PHOTO ILLUSTRATION: 731; PHOTO: PARAMOUNT PICTURES

With viewers watching to ad-free streamers, ad agencies hope to perpetuate the silly fiction that ‘product placement’ will drive ‘consumers’ clamouring to buy that can of Coke.

21 July 2021 | Kelly Gilblom | Bloomberg Businesweek

Hiram Lodge, the manipulative crime lord who targets the fictional town of Riverdale, sits back in his office chair. After plotting his latest scheme with a cohort over submarine sandwiches, he takes a bite of a Doritos chip, holding the bag in clear view of the camera while looking away pensively.

Frito-Lay, which got the snack on the CW Network’s teen drama Riverdale with the help of the No. 1 product placement company BEN, hopes audiences noticed enough to crave their own bag of Doritos, but not so much that they became annoyed. That’s the delicate balance companies strike when using product placement, which is becoming an even more popular form of advertising thanks to factors including increasingly sophisticated data collection and the rise of streaming and mobile video.

Linear television, the old-school version of programming in which viewers have to be on their sofas at a scheduled time, is becoming an activity of the past, reducing promotional opportunities for brands. Meanwhile, more people are tuning in to Netflix or other streaming services that eschew conventional ads. “If I’m starting to cobble together my viewing experience as a series of streaming services, I potentially don’t get exposed to traditional television advertising anymore,” says David Schweidel, a marketing professor at Emory University. “So product placement becomes the way of cutting down the cost associated with production when you don’t have advertising to support you.”

To do that, product placement is morphing into a more tech-focused and targeted business that can mesh nicely with the data-driven strategies that have proved so successful for digital marketing companies such as Facebook Inc. and Google. While advertisers still try to weave their products into the fabric of a film or TV show’s plot, a lot more is happening behind the scenes to guarantee those marketing dollars will turn into a sale.

For one, entertainment consumers are naturally separating themselves into smaller, like-minded groups. Twentieth century viewers tuned in en masse to a few evening network TV programs, meaning ad placements were largely a game of reaching an enormous number of people while hoping to resonate with a few. But 21st century viewers often let a Netflix or TikTok algorithm suggest what to watch next, meaning advertising opportunities can be smaller-scale but reach a more-tailored audience.

Movies With the Most Product Placement

Data: Concave Brand Tracking

Advancing technology also helps. BEN has developed, through artificial intelligence and machine learning, the ability to fairly accurately determine which new TV shows will become hits. The team communicates that to Frito-Lay and other companies looking to gain visibility for their brands or products via Hollywood. The company, owned by Microsoft Inc. founder Bill Gates, also plans to partner with data company 605, which captures information from set-top boxes and smart TVs.

With that information in hand, a company like BEN has new digitally enabled flexibility. People watching the exact same scene of the same show may be advertised different products, depending on who and where they are. Hiram Lodge was eating a bag of Doritos, but it’s possible to digitally swap that bag with Ruffles, if that brand better caters to the personal taste of the viewer.

“If you’re able to navigate the content, and you have the technology to be able to figure out to prioritize and predict how to best target your audience, you can literally have the impact of a Super Bowl ad every week,” says Ricky Ray Butler, the chief executive officer of BEN. “There’s seriously that much content that is out there.”

Product placement could benefit from another challenge in the advertising world: consumer pushback against hypertargeted online ads. Just as viewers are increasingly intolerant of having a TV show interrupted for ad breaks—and willing to pay for ad-free versions of streaming services—they’re also growing weary of feeling dogged for weeks by digital ads associated with things they search for on platforms like Google and Facebook. Apple Inc. has started to limit such hyperfocused advertising, and others may follow suit, offering product placement yet another opportunity to break ground.

“Consumers are getting wise to it, and that’s why, I think, Apple was the first one” to crack down, says Allen Adamson, co-founder of marketing company Metaforce. “Product placement can be more natural, and part of what marketers are searching for is authenticity.”

Global product placement spending is projected to rise 13.8%, to $23.3 billion, in 2021 from a year earlier. During the same period, overall marketing spending is expected to rise only 5.9%, to $1.35 trillion, according to data from researcher PQ Media.

The more the technique is used, the more marketers are able to determine whether the messaging worked. In a 2019 study, Schweidel and Indiana University professor Beth Fossen found they could track product placement in TV shows with an uptick in social media chatter and web traffic to the companies. BEN studies what consumer opinions of brands are after they’ve been exposed to product placement, but is trying to sift through huge amounts of data to get more precise readings. BEN is also working to measure how the practice stimulates retail foot traffic and ultimately in-store purchases.

“So long as we continue to see positive returns from paid product placement, and consumer behavior continues to pivot toward media consumption in ad-free/ad-light environments, I would anticipate more investment will follow,” James Clarke, a senior director of media strategy at Frito-Lay North America, said in an email.

Still, more data-driven hypertargeting of product placement could stoke the same kind of consumer pushback that online digital ads have received. CEO Butler is aware the practice could cause some discomfort, especially when it’s bankrolled by Gates, one of the 10 richest people on Earth. But he says that the complex data his company uses to help marketers is all about explaining how groups—rather than individuals—react, while conceding that his focus is on ensuring his company’s product placements turn into sales.

“It’s the next frontier of advertising,” Butler says. “Because of all this data, you can get way more impact and guarantees that people are actually seeing the content you’re in.” 

BOTTOM LINE – Product placement spending is projected to reach $23.3 billion this year. It could grow even more as marketers look for ways to reach consumers who pay for ad-free streaming.