the total time restrictions placed on broadcasters for showing ads during a program. Italy is one territory, for instance, that requires broadcasters to include product placement in their total ad time tally.