The US product placement marketplace was valued at $8.8 billion in 2017, up 13.7% year-over-year (YoY), according to a new report by media research firm PQ Media.
The US product placement marketplace was valued at $8.8 billion in 2017, up 13.7% year-over-year (YoY), according to a new report by media research firm PQ Media. The number of product placements executed last year decreased, but higher-value brand deals secured by services like Netflix and Amazon helped offset the lower volume. For context, over-the-top (OTT) services like Netflix and Amazon are able to secure higher-valued product placements because of their ability to gain viewers that are fleeing traditional TV.
Product placement is important to the monetization plans of the top OTT services. Amazon, Hulu, and Netflix all integrate product placement into major portions of their original series libraries'. All of Amazon’s original programming contains brand integrations, while 91% of Hulu originals use them, according to Branded Entertainment Networks.
Even Netflix, which trails, uses product placement in 74% of its original series. Product placements can give these streamers new ways to monetize beyond subscription revenue without having to add advertising or, in the case of Hulu, ramp up commercials
Brands should consider taking advantage of product placement opportunities for two key reasons:
- Some consumers might be more receptive to brand integrations than they are to traditional ads. Eighty-four percent of millennials don’t like or trust traditional marketing, according to McCarthy Group per Forbes. Meanwhile, 60% of consumers feel more positive toward a brand they recognize in a product placement, according to research cited by NextPage. Consumer receptiveness to product placement could eventually translate into an in-store or online purchase the next time a consumer encounters a brand that was integrated into a show.
- Measurement tools for product placements on OTT services are improving. Nielsen recently created a new offering that helps brands evaluate their brand integrations across both linear TV and OTT services. This offering evaluates factors such as the duration and on-screen prominence of a brand integration in OTT services. This tool could help brands, like Clorox, determine if their product placements on an OTT service like Netflix are as effective as those on traditional TV.
Meanwhile, product placement opportunities for brands may increase as more traditional media networks cut ad loads. A growing number of networks, including NBC and Fox, are pledging to air fewer commercials with the aim of improving the viewership experience and appealing to consumers that are increasingly viewing subscription video on demand (SVOD) services. To offset declines in ad revenue associated with this strategy, companies may choose to run more brand integrations in their shows.