Product Placement Spending in 2004

Value of Product Placement Market Exploded 30.5% to $3.46 Billion in 2004, and Surged 16.3% Annually Since 1999 The value of the product placement market grew 30.5% to $3.46 billion in 2004, as marketers wary of ad-skipping technologies targeted more of their marketing budgets at media that attract the 18- to 34-year-old demographic. The value of product placements in television, films and other media grew at a compound annual rate of 16.3% from 1999 to 2004, according to Product Placement Spending in Media 2005, a new report from PQ Media, a custom media research firm. The report, which includes 30 years of historical trends, five years of spending forecasts and approximately 75 tables and charts, projects that the product placement market will expand 22.7% to $4.24 billion in 2005, propelled by strong growth in all three major media segments, due primarily to an increase in paid placements. Growth over the past five years was driven mainly by the strong expansion of the television segment. The value of television product placements soared 46.4% to $1.88 billion in 2004, and grew at a compound annual rate of 21.5% from 1999 to 2004, as reality television became a haven for numerous product placement deals. The value of product placements in films rose 14.6% to $1.25 billion in 2004, and grew 11.4% on a compound annual basis in the 1999-2004 period, according to Product Placement Spending in Media 2005. Spending in the other media segment, including magazines, newspapers, videogames, Internet, music, books and radio, increased 19.9% in 2004 to $325.8 million, and rose at a compound annual rate of 11.7% from 1999 to 2004. Product placement’s growth is coming at the advertising market’s expense, according to PQ Media, as marketers more aggressively migrate dollars away from advertising to alternative media, especially product placement. “The reasons behind this development are rather simple, but critical to a media industry undergoing rapid change,” said Patrick Quinn, president of PQ Media. “Technological advances, most notably personal video recorders, and continued audience fragmentation, due to the growing popularity of new media, have led major marketers to become more skeptical of their return on investment in traditional advertising.” Another key trend in product placement is the growth of paid placements compared with barter and gratis arrangements. The share of paid placements increased from 18% in 1974 to 29.2% in 2004, as marketers began to compete for placements in television, films and other media. Gratis placements have become much less frequent, accounting for only 6.6% of the market in 2004 compared with 24.3% in 1974. Barter arrangements grew from a 57.7% share in 1974 to 64.2% in 2004, according to PQ Media. The value of the product placement market is projected to grow at a compound annual rate of 14.9% from 2004 to 2009, reaching $6.94 billion, as media producers provide more opportunities for marketers and increase their rates to coincide with strengthening demand. Television will increase its share of total product placement spending to 61.2% by 2009.