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Will TV Product Placement Ever Replace Ad-Based Revenues for Networks?

TV product placement Modern Family

You know the feeling: that sense of smug that you get when you own a DVR and use it to blast through the commercials that completely interrupt your favorite shows. But before you pat yourself on the back too hard, keep in mind that while you’re getting wise to advertisers, advertisers are getting wise to you. Marketers know that more people are opting out of traditional commercials, which is why product placement – especially on shows with a high DVR playback rate – are starting to infiltrate the ranks of ad revenue.

Of course, some brands do it better than others. Take The Vampire Diaries on the CW, for example. The last season was shown pimping the new Windows Phone. Of course, that made sense, because the phone was integrated with texting and showing videos in the show. Teens text and share media on their phones, so the product placement was less obvious. One bust of the last season was when Ford Fusion practically purchased an entire episode of New Girl. Jessie modeled at a car show and we got to learn all about the newest Ford car – but no one really knows why. The demographic for the Fusion might have been on point, but the audience and their focus might not have been there. In the end, the product placement came off as obnoxious and oh-so obvious.

Still, advertisers are willing to make the switch from typical commercials to product placement for one smart reason: it’s in the consumers’ face. While you might fast-forward through the commercials during the American Idol results show, you won’t miss a minute of the drama. And, since AI is one of the most heavily-used shows for product placement – over 500 placements per season – you subconsciously take in all of those advertisements, even with a DVR.

Advertisers see product placement as a good deal, especially when compared to rising advertising rates across networks. The average 30-second primetime commercial spot cost anywhere from $200K to $400K, and that’s for a commercial that might get skipped. The cost for product placement varies widely – some networks do it for free, while others charge for the service. Movie product placement rakes in the most – Heineken reportedly shelled out $45 million to have Bond swap his iconic martini for a bottle of beer instead. The major benefit of product placement is the fact that not only do you see the product, but it’s used by your favorite stars. That saves money when compared to hiring a celebrity spokesperson for a commercial spot instead. The one downfall to product placements is that they’re very difficult to track numerically. A commercial spot has the advantage of telling you just how many people it will reach, while a product placement can only give marketing a ballpark figure – results may vary.

The thing is, there’s a good chance that neither product placement nor traditional advertisement will ever wipe out the other completely. Instead, expect to see more product placements used in conjunction with ad-based marketing tactics, like a Modern Family episode all about the Oreo paired with more commercials for America’s favorite cookie. That way, you end up fairly steeped in advertising after an hour of TV.

It’s important to note that ad placement isn’t the only form of advertising coming out of the woodworks with the addition of the DVR and the ability to skip commercials. Social TV – where you use apps to share and chat with friends while you watch – as well as advertising campaigns that encourage you to use your smartphone while you watch should also be on the rise as advertisers find more ways to be heard.

Emiah has always been intrigued by the cable TV industry. She is consistently questioning how certain shows become pop culture phenomenons while others unceremoniously fail. Emiah has a deep appreciation for Andy Cohen and The Real Housewives franchise.

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