UK Free Prop Supply Product Placement

“The Results Show”

NMG’s Average Client Gains £6+ million Tracker™ Media Value

Introduction

Accountants KPMG’s latest study suggests an increasing and positive future for product placement in the UK.

(See: http://www.kpmg.com/uk/en/industry/media/product-placement/pages/default.aspx)
 
Pinewood Studios based NMG Product Placement believes that free prop supply product placement, (“free prop”), and paid for product placement, (“paid for”), are the same market – they both integrate brands into content – both have pros and cons – the only real difference between them is the way the deals are structured.

This article does not seek to compare these pros and cons in detail. For example, free prop can place any brand, except tobacco; paid for is strictly limited by Ofcom in the brands that are allowed.

Free prop works on the BBC; paid for is not allowed.

On the other hand paid for can tailor the date of the appearance; free prop has a more elastic timescale.

Free prop subtly places the brand in content; paid for has to be signalled by the “P” sign which can negate the value of the placement.

Commentators advocating paid for product placement always cite James Bond and American Idol and Coke as examples of best working practice, whilst overlooking that such guaranteed content and brand fit plus budgets in the $100m+ range are rare. In reality the norm is the Nationwide ATM in ITV’s Corrie, or Spontex cleaning materials on Sky’s Trollied.

Spontex on Sky

Nationwide on ITV

Spontex on Sky’s Trollied and Nationwide on ITV’s Corrie share the

brand limelight with free prop and other brands.
 

It is difficult to discover what fees have actually been paid for UK paid for deals. The euphemistic “six figure amount” is frequently mentioned, but what six figures?

Other reports suggest that paid for product placement deals are being offered to brands to sweeten the purchase of TV spot campaigns. Thus whilst the commercial TV industry was strident in pursuing Ofcom for rule changes to gain much needed incremental revenue, in reality are paid for deals cannibalising the TV spot spend?

What we can examine here, from NMG’s own data, is the Financial Efficiency of free prop product placement. Through almost three decades hands-on experience NMG Product Placement has created Tracker™; a unique database, which tracks and evaluates over 20,000 brand appearances on UK TV each year.

 
“Don’t let me be misunderstood”
 

Exponents of paid for product placement talk of a “new market”, “learning curves” and sideswipe free prop into a folksy momma and papa industry. A bit surprising since free prop product placement founded by NMG has been around since 1984, up to a hundred UK clients use it today and agencies like NMG operate using a sophisticated business model.

Free prop campaigns normally run on a 12 to 36 month period, with the Product Placement Agency undertaking to deliver as many on target placements as possible. Budgets, including cost of product and logistics, vary widely depending on the product itself – delivering a single pot of fresh yogurt onto a set in Liverpool, or a pristine car to Scotland, for example rack up costs. The selectiveness of the client’s brief can increase agency time in preventing negative appearances, excluding competitors and matching usage to the client’s strict marketing guidelines. Thus free prop total budgets, fee plus product cost, tend to run from about £30k to £140K pa. What can the client expect for that?

In free prop the most important dynamics in maximising results delivery are agency reputation and infrastructure, range of “must have” clients and an extensive operating network.

Far from the suggestions that free prop product placement is just about supplying products and hoping, NMG runs a sophisticated business operating inside the film and TV production industry.

Many production industry decision makers have dealt with NMG, and our sister company, Contemporary Props throughout their careers. Scripts are read, productions are contacted on a planned basis, sets visited and a “can do” team works daily hand in hand with their opposite numbers on the production.

A sophisticated logistics operation warehouses product, shops for short shelf life product or for specific production requests, and will deliver that single pot of yoghurt on set in Liverpool on time, or provide a smartphone ready to go, internet ready, with the character’s name and numbers already programmed in, or provide enough product and POS displays to dress a whole corner shop, supermarket or bar.

Finally, NMG operates Tracker™, the UK’s largest specialised database tracking and evaluating over 20,000 product appearances in content each year. Using Tracker™ Census  NMG clients receive comprehensive reporting and share of voice analysis so they can review their results, those of their competitors and plan this medium as they plan their other media activities.

 
The Results Show
 
This table summarises results delivered by NMG Product Placement. The data is averaged to preserve client confidentiality. The range column shows how individual clients results vary from this norm due to their brief, product attributes and range of brands included in their campaigns.
 

The above figures are based on UK TV first run only. An earlier NMG study with media experts Madigan Cluff and television tracking company ETS, identified that overseas broadcasts can double the UK Tracker™ media value.

 
See: http://www.newmediagroup.co.uk/?p=676
 
Money! Money! Money!
 

