Ben Silverman, Reveille CEO and executive producer of NBC's "The Office" and "Meet Mr. Mom," recalls that when he first got into branded entertainment in the late 1990s, he thought it would be easy to show a return on investment to marketers.
"I thought sure, just look for a bump in (product) sales," he says.
"But it's not that simple. During that time, were people influenced to buy something during Christmas? You don't really know."
Tom Meyer, president of Davie-Brown Entertainment, which handles placements for PepsiCo, agrees. "There are very few times you can take a placement and tie it directly to sales," he says.
The truth is, product placement falls under a malleable heading that's known as "branding," which has become viewed as an investment without quantifiable returns. (The same goes for branded-entertainment deals such as an ESPN show Anheuser-Busch is mulling for its Budweiser brand next year that'll take aim at the sport of darts; or "First Descent," a film financed by PepsiCo's Mountain Dew brand that will be distributed theatrically by Universal in December.)
Solving that "return on investment" question about branded entertainment has become the industry's $64,000 question, with the bottom line being this: Is it even worth it? In the past year or so, a number of firms -- including IAG, iTVX and Nielsen Entertainment (a subsidiary of VNU Inc., parent company of The Hollywood Reporter) -- have attempted to answer it by setting a pricing standard for the industry.
The equivalent of a rate card remains elusive, but at least the discussion has started, says John Zamoiski, president of NMA Marketing, a Los Angeles-based branded-entertainment firm. "Some are taking a shot in the dark," he notes, "but at least if you create a standard, you have a place to start."
Frank Zazza, CEO of New York-based iTVX, believes that ideally, marketers should pay "on results" for placements on an established per-second basis. "Clients are not doing it right now, but there's no question this is the business model of the future," he says.
If that's how things spin out, the model of the future looks much like the old one for broadcast ads, in which prices -- based on CPMs (cost-per-thousand viewers) -- are set, and advertisers routinely earn free time in the form of "make goods" if programming doesn't hit a particular ratings point.
Zazza's iTVX has implemented a measurement system on its Web site (www.itvx.com) that provides subscribing members with an interactive way to evaluate both product placement and branded results.
Meanwhile, companies like Los Angeles-based the Salter Group have branched off with subsidiary Brand Advisors, which places a dollar valuation on potential brand-integration strategies. "We're hired by the film or brand company to tell the advertiser what we think it's worth," principal Roy Salter says.
But, Salter notes, valuating branded entertainment is a "stepping stone" to "a much bigger question" -- that is, video-on-demand and Internet protocol television. "That's what's going to keep (advertisers) up all night," he says, "when we can watch whatever we want, when we want it."
Until recently, the business of quantifying branding's success was more informal. Many branding instances came from product-placement agencies, which typically charge between $5,000-$20,000 a month to get products in the hands of propmasters during production. That, and some donated product, represented the sum total of the marketer's product-placement expense.
Realizing that a changing ad model means ad-sales growth now will come largely from product placement, TV networks have taken over much of the dealmaking. For example, Mark Burnett, executive producer of CBS' "Survivor" and NBC's "The Apprentice," among others, has shown that advertisers are willing to pay up to $5 million to get their brand featured in a one-hour primetime show. But the lack of a pricing standard means each deal has to be worked out individually. With a standard in place, deals could be inked much more quickly, and the networks would have third-party justification for their prices.
However, some aren't waiting for the networks or a third party to come up with a standard. NMA has offered that service to some clients for years, as have talent agencies such as CAA and ICM. One of NMA's clients, General Motors, has had the firm create an in-house group that assigns ratings to GM's various branded-entertainment efforts.
And what GM has discovered is that having its car in a camera shot doesn't really do much for sales or branding. "Is there a reason for it being there that goes beyond just pure placement? It's got to be true integration," says Steve Tihanyi, general director of marketing alliances and promotions for GM. For example, the GMC Yukon XL Denalis serve as mobile analysis units on CBS' "CSI: Crime Scene Investigation," and more such "CSI" tie-ins are planned for the fall season.
Similarly, PerfectMatch.com has done placement deals for films and TV networks such as Lifetime and MSNBC. Most notably, the Web dating service had a tie-in with Warner Bros. Pictures' July romantic comedy "Must Love Dogs," appearing as an integral part of the film. Now, CEO Duane Dahl says he wants his company to have a branded talk show of its own.
"We've certainly found that with our placement with 'Dr. Phil,' viewers respond if we're part of the action," says Dahl, noting that a recent segment on the syndicated "Dr. Phil" show used the service to unite "perfectly" matched men and women.
Such demands put the networks in a quandary. Ad spending is flat, and they need new revenue streams. But they also don't want shows that look like infomercials with brands demanding more face time.
ABC's approach has been to adopt low-key placement and branding deals. Dan Longest, senior vp integrated marketing and promotion at the network, says ABC only does about one placement deal a week, which effectively roots out any conflicting deals made by production companies. "We said years ago we're not going to turn ourselves into the promotional network," he explains.
But ABC stands out as the lone exception on the dial, with the average sitcom or reality show on other networks now beginning to rival NASCAR in terms of onscreen logos. The number of product placements during network primetime grew 100% in the first quarter of 2005 and another 100% in the second, according to Nielsen Product Placement. The 10 shows with the most placements averaged 6.4 per hour.
No figures exist for overall placements in movies, but some reviewers have taken recent movies to task for such overt advertising -- most notably, Buena Vista's June comedy "Herbie: Fully Loaded," which critic Richard Roeper described as "product placement gone wild."
Wall-to-wall placement might have hurt "Herbie's" boxoffice somewhat ($65 million domestically on a $50 million budget, at press time), yet even if the film had flopped, brands might have still done well, a truism for television as well: NBC's "The Contender" wasn't a huge hit, but it was credited with causing tie-in partner Everlast's first-quarter sales to jump 23%.
Likewise, Sweet'n Low had no problem with Sony's decision to postpone its release of "The Pink Panther"; marketers saw it as a way to extend their association with the upcoming Steve Martin film at no additional cost. And Rose Downey, marketing manager for Au'some Candies, says tie-ins for Fox's January actioner "Elektra," a spinoff of 2003's "Daredevil," did well.
"Candy is universal for all age groups," she says. "It's an inexpensive way to get involved with the character." Au'some so enjoyed its experience with "Elektra" that the company has returned for Universal's planned December release "King Kong," using the 72-year-old icon in products ranging from yo-yos to a Power Pop.
Whether firms find a way to quantify branding's success in numbers or dollars could prove unnecessary as products stand further apart from the shows and films in which they are featured. "The success of a marketing program has nothing to do with boxoffice success," Miramax executive vp worldwide promotions Lori Sale says. "If 10 people see the movie and they're the right 10 people for a brand, then what do you care?"