Kate Bulkley, Media Analyst.

Following the money trail

By Kate Bulkley

Broadcast News

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For Broadcast January 13, 2011

While product placement is set to hit UK TV screens from March, there are still some big questions to be answered. Not least, who gets the money?

Will product placement bring in new money or just rebrand cash already earmarked for ad spots? And will broadcasters and indies end up fighting over who pockets what?

There isn’t even a consensus over how much money there will be to argue over. Product placement is equivalent to 14% of US TV spot advertising income and if that holds true for the UK, it would mean £450m a year to the industry, according to calculations by advisers MadiganCluff.

Ofcom’s stricter product placement guidelines, such as barring “undue prominence” and restricting brand categories (no alcohol, no sweets) will stifle US-style numbers. But the naysayers who believe product placement will only be worth £20m are also way out of line.

UK product placement will start small - privately, ITV says it expects to generate only about £1m in 2011 - but the revenues should ramp up quickly, with a senior executive at Channel 4 estimating it could be worth closer to £100m to the industry in four to five years.

TV sponsorship revenue in the UK is worth £170-200m and has taken over a decade to get there, but that experience should help broadcasters and media agencies develop product placement figures much faster.

It’s the destination of product placement money that is of huge concern for Pact and its members. It will issue guidelines to its members by the end of January and the underlying concern is that broadcasters’ ad sales departments will bundle up product placement money as part of their targets. Pact is keen that it is counted as additional money and that the split from any upside should be 50/50 with the broadcaster. It also wants its members to take some of the initiative on raising money, and to ensure there are no sacrifices to editorial integrity.

Meanwhile, broadcasters like ITV - which has lined up Emmerdale and Coronation Street as early product placement guinea pigs - and C4 - which is in talks with Lime Pictures about Hollyoaks - say they expect to lead the sell-in of product placement because they are responsible for programme compliance.

But how transparent will the broadcasters be about the money they raise? C4 admits that because product placement will likely be in combination with things like sponsorship and licensing, the channel “expects and hopes” it will take the lead on raising product placement money.

And if all this was not opaque enough, Ofcom is adding another layer of complexity. Remember the red triangle that appeared on 18-certificate films on C4 in the mid-1980s? It is set to be reborn with a reportedly blue triangle to flag up programmes with product placement. Back in the ’80s, the red triangle became a magnet for viewers looking for late night titillation, and the blue one will spur games of ‘spot the brand’ among viewers - giving prominence to the very thing that Ofcom says needs to be genuinely integrated.

The triangle was a bad idea 30 years ago, and it’s still a bad idea today. But product placement done well can be a good thing for TV’s bottom line - and you don’t need an on-screen triangle to spot that.

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