Due to lack of published data we cannot compare these results to paid for campaigns, but looking elsewhere we can make a broad brush order of magnitude comparison with other media. Thinkbox reported:

TV also delivers the most extra profit, Ebiquity found: an average return of £1.70 for every £1 invested (ROI of 1:1.7). This compares to £1.48 for radio, £1.40 for press, £1.06 for online static display, and £0.45 for outdoor advertising.

 
http://www.thinkbox.tv/server/show/ConWebDoc.3145
 
http://www.thinkbox.tv/server/show/nav.1818
 
Whilst we agree that product placement is not TV advertising, sometimes the results are more subtle, other times more powerful than advertising, with a product placement payback of around £1 invested yields around £60 ROI on the first broadcast, one can appreciate why the majority of NMG’s clients have continuously retained us since the 90s.
 
Conclusions.

• NMG believes that free prop and paid for product placement are in the same business only the deal structures vary.

• The overall product placement business will grow faster by free prop and paid product placement working together.

• Data sharing and transparency is the key to fuelling this growth.

Product placement is not a blunt communications tool. Knowing how and when to use free prop supply and paid for, or a mixture of both, and how much to invest, will lead to faster overall market growth and benefit all the players.

JRB 10 December 2012

John Barnard, FCA is chairman and founder of NMG Product Placement, which is based at Pinewood Studios. NMG founded the UK product placement industry in 1984, and commenced measuring product placement in 1987.

Each year NMG’s Tracker™ and Tracker™ Census records and evaluates over 20,000 separate brand appearances to the nearest second from more than 2000 hours of UK television and analyses them by 5 categories of saliency and further categorises into 300 product categories.

More than 80 leading brands retain NMG. Each year NMG delivers around 4000 on screen placements. John estimates that since the agency’s inception NMG has been responsible for more than 100,000 placements – so far.

 
For more information, visit www.newmediagroup.co.uk

UK “Paid for” TV Product Placement – A viewing snapshot after 18 months

An NMG Product Placement Commentary

 
Background.
 
On 28th February 2011 Ofcom first permitted paid for product placement in UK commercial TV.

Ofcom’s paid for product placement guidelines can be found at

http://consumers.ofcom.org.uk/2011/02/product-placement-on-tv/

Relevant to this viewing study Ofcom’s guidelines include:
 
How can products be placed?
 
There must be ‘editorial justification’ for a product to be placed in a programme.

That means the product must be relevant to what the programme is about. The content of programmes shouldn’t seem to be created or distorted, just to feature the placed products.

Programmes also can’t promote placed products or give them too much prominence. So there shouldn’t be any claims made about how good a placed product is, or so many references to a product that it feels like it is being promoted.

Pinewood Studios based NMG Product Placement records and analyses brand appearances within TV and film using our Tracker™ system. Tracker™ was first introduced in 1987 and is used by over 80 major UK brands, whose feedback has aided its continuing development.

For this study NMG viewed over 364 hours of broadcast programming containing brands that were the subject of paid for product placement deals.
 
Results so far
 
After a slow start sufficient deals now exist to form a snapshot of activity, results and future challenges.

The following table below provides visibility examples of “paid for” deals in recent months. The frequency and quality of brand appearances varies over time, thus the tables describes average exposure.

 
Conclusions.
 
Our observations suggest that some of the above deals may well be in breach of Ofcom’s Guidelines, whilst others promote the best interests of the viewer and advertiser by offering seamless integration.
 
Viewers generally react adversely to overt “brand plugging”. Thus the repeated presence of the “deal” brands, a lack of competitive brands, plus the “P” symbol flagging up that “deal” brands appear as a result of a commercial arrangement that does not directly benefit the viewer, could generate negative consumer reaction, even brand boycotting.
 
NMG’s recommends that brands maximise their product placement campaigns by utilising a variety of product placement techniques:

“paid for” on commercial TV,
free prop supply in BBC and commercial TV,
paid for and free prop supply in film with promotional tie in exploitation,
post production digital insertion,
web dramas, commercials, music videos, etc
 
With a properly managed product placement campaign consumers will receive a wider variety of product placement visibilities varying from subtle to overt, through a wider range of viewing platforms generating a much stronger and more persuasive overall impact
 
NMG’s tracking and evaluation system, Tracker™, can be used to measure relative ROI’s and professionally develop brand product placement campaigns using the same disciplines used in other advertising channels.
 
Chloe Thompson and NMG Team
3 October 2012
 
Background:
 
NMG Product Placement is based at Pinewood Studios and founded the UK product placement industry in 1984. NMG commenced measuring product placement in 1987.
 
NMG Product Placement is retained by over 85 major brands.
 
Tracker™ 2011 records and evaluates over 20,693 brand appearances each year from over 2190 hours viewing across 21 TV channels. Each brand appearance is measured to the nearest second and categorised into 5 levels of saliency. Brands are further segregated into over 300 product categories.
 
