SKU’d Thoughts
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SKU’d Thoughts

SKU’d Thoughts 23: Is product placement an effective form of marketing?

A couple of weekends ago, I went down a YouTube rabbit hole of DJ Khaled music videos. One glaring observation was the number of product placements, from watches to liquor to cars, none of which were subtle. It got me wondering if that type of marketing is actually effective. The practice of intentionally embedding products within photos, TV shows, and movies dates back to the early 1900s and it is only growing as consumers gravitate towards Netflix, Amazon Prime, and other ad-free viewing experiences.

According to PQ Media, the product placement market in the U.S. will reach $11.44 billion this year and is projected to grow, a trend that reflects the on-demand nature of how people consume media. Brands are losing the luxury of effectively advertising their products to consumers during commercial breaks. NBCUniversal plans to cut primetime advertising time by 20 percent across all its networks, Fox Networks Group wants to reduce ads to two minutes per hour across all its channels by 2020 and Turner has been cutting its advertising time over the past few years. So, brands have turned to product placement as a way to keep up with changing viewership trends and media company practices.

According to reports, Reese’s Pieces jumped 65% the summer of 1982 due to the famous product placement in E.T. The Extra-Terrestrial. Getting back to DJ Khaled, he is not the first hip-hop star to showcase products in their videos. Sean “Diddy” Combs who inked a marketing partnership with Ciroc in 2007 placed the alcohol in all his music videos. Before partnering with Diddy, Diageo, the manufacturer of Ciroc, sold a mere 50,000 cases but has now become the №2 selling premium vodka brand in the U.S. However, there hasn’t been enough data published about the financial benefits brands received from product placements.

Effective product placement should feel natural and unforced and some brands are taking it a step further by buying storylines, also referred to as ‘paid integration’. In my opinion, Lyft and KFC have managed to cleanly pull this off. Raven Symoné’s character in “Black-Ish” became Lyft driver to make ends meet and a bucket of KFC chicken appeared on a “Stranger Things” episode in Season 2, with one of the characters proclaiming it “is finger-licking good”.

The growth in product placement spend — in spite of limited data — is evidence that brands find this form of marketing to be worthwhile. Brands will need to figure out how to seamlessly fit into TV shows, movies or whatever media they place their products while standing out enough for consumers to take notice.

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Think pieces about CPG and retail space in relation to startups.

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