Sunday 25 September 2016

Come on down if the price is right: product placement takes a new starring role in Irish TV budgets

Ad agencies and brands are diverting more of their budgets to product placement and plot-line integration in a clever bid to outsmart tech-savvy viewers, writes Simon Rowe

Simon Rowe

Published 25/10/2015 | 02:30

Tom Hopkins, who plays Fair City’s Christy Phelan, outside the fictional TV shop that actually is more profitable than the average Spar, bringing in €300,000 profit a year
Tom Hopkins, who plays Fair City’s Christy Phelan, outside the fictional TV shop that actually is more profitable than the average Spar, bringing in €300,000 profit a year

Product placement is no longer happy to play a cameo role on Irish television and in fact is fast becoming its star performer.

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When TV station chiefs launched their autumn schedules to great fanfare a few weeks ago, product placement took centre stage in terms of where the industry sees income stream growth into the future.

In a world of ad-skipping technology, highly mobile consumers and on-demand online services, companies are starting to divert more and more of their ad spend on product placement as a way of outsmarting tech-savvy viewers.

Spot ads still command the lion's share of TV advertising budgets but product placement or Advertising Funded Programmes (AFP) is where the smart money is.

The appeal of AFP is simple: it's hard for viewers to avoid a specific brand if a TV show's set is built around that brand or if the product is cleverly incorporated into the script.

Although product placement is notoriously hard to measure in terms of delivering value for money, ad agencies and brands are piling into the sector. The sector has grown massively in recent years, with annual global revenues estimated €8.8bn ($10bn). Advertiser-funded programming is the umbrella term used to include product placement, sponsorship, naming rights and, more recently, the creation of shows in partnership with advertisers.

But the days of gratuitous product placement are over. Seamless product integration into plot lines is now the norm, shifting the emphasis away from once-off brand cameos.

TV3, one of the best exponents of product placement, admits it has learned its lesson from the over-use of product placement on hit shows such as The Apprentice.

The station's commercial director Pat Kiely said "viewers voted with their remote control" when the show became over-commercialised.

"The Apprentice was probably Ireland's first big foray into advertising funded programmes where you had a different brand each week figuring in the task."

By series four, however, product placement stopped working - and viewers began to switch off in their droves, he candidly admits.

"That was a good example of where viewers began to focus on the remote control," he said.

TV3 led the way with product placement in Ireland with branded Kenco mugs on its Midday programme in 2011.

Until then, paid-for product placement was prohibited in Irish programming, with free product placement also limited. The Broadcasting Authority of Ireland (BAI) changed its rules in May of that year, opening up the market in Ireland.

It didn't take long for TV stations to wake up to the fact that product placement is a money spinner - and the income can be used to offset rising production costs.

Now the floodgates are open.

If you want to be a "guest" on RTE and TV3 daytime shows all you have to do is fork out thousands of euro. It's like a boardroom version of the old hit TV game show The Price is Right: for a small fee ranging from €1,000 to €15,000 per appearance, brands can plug their products or services live on air.

TV3 has cooked up lucrative product placement deals with Stork margarine and Odlum's flour for the latest series of TV3's The Great Irish Bake-Off.

Daniel and Majella O'Donnell are driving around in a Skoda in their new TV travel series on UTV Ireland. The show features long lingering shots of the Kincasslagh crooner and his wife driving through Ireland in a Skoda Yeti.

Abominable or not, such product placement is here to stay.

TV3's acclaimed homegrown drama series Red Rock has cemented the relationship between quality content and product placement.

Red Rock is a game-changer for the industry and marks a significant advance in the evolution of product placement, says TV3's Pat Kiely.

Featuring a branded Costcutters shop on the Red Rock street, TV3 has replicated the success that Spar has enjoyed with its branded store on RTE's flagship soap Fair City.

"It took RTE 25 years to get the Spar into Fair City but we had Costcutters in Red Rock in the first episode," says Kiely, who has been 17 years at the commercial helm of the Ballymount broadcaster.

He believes the key to successful product placement is finding "the 'sweet spot' where there is a natural incorporation of brands and where brands would normally co-exist with content".

The Red Rock deal with Costcutters would add about £100,000 to TV3's income, say industry insiders.

And Kiely insists it also adds editorial value and authenticity to shows. The use of real-life brands and products on the twice-weekly show, along with the Costcutters shop on the set of Red Rock "makes the Red Rock street feel more real for viewers".

"If you look at the BBC version of The Apprentice, they have to make up brands. But when you have a real brand, say Cadbury's, and the task is to come up with a new Cadbury's flavour, that's a much more interesting and exciting task than if you're making up a pretend name of a bar of chocolate. So, editorially and creatively brands can actually enhance and add value to shows. The issue for broadcasters and advertisers is just identifying where those opportunities are.

"Viewers will vote with their remote control. Clearly if we were forcing the wrong product into the wrong show in the wrong way, it's never going to work," he said.

Geraldine O'Leary, commercial director at RTE, insists that as a public broadcaster its approach to product placement is a little different.

"Just because you can do it doesn't mean you should do it. The integrity of the editorial is first and foremost and always will be in RTE. That's the backdrop to everything we do," she said.

But don't let the 'public broadcaster' mantra fool you. Montrose commercial executives are not shy about raking in the moolah from advertisers.

A cursory glance across its new Autumn schedule reveals that the station has more sponsors than a school fun run.

Montrose is a slick money-making machine. RTE's latest annual report for 2014 showed total revenue of €328.2m, made up of €149.6m in commercial revenue and €178.6m from the licence fee.

But RTE's TV licence revenue was down by almost €4m in 2014 compared to 2013. So the public broadcaster is likely to come under more pressure in the years ahead to leverage its product placement opportunities.

A further concern for the entire television industry is the increase in the number of homes that do not have a television set. This number has been growing steadily over recent years whereby it currently stands at 110,000 or 6.5pc of all homes, according to the Nielsen Establishment Survey.

But despite these concerns the commercial approach of the public broadcaster will remain simple, says O'Leary. "Our approach to product placement is to try and do fewer bigger deals rather than doing lots of smaller deals."

"We've done a few nice deals with relatively healthy sums - but it's still very small in terms of the context of our overall revenue."

When RTE made the ground-breaking decision in 2011 to have a branded shop on the Carrigstown lot in Fair City, O'Leary admits that nobody knew how much the contract would be worth.

"We put it out to tender. We decided to let the market find its own level because nobody had a clue how much we should charge."

The contract is now worth an estimated £300,000 per year and Spar renewed their three-year contract with RTE last autumn bringing their total investment in TV product placement to €2m over six years.

Fair City also features a branded Credit Union and an Expert Hardware store. Both have signed three-year product placement deals on the soap that's watched by an average of 550,000 viewers per episode - beating TV stalwarts such as Emmerdale, Coronation Street and EastEnders in the ratings war.

RTE also has renewed its deal with Lidl on its Taste of Success show where contestants compete to have their food product on the shelves of 140 Lidl stores nationwide.

Pat Kiely sums up the appeal of product placement for advertisers: "The rule of thumb is that when a brand is featured in content the value of that is worth three to four times what it is when it is featured in an ad break." Brands are all about achieving consumer awareness and changing market perception. "That is more difficult within a 30-second ad break so that's where product placement helps and that's why it works."

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