- Product Placement to become ‘one of key weapons’ in advertising industry’s arsenal, report says
- Understanding the potential opportunities of product placement should rank high on agenda for advertisers, producers and broadcasters
Product Placement could significantly alter the way UK TV programming is produced, financed and consumed over the next few years, according to a KPMG report published ahead of the two year anniversary of an Ofcom ruling* which allowed product placement for the first time on UK TV. The report ‘Taking a subtle approach: How product placement will breathe a new lease of life into UK TV advertising’ argues that product placement will become much more common and widespread in the UK as the broadcasting sector is in the midst of a dramatic revolution, driven by rapidly changing consumer preferences and fast-paced technological developments.
Clement Chan, Executive Advisor at KPMG’s media consulting practice, comments:
“The UK product placement market is still in its infancy stage. The timing of Ofcom’s ruling in 2011 plays a big part in explaining the relatively slow growth until now. The global economic downturn and major sporting events in 2012 (Euro2012, the Olympics and Paralympics) have distorted the way brand owners spend their money. But technology continues to disrupt the way content is consumed, content creators are hungry for new revenue models and consumers seem to be increasingly comfortable with the idea of product placement on UK TV."
Among the most notable PP deals announced in the UK since the Ofcom ruling in February 2011 were the Nationwide cash-machines which have appeared on ITV’s Coronation Street since November 2011, the Nescafe Dulce Gusto Coffee machine on ITV’s This Morning and the Nokia phones displayed prominently by the actors in the episodes of Hollyoaks.
However, recent deals between big brands and prime time shows suggests there is growing strength and depth in UK TV product placement (Samsung in X-Factor, Highland spring in Dancing on Ice, Yeo Valley and Uncle Ben’s in Jamie’s 15 minutes meals, Nokia and L’Oreal in episodes of Hollyoaks to name a few).
Research suggests the current size of the UK product placement market to be between £10 and 30 million pounds**, which is relatively small compared to an overall TV ad market of about £ 3.3bn***. Estimates suggests that within five to six years that market could grow to £120million, accounting for around three percent of the TV spot ad market.****
Traditional broadcasts become increasingly overshadowed by new technologies
As growing number of consumers start to speed up, slow down or altogether skip ads through phased viewing, advertising models need to become more sophisticated
The timing is right for new funding models
Similarly, as funding is becoming increasingly tight, particularly for those in the early stages of content development, producers and content creators are increasingly ready to embrace new funding models. Product placement is set to play an increasingly important role.
Growth of a supportive ecosystem and evolving structure for industry
Already, more than 20 well known UK media agencies offer product placement services. This number is only set to grow as more and more agencies start to recognise both the revenue potential and the benefits for their clients’ brands.
Clement Chan comments:
“Product placement will become one of the key weapons in the advertising industry’s arsenal and an important source of revenues for virtually everyone in the media value chain. Understanding and exploiting the potential opportunities of product placement should rank high on the agenda for advertisers, producers, broadcasters and agencies. We already see UK broadcasters adapting and putting increased numbers of paid for PP opportunities out into the market place.”
Note to editors:
* From 28 February 2011 TV programmes made for UK audiences were allowed to contain product placement as long as they comply with the rules of the regulator Ofcom.
**Latest Research Study by NMG Product Placement values UK “Paid for” Product Placement Market Size at £9.7m to £29.1m (external link)
***Figures according to ZenithOptimedia, Dec 2012
****Product placement set to take off in 2013 (external link)
Katrin Boettger, Senior PR Manager
Tel: +44 207 896 4232 / 0782 4475168
About KPMG:KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.