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How can UK TV product placement do better, asks report

X Factor judges could have mugs marked 'Your ad here'?

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A new analysis of paid product placements, which have been legal on UK television since February 2011, shows that it hasn't generated all the powerful stream of new revenue the industry had been hoping for. Worse, the technique is in danger of destroying a previously successful industry.

When product placements became legal, they were heralded as the answer to falling revenue from TV ads, not to mention a solution for the irritating way viewers avoid watching ads, but the first 20 months have seen fewer than 20 products placed and left directors with empty sets as the industry struggles with complex regulation and a terror of being labelled "too commercial" by its the viewers.

The idea of product placement was that companies would pay to have their products in the background of TV shows, and the products were to be identified with a "P" at the start of the show.

At the time, media analysts at Screen Digest estimated the value of product placement at close to $150m. But in a recent article in the International Journal of Advertising, University of London Royal Holloway's professor of marketing, Chris Hackley, explains that product placements have raised less than 2 per cent of that figure and have seriously damaged the existing regime which had been operating perfectly well for at least 20 years.

Fees, freebies and mad props

Writing with Amy Rungpaka Hackley, of Queen Mary University, the pair explain that under the existing regime, companies who want their products on show pay an annual retainer, say £30,000, to one of the 12 or so placement agents operating in the UK. A TV production company dressing a set will call up their favourite placement company with a list of requirements which the agency tries to fill with free stuff provided by their clients. Clients get a veto based on the show, but no control over how their product is portrayed or how long it's on screen.

The TV companies get free props, but no cash, and there's no obligation for the product to be used in a specific way, or indeed at all should the scenes involved end up on the cutting-room floor.

But when paid product placement arrived, the TV companies got very excited, and set up sales departments to hawk their airtime direct to companies, the process famously kicking off with a Nescafé coffee machine sitting on a shelf behind the presenters on This Morning - a deal pegged at £100,000 and indicative of one problem with commercial product placements.

Another example, though not one mentioned in the report, illustrates the other problem well. A TV company came up with the concept of a show based in a supermarket, planning to fund production with paid product placements filling the shelves, but that would be against the Ofcom rules, which are very clear that placements can't be promotional... and in the real world, supermarket shelves always contain a variety of products, so paid-for placements would have to appear alongside, and with equal exposure to unpaid set dressing, making the sale impossibly hard.

That restriction on being "promotional" presents other problems too, such as a poster on a bus stop. Posters are, by their very nature, "promotional" and thus not permitted under the paid product placement rules. Worse still, such placements must be editorially justified, which could drive the most dedicated of directors insane should they stop to think about the motivation of every inanimate object as well as the luvvies in every scene.

No products on Auntie - and that's where the real TV money is

Paid product placement isn’t allowed on the BBC at all, so it’s a wily agent who got boxes of Seabrook Crisps into Beale's Plaice - though why the EastEnders chippy was selling crisps remains a mystery. Paid Placements are also banned from all children's TV, though freebie set dressing remains standard practice and modern cartoons are little more than toy sponsorship these days.

The alcohol, tobacco and firearms companies are also banned from paid product placements, and voluntarily exclude themselves from the set-dressing freebies, so every time you see someone swigging from a bottle or lighting a fag be pleased they had to pay for it - and wonder what happened to the contents of the bottle before it was replaced with ginger ale.

But so tortuous is the process by which companies can pay for their products to appear on screen that few companies are bothering, further discouraged by the outrageous fees the broadcasters are asking. One example asked £100,000 for a guaranteed six-second exposure, which would pay for a lot of non-guaranteed chances.

The negotiation process is even putting production at risk, with tales of units turning up to shoot a scene only to discover the deal wasn't signed and the set isn't dressed, prompting desperate calls to the placement agencies in the hope of filling the gaps.

Not that those placement agencies are in any mood to help, having been cut out of the loop somewhat by over-optimistic production companies who thought they could turn a penny or two renting out screen space.

The full report, which is available online, doesn’t conclude that paid product placements can't work, just that there are problems blocking it here in Blighty: in America the process is well-established, with paid and freebie dressings co-existing on set.

In the UK, the presence of the BBC is important, as the largest producer - and purchaser - of television content, but it’s the tight regulations are apparently stifling development:

"They have to be reformed and liberalised. But, for this to happen, the government, Ofcom and the UK media industry would have to acknowledge that product placement has been present in UK TV for (at least) three decades, and only the payment system has really changed under the new rules."

Not only that, but they'll have to recognise that "the product placement agencies delivering free props have played a prominent part in the history of both commercial and non-commercial UK television production, and have helped shape the way TV production looks today".

And most scary of all "to confront this taboo Ofcom might need to confront another, which is that brands on the BBC constitute the most valuable international placement market the UK has to offer." ®

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