Product placement set to grow in the UK

According to a report from KPMG, product placement could significantly change how UK television is produced, financed, and consumed in the next five years.

The research, titled “Taking a subtle approach: How product placement will breathe a new lease of life into UK TV advertising,” says that product placement will soon become common practice in the country. And it’s being driven by evolving consumer preferences as well as technological development.

“The UK product placement market is still in its infancy stage,” explained Clement Chan, KPMG’s executive advisor. “The timing of Ofcom’s ruling in 2011 plays a big part in explaining the relatively slow growth until now. The global economic downturn and major sporting events in 2012 (Euro2012, the Olympics and Paralympics) have distorted the way brand owners spend their money. But technology continues to disrupt the way content is consumed, content creators are hungry for new revenue models and consumers seem to be increasingly comfortable with the idea of product placement on UK TV.”

Since Ofcom lifted the television industry’s product placement ban, many agreements have been made between networks and brands. Most recently, big-name brands—including L’Oreal, Nokia, and Samsung—have been investing in product placement and branded entertainment in UK TV.

The KPMG report estimated the current value of the UK product placement market at 10 to 30 million pounds. Other forecasts indicate that its value could grow as large as £120-million.

“Product placement will become one of the key weapons in the advertising industry’s arsenal and an important source of revenues for virtually everyone in the media value chain,” said Chan. “Understanding and exploiting the potential opportunities of product placement should rank high on the agenda for advertisers, producers, broadcasters and agencies. We already see UK broadcasters adapting and putting increased numbers of paid for product placement opportunities out into the market place.”