Kate Bulkley, Media Analyst.

Unlocking value from within

By Kate Bulkley

Broadcast News

For Broadcast March 31, 2010

Clever product placement can improve the online viewer’s experience, writes Kate Bulkley.

The media’s search for new ways to boost revenues ramped up last week with News International announcing that both The Times’ and The Sunday Times’ websites will soon be peeking out at the world from behind a paywall, with a hurdle value of £1 a day or £2 a week.

To my mind, the paywall move is a crap shoot - notice that Rupert Murdoch is not putting The Sun behind such a hurdle, at least not yet.

And even if all UK papers agreed to put up paywalls, it would be tough to make such a proposition work while bbc.co.uk remains wall-less and ad-free.

But these are desperate times and media proprietors are scanning the landscape for any bright points of light. At ITV, the experiment of inserting products into the online version of Coronation Street is both a way to take advantage of the fact that product placement rules don’t apply on the net, and for the commercial broadcaster to get ready for the time when product placement is allowed on TV as well.

Unlike the paywall strategy of newspapers, product placement is not about taking something away from users that they could previously access for free.

Dynamic product placement done well is additive to the whole user experience - the ad messages should be more relevant and useful.

On the revenue side, the parallel of the Corrie trial is in the video-games business, where in-game advertising has been a growing revenue stream for years.

According to consultancy PriceWaterhouseCoopers, in-game advertising was 5% of total revenue for the US games industry in 2008, or $765m out of a total of $16bn.

But in-game advertising has been growing at 14% a year, more than double the 6% annual growth rate of the entire North American games business.

“When you get an emerging medium that captures people’s imaginations, you can see how fast it can take off,” says Nick George, strategy partner at PwC.

The idea of product placement within online shows will also appeal to web watchers who are accustomed to clicking things they are interested in. Why not make the outfit an actress is wearing clickable to find out where it can be purchased and for how much? This is the type of technology that the iPhone already has with its in-app purchasing capabilities.

ITV’s online product placement trial fits with chairman Archie Norman’s desire for it to grow its digital revenues and has broadly been well received.

“Thank goodness ITV is attempting to find an alternative way to ‘advertise’ to people, as well as alternative business models for advertisers,” says Nicole Yershon, director of innovative solutions at Ogilvy Group UK.

Of course, the revenues could be far greater in TV, and it’s not all simple. Strike a lucrative placement deal and is it the production company’s bank account that fills up? Or does the broadcaster take the dosh?

But whatever the answers, it’s significant that Norman believes selling off ITV’s in-house production arm is not an option. He is confident content is “central” to ITV’s future and he’s right - there’s gold in them there shows.

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