Pricing the Placement

Tonight I heard a speech that included the statistic that there are over 100,000 instances of product placement a year. 100,000 instances where advertisers are buying media without a rate card. That's right. Pricing for product placement is not standardized. "It's all done on a what-the-market-will-bear basis," says a producer who used to work with Mark Burnett Productions, which is responsible for Survivor and The Apprentice. "How badly do you want to be in the show, and what are you willing to pay?" (this article again)

According to the article, there are three categories of pricing for product placements: "some are free, including incidental cameos; others are barter deals in which there is a quid pro quo, such as a company agreeing to help promote the show or film; and in some, a fee is paid, or the integration comes as part of a big ad purchase—as a kind of bonus". Famous product placements (United Airlines in Terminal, FedEx in Castaway), were free - the writers wanted it, and it was just a special treat for the advertisers. The only cost to the company was personnel to advise the moviemakers about the details.

National Treasure was, well, a treasure-trove of product placement (sorry, I couldn't resist). The article cites a USA Today article which describes how "Visa, McDonald's, Verizon Wireless, America Online and others contributed to a $160 million marketing war chest, which exceeded the movie's $100 million production budget". You can fund your movie with product placement, you can produce a TV show - what better arguement is there for the growth of product placement as the 30-second ad continues to decline? One pricing is standardized (right now, it's all about getting in early and negotiating), product placement will surely play a larger role in funding media projects.