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With The Decline Of Commercials, Product Placement Is Bigger Than Ever

Ever notice how sometimes in TV shows or movies, you’ll see a familiar product in a character’s hand? Think back to E.T. The Extra Terrestrial. That little alien loved him some Reese’s Pieces. And remember the hit show 90210? Everyone in it seemed to be sipping a Dr. Pepper. More recently, there’s the Mini Cooper car chase in the 2003 film The Italian Job. Product placement has even crept into music. In Lady Gaga’s music video Telephone, there are at least six (six!) product placements, including Coca-Cola, Virgin Mobile, and the Plenty of Fish dating site.

What’s interesting is that product placements on the big screen date back to as early as 1919. The concept was first used in the short film The Garage, a comedy starring Buster Keaton and Roscoe Arbuckle that featured sets containing ads on the walls for gasoline.

These days, the use of product placement to advertise has a new need to meet thanks to technology; with the rise of commercial-free shows via Netflix, Amazon, HBO, and others, it makes sense that, because commercial time is inching towards obsolete, media buyers and companies are increasingly looking at other ways to promote products.

Re-enter good old-fashioned product placement, stage right. Product placement revenue will hit $11.44 billion by the end of 2019, up from just $4.75 billion in 2012, according to ad industry estimates.

One perfect example of product placement can be found in the second season of Netflix’s Stranger Things. In one particularly awkward scene, two characters are having dinner at a missing friend’s parents’ house. In the middle of the table is a red and white bucket we all recognize – it’s KFC, and it’s finger-licking good. One of the characters actually delivers this very line, by the way, to cut the weirdness with a bit of comedy.

But don’t be fooled – this wasn’t just a bucket of chicken. Its appearance in the scene was a coordinated decision made by Netflix, the Stranger Things producers, and KFC.

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“They [Netflix] handle their content in a very respectable way, and we felt it was a property where we have shared values,” explained KFC chief marketing officer Andrea Zahumensky, who also shared that Netflix had approached them about the opportunity.

“Brands are increasing their product integrations as they start to realize that consumer behaviors have truly shifted and aren’t going back,” said media agency Carat’s chief content officer Shannon Pruitt to CNBC. “Advances in audience targeting, the understanding of the role of product integration, as well as the focus on measurement capabilities to prove ROI (return on investment), while still not comprehensive, has elevated the acceptance and pursuit of the opportunity to be part of the story.”

Read as: with the decline of commercials, product placement is the best brands have got, for now.

Even network television is shaving off commercial time. NBCUniversal announced plans to reduce primetime advertising time by 20 percent across all its networks to meet viewers’ preferences. Turner has been trimming its commercial time over the past few years, including up to 50% on TNT. And going forward, Fox Networks Group’s president of advertising revenue said the company wants to reduce ads to two minutes per hour, across all its channels, by 2020.

Despite this shift, we’re probably not saying goodbye to traditional commercials just yet. “It’s less about the notion of, ‘Is the 30-second spot going away?’ ‘Yes or no,’” said Lyft director of entertainment marketing Ari Avishay to CNBC, before heading off to a meeting with Netflix about potential Lyft integrations. “[W]e’re attracting eyeballs rather than interrupting. The interrupting commercial may be ending, but that isn’t to say there isn’t a place for traditional advertising.”

KFC, for example, isn’t quitting commercials, despite the company’s success with product placement. Instead, they are adjusting their mix of what advertising they buy.

Branded Entertainment Network (BEN), an entertainment marketing company, projects it alone will place approximately 6,000 “product integrations” in various video content during 2018. Why? Because, so far, it seems to be working. Product placements on Hulu result in 89% higher purchase intent and 74% higher brand awareness over traditional 30-second commercials, Hulu’s Naylor said.

If you ask me, no one sits down to their favorite show and waits eagerly for the commercials. That’s one thing I love about Netflix – I get to binge on as many episodes as I want without any interruption. And if my trading commercials for flow means the characters sip away on Heineken beer while wearing Ray-Bans and Nikes, I’ll take that deal any day.

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