For comment or interview please contact:
 
John Barnard, FCA, Chairman, NMG Product Placement: john.barnard@newmediagroup .co.uk
or
Sarah Curran, Business Development Director on sarah.curran@newmediagroup.co.uk or 01753 655866

Latest Research Study by NMG Product Placement values UK “Paid for” Product Placement Market Size at £9.7m to £29.1m

Exclusive Data Released today from NMG’s Tracker™ 2012 Database

“Paid for” product placement began its journey in November 2007 within the EU’s Audiovisual Media Services Directive 2007/65/EC.  This sought to harmonise television practices across Europe. Member states could adopt limited “paid for” product placement subject to these provisos:

• Exclusion of certain products such as tobacco
• No placement in news, current affairs or children’s programmes
• Signalling of placement at the beginning, end and after every commercial break
• The product placement must not influence editorial content
• No undue prominence
• The placement cannot promote buying the product

Ref: http://europa.eu/legislation_summaries/audiovisual_and_media/l24101a_en.htm

Ofcom conducted an extensive consultation in order to formulate its recommendations for implementing the Directive. In March 2010 the Department of Culture Media and Sport published its summary of the consultation responses.

Specifically, paragraphs 14 to 17 of the summary dealt with future market estimates, which varied at year 5 from £10 to £25m to £175m+.

Ofcom settled on a year 5 estimate of £25m to £30m and this was incorporated into the explanatory memorandum laid before Parliament wherein the DCMS laid out a 10-year benefit of £215m

Ref: http://webarchive.nationalarchives.gov.uk/+/http:/www.culture.gov.uk/images/consultation_responses/Consultation_Report_final.pdf

On  28^th February 2011 Ofcom permitted “paid for” product placement in a limited range of programmes, for limited brands subject to restraints on undue prominence, protecting editorial integrity, and preventing placements from being able to influence sales.

NMG Commentary.

Why was there such a wide range of market size estimates?

When examining the Ofcom summary broadly the lower estimates came from agencies already experienced in UK product placement or services allied thereto.

The higher estimates came from media related companies with a vested commercial interest in the largest possible market. Their estimates were based on extrapolating the US and Australian experience with product placement achieving 5%, after 5 years, of total advertising revenue. There appear to be flaws in this approach:

• • The UK, uniquely, has a buoyant PBS broadcaster in the BBC. Excluded from the “paid for” market, but having a 27% viewing share. In the States, for example, PBS scores a Prime Time rating of 1.3, versus the top four networks 19.3

Source: BARB Feb 20-28 and Nielsen.

• • Madigan Cluff/Screen Digest reports that US branded entertainment figures are 14% of total TV advertising revenue. This includes all forms of branded entertainment – for instance digital videos shown alongside a branded sponsor or events tied to a broadcast, not just paid for product placement. In their research for last year’s Screen Digest’s report Madigan Cluff estimates the UK market for “paid for” placement in 2011 at 0.1% of total advertising revenue (£7m), rising to 0.9% (£38m) in 2015.

• • Other estimates were based on the UK TV Sponsorship market. However, ISBA noted to Ofcom that the market for TV sponsorship had taken 25 years to reach around £200m. Further, NMG believes the TV sponsorship model is not relevant on two levels:

• ♣ It competes for the same budgets as “paid for” placement.

• ♣ There was no previous TV sponsorship market, hence its rapid adoption, however, “paid for” placement competes with the established free prop placement industry created by NMG Product Placement in 1984.

John Barnard, Chairman of NMG Product Placement said: “Clearly in the light of such varied estimates there was a need to find an alternative methodology to assess the “paid for” placement market size. Without a new approach then comparing the relatively low deal take up in the first 12 months is meaningless.

NMG’s unique database, Tracker 2012, provides a flexible resource, which allows us to apply empirical methodology that is refreshingly simple and transparent. In January 2012 NMG recorded and analysed 85 hours of the programmes most likely to contain “paid for” placement opportunities from these commercial TV channels: ITV1, C4, E4, C5, MTV UK and Sky 1

NMG’s Chief Visual Brands Analyst, Chloe Thompson was briefed to enter into NMG’s Tracker 2012 database opportunities that appeared on screen, which were, in our experience, commercially viable and complied with Ofcom’s Guidelines.

NMG examined all these scenes and noted opportunities where a brand appeared in the right context and with likelihood of repeated exposure. The brand could be present due to free prop supply or serendipity having been bought by the production.

To this universe we added opportunities where a brand could have been present. For example, frequent dialogue at a shop counter where a counter top display unit might be added or exterior scenes where posters or display boards would, in reality, be appropriate.

John explained “Our logic is simple; since Ofcom’s Guidelines do not permit a brand to interfere with creative content, the “paid for’ opportunity has to already naturally occur within the script with sufficient frequency, relevance and quality to justify any brand allocating scarce budget. Typically, this will be lead cars, high involvement products such as smartphones, tablets, distinctive fashion wear and set dressing in fixed sets such as the Nationwide ATM in Coronation Street”.

