Whilst many agree that product placement is certain to grow, there is a growing point of debate within the industry regarding the forecast size of the eventual market in the UK.
Some estimates at the high end suggest that UK product placement may – within the next five to six years – reach £120 million, accounting for somewhere around three per cent of the domestic TV spot ad market. At the other end of the scale, OFCOM’s research predicts the market to grow to a more modest £25 to £30 million in the same timeframe.
Already, the UK is experiencing massive market growth. In 2011, product placement revenues (across all mediums including TV and movies) were estimated to be worth around £7.8 million, up from just £2.3 million in 2010. Extrapolating this trajectory into the future would suggest that the market will be worth some £35 million by 2015, closely mirroring OFCOM’s prediction. In the US, however, the market has enjoyed much higher uptake. In 2009, around US$3.6 billion was spent on product placement and most expect the sector to reach over US$6 billion by 2014.
However, scale has a significant impact on this growth pattern: the US market spent approximately US$68 billion on TV advertising in 2011, of which product placement made up less than 10 per cent.
But – for argument’s sake – if we were to apply a much more modest two per cent proportion onto the UK market, we could reasonably expect the market to reach upwards of £87 million in rather short order (based on UK TV advertising spend in 2011 of around £4.35 billion).
However, it is clear to anyone involved that there are dramatic differences between the US and UK markets that significantly skew these numbers downwards. For example, for the previous calculation to materialise, the UK would need a relative proportion of content developers, broadcasters and advertisers which – clearly – we do not have. As a result, one would have to assume that the UK market will take a much shallower trajectory than that of the US. We must also remember that product placement has been maturing for decades in the US.
It is my opinion that the UK market will likely cap out at around £100 million in the foreseeable future. This is not only based on the available quantum of advertising revenue within our domestic market, but also on the belief that there is only so much product placement that can – without becoming forced – be inserted into existing programming on current TV channels.