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Watching TV one evening, I was surprised to see a Wild Oats Markets store appear on the screen during a blur of commercials, in the context of an advertisement for the new hybrid Ford Mercury Mariner truck. A fitting coincidence, I thought -- Wild Oats and a green vehicle. But then I quickly realized that the store was featured too prominently to have been there arbitrarily.
A quick Google search of "ford mercury mariner wild oats" led me to a press release on Ford's Web site, which announced the automaker's alliance with Wild Oats to educate consumers about the benefits of driving hybrid vehicles.
As part of the promotion, Ford had stationed new Mercury Mariners in the parking lots of Wild Oats stores, and offered shoppers a chance to test-drive the new trucks right then and there. The jointly run events generated significant media coverage for both the Mercury Mariner and Wild Oats -- in effect, a feat of product placement for Wild Oats within the context of news coverage. The commercial I had seen was an extension of this promotion.
That got me thinking. With the rash of product placement happening today in TV shows, movies, and even video games, this was one of the few times I can remember seeing a food retailer involved. Another instance was when Doctor Octopus climbed a D'Agostino storefront after snatching MJ from Peter Parker in "Spider-Man 2," knocking down the store's banner in the process. How this placement happened was a combination of shrewd foresight on the part of c.e.o. Nick D'Agostino -- who donates banners and signage to movie studios -- and luck that Marvel wanted New York landmark sites for the film.
Times are definitely changing in the advertising world. Its basic building block, the 30-second TV spot, is no longer working. And you probably know why: Over the past 20 years, the number of TV channels has quintupled, home video has become a rent and own medium through DVDs and video on demand, TiVo has changed the way TV is watched, and the Internet and video games have challenged TV as viable entertainment options.
The simple truth is that the audience for mass media is no longer as massive, and those remaining viewers aren't watching the commercials. Thirty years ago, a marketer with a good piece of advertising could put it on the air at reasonable weights and simply sit back and wait for the cash register to ring.
That doesn't happen anymore. Chrysler just spent $70 million on its summer ad push, featuring the now-ubiquitous Dr. Z, and actually drove sales down. We can argue the merits of the specific campaign, but the reality is that simply putting an ad on TV, early and often, isn't enough.
There's a variety of new media that has taken hold in the wake of the 30-second spot's decline. These range from the wide assortment of Internet-driven media now available, to in-store media options, to new approaches to traditional media. Among the various emerging media, the rise of product placement has been particularly dramatic.
Product placement isn't a new idea. Roughly defined, it's the inclusion of branded products into the plot or context of any entertainment program in any medium. And it's been going on at least since the beginning of radio, when all shows were single-sponsor affairs, and the name and product of the sponsor often figured the plot and context of the show.
In the 1960s and early 1970s, the incidence of product placement dramatically dropped, not because the practice was discredited as a communication tactic, but because single sponsorship of specific programs became unaffordable for advertisers and, in the minds of the leading media thinkers of the time, inefficient, as such sponsorships delivered more frequency than reach.
But you can't keep a good idea down, and by the late 1970s, entrepreneurs had invented a new business model of product placement in theatrical movies. This was appealing for the entrepreneurs, since their proposition was that movie producers got free props instead of a share of the product revenue.
Through the early 1980s, a modest business existed in "placing" products in movies. The script would call for a car, and the product placement company would deliver a Ford; the script would call for a can of soda, and the product placement folks would deliver a case of Pepsi.
This all changed again in 1982, with the release of Steven Spielberg's "E.T. the Extra-Terrestrial." In "E.T.," which was, at the time of its release, the most successful movie ever, Reese's Pieces candy played a critical role in the plot, helping Elliott (the hero) and "E.T." connect. The movie was a smash, the product placement was critical to the plot, and sales of Reese's Pieces soared.
This turn of events emboldened movie producers to charge for product placement, turning around the business models and helping to defray soaring production costs. And since this approach quickly became a meaningful revenue source for movie producers, their TV counterparts weren't far behind.
