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ITV and Nestle Make Product Placement History

March 16, 2011

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On 28 February 2011, TV product placement became legal in the UK. On the same day, the first major deal recorded featured a Nestle Dolce Gusto coffee machine in the kitchen area of ITV1's programme This Morning. ITV confirmed that it is exploring other opportunities across programme categories that are now open to product placement (entertainment, drama, soaps in particular).

The UK is the latest market to relax product placement rules, following the new European Directive and Ofcom guidelines published in December 2010 (see our Analyst Commentary of 4 January).

Nestle's product placement is reported to be a £100,000 deal for three months. IHS Screen Digest was not able to get confirmation of these terms from ITV, but it is a realistic amount equivalent to a 30-second spot in the centre break of a major soap. ITV confirmed that it is currently talking to clients about a number of product placement opportunities, spanning a range of programmes and channels.

The product placement agency NMG said that the level of exposure of the coffee machine during the first 10 days was equivalent to £56,000 worth of spot advertising. The same level of exposure over three months would generate the equivalent of a £400,000 spot campaign, NMG said.

Meanwhile a survey by consumer research company Vision Critical revealed that 61 per cent of Britons were unaware that product placement was now allowed on TV. Among those aware of the change, 32 per cent were uncomfortable with product placement, against 54 per cent being comfortable with the concept.

This will fuel cautiousness on the part of programme producers and broadcasters, and it is one of the reasons why IHS Screen Digest does not expect a fast and massive surge in the number of deals beyond the initial stage. ITV and Channel 4 are likely to first focus on the soap and drama genres where prop placement has been used for a long time and all parties involved (brands, producers, broadcasters, agencies) already know what works, what does not and what could backfire. Broadcasters will be very careful not to upset viewers or cannibalise  sponsorship revenues (£60m or 4 per cent of total broadcast advertising revenues for ITV alone). We therefore expect them to favour a limited number of premium deals rather than multiple one-shot product insertions over many shows. Other brands reported to consider product placement include Thomas Cook and Electronic Arts.

Electronic Arts recently made a product placement deal for Plus Belle La Vie, a popular French soap produced by Telfrance and broadcast on public channel France 3. In France, product placement rules have already been relaxed since March 2010, but the advertising form has failed to really take-off so far. One reason is that only soaps and drama genres are currently open to product placement, but not entertainment formats.

IHS Screen Digest, in partnership with brand content and sponsorship specialist Madigan Cluff, will publish a comprehensive study on product placement across Europe in April 2011.

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