New rules announced by the media regulator Ofcom, mean that businesses will now be able to use product placement on some TV programmes in the UK for the first time. Product placement is a marketing tool whereby a company pays to have its product or brand either prominently displayed within a TV programme or used by the actors and so brings the product to the attention of actual and potential customers and raises awareness of the product.
Product placement has been common in the movie industry and on US TV - the James Bond franchise is a very good example. In the last two James Bond films starring Daniel Craig as the secret agent, a number of the hi-tech gadgets used by Mr Bond are very clearly branded products - a Sony Ericsson phone, Sony VAIO laptops, Sony cameras and TVs along with Microsoft Surface, a platform which allows users to manipulate digital content through hand gestures or touch - have all been prominent throughout the movie. Apple, Coca-Cola, Dell, Hewlett Packard, IKEA, Minute Maid fruit juices, Rolex watches and various types of champagne amongst others have all been examples of companies or brands which have used product placement extensively in media to date. Now, such companies and brands are likely to be seen more obviously in TV programmes in the UK.
The new regulations do come with some restrictions. The letter 'P' must be displayed for three seconds at the start and end of a programme that will have product placement and the tactic will not be allowed to be used in various types of programmes including news and current affairs programmes and on programmes aimed at children. In addition, product placement will not be allowed on the BBC.
Analysts are not expecting an explosion of this tactic in the UK in the short-term. Getting a better understanding of how product placement works, what the potential costs and benefits are and whether potential and existing customers will welcome it are all things that marketers will want to investigate carefully before committing to the tactic. Some customers might see deliberate product placement as intrusive, not appropriate to the content of the programme or the characters who are using the product or even putting a product in a plot which gives it the wrong 'personality', for example, do smart phone manufacturers want viewers to see criminals in a programme using one of their products?
Analysts expect product placement will grow only slowly over the next few years with one estimate from Barclays, quoted by the Financial Times, as amounting to around £150 million a year by 2016, just 4 per cent of current UK advertising expenditure.