Industry Gets Set For New Product Placement Regime

From next week, paid-for product placement will be allowed in UK commissioned programmes for the first time – thanks to long-awaited rule changes by media regulator Ofcom. The changes come after years of lobbying by producers, agencies and advertisers – keen to unlock extra revenues/opportunities.

While the rule change has generated lots of noise in the market,  analysts are not expecting a rush of activity. With broadcasters and advertiser both anxious to avoid upsetting a) the regulator and b) the viewers, the best guess is that paid-for product placement will only add around £25m to the market in year one.

That said, it may grow as those involved find their feet. In the US, product placement is around 5% of the total ad market, which in the UK would equate to around £150-200 million.

For it to reach that level, Ofcom will probably need to relax its regulatory regime again. Under the new framework, Ofcom has outlawed placement of alcohol and hfss foods, areas which probably would have generated a lot of money for the sector.

Ironically, advertisers are the most reluctant to embrace product placement, arguing that it might adversely affect the classic airtime market. However independent producers are keen, arguing that new revenues streams are needed to combat downward pressures on broadcaster budgets.

The area most likely to see in influx of product placement is lifestyle programming (eg cooking and DIY). The reason for this is that audiences often want to know what products are being used in shows are where they can be sourced. Indeed, they are often left frustrated when they can’;t find out. Entertainment shows and soaps are also expected to be targeted, though it may be a little longer before high-end dramas and documentaries see paid-for brand integration. Areas protected from placement include children’;s, news, current affairs, consumer affairs and religious programmes.

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