Navigating the paid placement path

In light of Ofcom’s paid placement decision, Darren Moore, VP, Nielsen IAG, gives some practical advice on how advertisers can maximize exposure and ROI, while maintaining an organic viewer experience…

The amount of television being watched is increasing, and the vast majority of viewing remains ‘traditional’, i.e. live, linear and through the TV set.  Although the proportion of shows watched on a time-shifted basis is small, the volume is growing. With DVR penetration now reaching almost 40% of households, the ability to avoid ads is increasing. Even ad-skipping online is now possible, with the launch of Google’s ‘TrueView’, allowing skippable pre-roll ads on YouTube.

This ability to avoid ads and, to a lesser extent, growth in ad clutter could make it harder for traditional advertising to break through to audiences.  Particularly in the US, advertisers have pushed the TV networks and regulatory bodies to experiment with new ad formats – limited commercial interruption, sponsorships, branded vignettes and integrations.

After much debate, Ofcom will allow the introduction of paid placement on UK TV in late 2010/early 2011.  The guidelines have yet to be finalized. However, the following have been confirmed:

• No placements in children’s programming , news content or current affairs programming
• No placements for select product categories: tobacco, alcohol, gambling, foods or drinks that are high in fat, salt or sugar, medicines and baby milk
• No undue prominence

Undue prominence is likely to be the source of much of the debate going forward. This may mean no verbal mention of brand names, limits on length of time on screen or no adjacent advertising and/or sponsorship. There must also be no confusion between editorial and advertising content.

However, a recent shift towards adjacent advertising has occurred. For example, L’Oreal can now advertise with brand spokesperson, Cheryl Cole, during The X Factor – a very recent development.  Could this be the catalyst for a new advertising landscape where ad and placement adjacency are allowed?  In the US, most placement deals essentially require an accompanying ad buy.

In the US, Nielsen IAG has been tracking viewer response to placements (both paid and prop) since 2005.  In that time, we have completed 10 million viewer surveys across 10,000 brands and 1,500 shows. We’ve observed that, rather than alienating the audience through multiple messaging and multiple exposures, an in-tandem strategy works.  The ad helps breakthrough of the adjacent placement and vice-versa, with sizeable increases in key metric performance for both the ad and placement when they air side by side.

Admittedly, there has also been increasing clutter in the product placement space in the US. An average episode of a reality programme has 10 brand integrations, and there has been a 30%+ increase in the overall number of placements in the last few years across all programming genres.  However, viewers continue to respond favourably despite this increase in activity.  Recall of brands has increased steadily over time and favourable opinion of the brands involved in integrations is also on the rise.

In the UK, Nielsen IAG has been tracking programming since the beginning of 2010 and has surveyed the audience about their exposure to placements across a wide range of US-originated shows airing here. Brands in the automotive, electronics and fashion sectors are prevalent, as well as a smattering of beer, firearm and prescription drug brands – the types of products that Ofcom won’t allow.

The only difference between responses of UK and US audiences to these placements in US shows is in branding recall; however, this is because brands may be unfamiliar and unavailable to a UK audience.  However, in other respects (perceived fit between product and programme, opinion improvement for integrated brands), UK and US audiences respond almost identically.

A key issue for broadcasters and programme makers here is the impact paid placement will have on the integrity of their show.  Based on the evidence, there is little for them to worry about.

Only 2% of UK viewers said they had a lesser opinion of programming as a result of its product placement, while one in four thought more highly of the show, which speaks to the importance of a synergistic fit between brand and environment.

So how can advertisers maximize exposure and ROI, while making for an organic viewer experience? How does a brand start thinking about an integration strategy for the first time? What does this all mean from both an executional standpoint and from a research standpoint for advertisers?

Synergy is a key point – firstly, synergy between the product and the show – those which ‘fit’ and are contextually appropriate are more successful. Secondly, synergy between ad and integration – airing both, if allowed under the guidelines, greatly increases recall.

It is imperative to bear in mind the reach and frequency equation – a placement will likely be seen by far fewer people than an ad, but can potentially be targeted much more effectively. It is important to determine what the placement objectives are, and how they fit within the broader marketing strategy. Typically, product placement should be considered as a beneficial supplement to a 30 second spot, rarely as a substitute.

Finally, integrating throughout a series, showcasing the brand in different ways across different episodes, is the optimal way to build awareness and increase brand opinion, creating a consistent, meaningful relationship with the audience.

The landscape is likely to evolve and change over time, as advertisers and programmers continually assess viewer tolerance, market tolerance and most importantly, ROI.