Summary of the Empirical Study Results:

The universe of opportunities in January was found to be:

However, some of these appearances were fleeting, or of poor quality, so NMG applied a number of reasonability filters, first excluding appearances on the Tracker scale 1 to 3 star, then those whose overall monthly total duration was less than 15 seconds and finally those whose total monthly appearance was under 30 seconds. This data trail followed:

John continued: “The next challenge is to evaluate a commercial value range based on Tracker Media Values which benchmark exposure to averaged 30 second spot advertising rates. Broadcasters have been discrete about the market values actually achieved so far, so NMG applied a reasonability approach.

Further NMG excluded from our considerations activation opportunities, which are sometimes packaged with the “paid for” offer, since these in themselves require the brand to allocate additional budget, and might be problematic. In an earlier NMG study, Paul Herbert, a specialist in media law and regulation at Goodman Derrick LLP voiced concerns that some activation opportunities might indeed contravene Ofcom Guidelines:

… “Additional sensitivities will also arise because of the off-screen promotional opportunities offered. Where those involve, for instance, members of the cast promoting products with which they interact in the programme, there is a danger that this could be regarded as an endorsement of the product by the character, which is a form of promotional reference.”

http://www.newmediagroup.co.uk/?p=505

John Barnard said: “We acknowledge that we are trying to evaluate an ever changing basket of opportunities. No two are the same. Some like this Peugeot in Emmerdale lead car, cast in an on-target role could be worth many times more than our Tracker Media Value.

Conversely, others like say, the Dolce Gusto machine in ITV’s “This Morning” might have a declining value as the viewer progressively ignores the product, as it becomes part of the everyday set dressing.

Likewise, the requirement to flag “paid for” placement with the “P” sign, which does not apply to free prop placement, could lead the consumer to believe that the product is being “plugged” and gratuitously inserted in their entertainment thereby creating a negative reaction.

A further dynamic is the financial efficiency of the free prop supply route to brand integration. NMGs’ clients typically enjoy a multiplier where the ratio of fee to Tracker Media Value can be from 1:10 up to 1:50. Thus their propensity to pay even Tracker Media Value may be diminished.

NMG’s experience leads us to believe that only those opportunities in the final table – over 30 seconds per month exposure, 4 star and above would be sellable. For example, Nationwide’s ATM and advertising board, viewed as a successful “paid for” example, clocked up 149 seconds in January.

Accordingly NMG factored January’s results of £1.6m and applied a +/- 50% rating to take into account the above commercial dynamics. Thus, we establish:

NMG’s estimate of the “paid for” market is within a range of £9.7m to £29.1m p.a

Commenting on these results, Sarah Curran, NMG’s Business Development Director said:

“Over 12 months NMG has carried out pioneering, innovative product placement research. Sometimes interested parties focus on the messenger and not the message.  With this latest study NMG provides a realistic range of market values.”

John Barnard added:

“NMG’s research reconfirms Ofcom’s initial estimates and those of the product placement industry as a whole.

This provokes the question: Why has the first 12 months deal take up still been so relatively small?”

One of the leading product placement commentators is Professor Chris Hackley of Royal Holloway University of London. In his latest analysis he identifies a number of issues: the pre-existing and successful free prop placement industry; commercial TV’s adoption of a new computerised evaluation system derived from sports sponsorship; and competition from overseas programmes; but overall the failure of the broadcasters to understand and work with the free prop placement agencies and relate their offers to this alternative route to screen.”

http://www.chris-hackley.com/

Final Word

John Barnard: “There are many companies who have adopted product placement as a major communications tool and already commit significant budgets, measured in £s millions. For example, today, here at Pinewood James Bond’s latest epic adventure “Skyfall” in in full production and rumoured to have raised US$45m in product placement deals.

Paradoxically, when TV broadcasters across Europe screen this movie all of the placements will remain in place whilst at the same time our own TV production industry struggles to raise incremental finance hamstrung by a series of restrictive guidelines.”

http://www.theaustralian.com.au/news/world/more-than-a-word-from-007s-sponsors/story-e6frg6so-1226047962752

NMG Product Placement is based at Pinewood Studios and founded the UK product placement industry in 1984. NMG commenced measuring product placement in 1987.

NMG Product Placement is retained by over 90 major brands.

Tracker™ 2012 records and evaluates over 6000 brand appearances each year from over 1135 programmes on over 21 TV channels. Each brand appearance is measured to the nearest second and categorised into 5 levels of saliency.  Brands are further segregated into over 110 product categories.

For comment or interview please contact:

John Barnard, FCA, Chairman, NMG Product Placement: john.barnard@newmediagroup.co.uk

or

Sarah Curran, Business Development Director on sarah.curran@newmediagroup.co.uk or 01753 655866