The real rise of this new golden age of product placement can be credited to two simultaneous events: the ongoing decline of mass media and the rise of reality television, in particular the rise of Mark Burnett. Considered one of the inventors of the genre, Burnett is not only responsible for such shows as "Survivor" and "The Apprentice," he's also the guy who got the networks to let him sell some of the advertising himself and, in doing so, incorporated product placement deeply into the plots of the shows.
Now it's not just product placement, but also product integration. Originally a character just happened to be drinking a Pepsi. After "E.T.," two characters would connect while they lingered over a Pepsi. After "The Apprentice," two characters would be discussing the essential meaning and greatness of Pepsi while drinking it. It has gradually become acceptable for the product to live in the foreground. You can use your old-fashioned retro land-line phone to vote for your favorite on "American Idol," or you can be hip and happening by text-messaging your vote -- but only if you subscribe to Cingular Wireless.
So what we see now is a landscape where product placement is an important part of many media buys, as well as a key element in many brands' media plans and marketing strategies. The practice has, over the past five years, migrated from the fringes of the marketing world to the mainstream. Advertising Age estimates that on a global basis, product placement fees will reach $2.2 billion this year, up 42 percent from 2005, and they're expected to continue to grow at double-digit rates. Additionally, of the $2.2 billion, $1.5 billion was spent here in the United States.
The move to new media
Product placement has definitely moved beyond movies and TV shows. Video games are a natural for product placement, with leading brands and products integrated into many of the leading titles for both PC games and gaming platforms. In fact, many video game business plans now call for breaking even on product placement alone. Sales of the games to consumers are just gravy.
And there's no end in sight. Hasbro, the parent of Parker Brothers, recently revealed that in future editions of its best-selling Monopoly game, many of the tokens will be branded. You can no longer be the shoe, you must be the Nike sneaker; you can no longer play as the race car, but you can play as the Toyota Prius.
So where does all this leave retailers? Should they start developing product placement plans?
They've done little of it to date. But just because retailers haven't been using product placement doesn't mean that they shouldn't be. And, interestingly, there are really two directions for retailers to go in with product placement, both of which could help build business.
First, retailers could become clients in the world of product placement for their stores, their products, and their brands.
Lack of a national presence might seem to make placement of many retailers' brands into national programming relatively inefficient, but there's no reason that it can't be orchestrated effectively for the right kind of retailer.
It's a no-brainer for large national chains such as Kroger and Safeway. Certainly a "Survivor" contestant would love to win a three-minute dash through a Safeway store, and "Project Runway" could spend a week designing stylish uniforms for Kroger cashiers. Whole Foods has a raft of opportunities for placement in programming targeted at its younger, affluent, health-oriented consumers.
But this shouldn't be limited to the national players. Local retailers could tie themselves even more firmly to their communities by developing market-specific placement deals. Wegmans could launch a series of live, in-store broadcasts on "Good Day Buffalo." Giant Eagle could seek placement in a domestic drama set in Pittsburgh. Investigators from "CSI: Miami" could drop by Publix for a quick lunch.
Retailers can also work to place their store-brand products in appropriate programming. As private label programs become more sophisticated and distinctive, the opportunity to place these products in relevant contexts becomes more compelling.
Wild Oats shade-grown French Roast coffee could appear prominently in the upscale kitchens of a television character. Contestants from "The Apprentice" could compete to see which team can sell more of Stop & Shop's frozen entrees. Top Chef could spend an episode developing meals for ShopRite's in-store deli.
Finally, stores can start thinking of themselves as the valuable locations they are. The third-party in-store advertising companies all talk about the value of the store as a communication location, but retailers can go beyond these transitory approaches, and sell permanent placement to leading advertisers. Retailers could fund in-store babysitting by creating the Pampers Play Zone. Supermarkets could improve their culinary programs by offering Marie Callender's Pot Pie-making classes in the ConAgra kitchen.
As product placement continues to influence the marketing mainstream, food retailers have real opportunities both to use this emerging approach to marketing to move their own agendas forward and recreate their stores as appropriate venues for place-based media.