Measuring the Effectiveness of Product Placement

"Today it's the Wild West. But the marketers have the gold, and eventually, they'll make the rules. Right now, though, they're frightened that the competition will get a placement that they won't." - Frank Zazza, chief executive of iTVX, a research analysis organization

This article from CMO Magazine (a magazine for marketers) is a great summary of some important product placement instances, a history of the practice, and statistics for measuring its effectiveness. Ratings work to see how many people are viewing the TV show, but who is acknowledging your product placement attempts and actually allowing those attempts to influence their behavior? Product placement must work, why else would it be so popular? According to the article, "Eight seconds within a show may be worth as much as a 30-second ad, or more," says Mark Workman, founder of FirstFireworks, an entertainment marketing company. But determining what "the factor" should be is entirely subjective. Research companies are developing methods that combine factors like "where the product appears in the frame and whether the brand name was spoken clearly" to generate a number called the "Q-Ratio".

And the "Q-Ratio" does lead to a good return on investment. After product placement in and promotions with the movie National Treasure, VISA's holiday volume went up 19% (although not all attributed to the film). However, abuse of product placement could lead to problems. First, advertisers already think product placement is overpriced, because of the lack of an industry standard in measurement - the Q-Ratio is different between different research companies. Also, there is always the constant fear of alienating customers by placing a product too often or too promiently. TV shows and movies can easily become half-hour to two-hour long commercials. Workman says, "The moment you focus on the business over the entertainment value, people will recognize it, and they'll be turned off. I don't think there's any question that a lot of marketers and producers will make that mistake."

Product placement remains a good option for "entertaining" brands. The new and "revolutionary" (if you ask Pontiac) G6 struck a cord when all the members of Oprah's audience got a free one. VISA can be used to involve TV or movie characters in more experiences - because VISA is everywhere you (and the star) want to be.