It seems like more and more people are getting their TV from alternative sources these days, whether from DVRs, sites like Hulu, or simply downloading torrents of the TV show. Most of these options let you watch much less (or let you skip all the) commercial breaks. I got to thinking that ultimately, the only way they could force people to watch ads is through product placement.
Could a network TV show survive with no commercial breaks and all product placement instead? I haven’t a clue for the going rate of a typical commercial vs. the cost of product placement. Or would the level of product placement required to match the ad revenue of normal commercials be so much, it would mimic the Truman Show’s ads?
It’s hard to come up with an answer. You’ll have to have enough product placement to pay for the cost of the show. The question, then, is how much to charge for each placement? If and episode of a TV show costs $500,000 to make, and you can find one company willing to pay $500,000 for product placement, then you’re fine. If no advertiser wants to pay more than $10,000, you have to find 50 advertisers – not so easy, and the show would be all placement.
The little secret to network TV shows is that the studios take a loss in producing them. Remember a few years ago when each one of the cast of friends was getting $1 million per episode? That was $6 million per episode just to cover the salaries of the cast principals. The networks pay a licensing fee for the right to run a show first, and the studio hopes to make up its production costs when the show becomes a hit and runs forever in syndication.
So you’d have to find product placements that would either a) be willing to pay a lot of money upfront or b) be willing to enter into long-term contracts. So, if a production company signed a 10-year contract with someone like JetBlue or Oldsmobile, everyone would be out of luck.
You can see a similar problem with naming rights for sports stadiums. Remember Enron Field in Houston and the TWA Dome in St. Louis? When those companies folded, the stadiums were able to resell the naming rights and hang up new signs. It would be a little difficult to delete every image and reference to New Coke from a TV show.
Not necessarily. They might use a technique that could insert a sponsor’s ad on billboards and other surfaces in the television program. Such a technique could let you change the ad for subsequent airings of the episode. Here is an article about this technology being used during baseball games and other sports events.
A big problem is that networks mostly don’t own shows. If a company paid for product placement who gets the money? If it’s the production company, then the network gets nothing. If it’s the network, the production company is putting distracting nonsense into its shows for no return.
What happens to the commercial time? It sounds nice to have continual programming with no commercials. But as noted above, the real money is made when the shows are placed into syndication. That means they get shown on channels that still need to show commercials to make money. A show would have to get huge amounts of time ripped out to make room for the new commercials. And the products being placed may be obsolete or valueless by that time. There also needs to be room for local or regional commercials. Many products, even from national companies, are not advertised nationally or have regionally variations in availability or pricing.
Nor would the product placement be valuable enough to replace a commercial. Commercials work by repetition. An ad campaign requires thousands of showing of a commercial to make an impact. No mere product placement gives that kind of value so the cost of a product placement would be far less than the value of a commercial. Even if a whole show were filled with product placements it couldn’t add up the millions that any half-hour show receives from selling 15-20 10, 20 and 30-seconds commercials. And the network loses time and space to show its own promos.
In addition, product placement severely reduces the type of companies that can advertise. Movie promos make no sense for product placement. They need to be timely, but shows are shot months before they are shown. What about special promotions, sales, or other timely events? How do companies coordinate placement with stores stocking their products when they can’t be sure when a show will run? What happens if a show is canceled after three episodes? Does somebody get money back? Is it all wasted?
Corporations that sell services rather than products would have a much harder time finding a way to place their names in programs. Corporate image advertising, where the object is to get the corporation’s name favorably out there without pushing an individual product, would be harder yet.
During election seasons, what happens to political advertising, which was a billion dollar business last year?
There may be dozens if not hundreds of ways this wouldn’t work. There’s no economic model in today’s world that would accommodate this. You’d have to completely rethink the entire business from the ground up. Placement is an add-on at best, not a base strategy.
Didn’t product placement used to be the standard method of advertising on the air, back in the radio days? You’d get the Lone Ranger taking a break from chasing the bandits to mention how much he enjoys smoking a particular brand of cigarettes, for instance. Or coded messages to B-E-S-U-R-E-T-O-D-R-I-N-K-Y-O-U-R-O-V-A-L-T-I-N-E, or the like.
The advertising agencies owned the entire show back in those days. They produced it, hired the actors, writers, and directors, everything. They paid a fee to the networks for running it. However, there wasn’t any syndication - not even a summer rerun in the beginning - so there was no economic incentive to have a show be meaningful for anything other than its original run. And shows were proportionally far less expensive in the early days, so the return on a single ad was much greater. Except that it wasn’t a single ad, it was continued pounding home of the sponsor hundreds of times over the season, not a mere one-time product placement.
Several things happened to change this. The quiz show scandals forced the networks to get rid of advertisers owning shows; filmed programming meant that shows could be rerun and syndication was born; “magazine” style advertising allowed many more advertisers to get onto tv without the expense of owning and running entire series; salaries and production expenses grew much higher, especially after color production became standard. Really, the entire world of television changed dramatically from the 50s to the 60s, although the change started in the mid-50s and took place over a number of years.
I’ve heard rumor that grocery stores make as much money from the food manufacturers as they do from selling that food to you, via shelf placement. I’ve been meaning to look into it.
I have no doubt they could do it, my god, look at all the Coke on American Idol. If Coca-Cola wasn’t footing the bill for the entire show, they came damned close. Heck, even the couch was in the Coke style.
I loved the days of “old time radio” with the advertisments as part of the plot…
Burns and Allen (Maxwell House Coffee)
George) OK Bill I’ve had enough of you
Bill Goodwin) But George
George) Run along Bill
Bill Goodwin) You’ll never run a long bill if you buy Maxwell House Coffee. It costs just pennies per cup.
Gracie) We have to get even with him. How can we torcher him?
Bill) Take away his Maxwell House Coffee.
Gracie) Bill is TOO a doctor
Nurse) He doesn’t look like a doctor to me
Gracie) Why just yesterday he delivered a baby
Nurse) What did she have
Bill) A cup of Maxwell House Coffee. I give it to all my patients. It relaxes them
This is a gameshow, first-run / produced by Game Show Network (GSN). Based on Blackjack.
The deck of cards used for the show, (Think “Card Sharks” sized decks of cards) has a card back patern with the Kraft Real Mayo logo. [That is, the logo is on the back of each, and every card.] Kraft also sponsors the website. (No real shock there.)
The placement / advertising of Real Mayo is obvious.
So much so, that it immediately reminded me of the older gameshows:
2 for the Money pitched Old Gold Cigarettes, with as blatant advertising.
What’s my Line?, Names the Same, and the like also had advertising prominately displayed. Remington Shavers, Perfumes, Etc.
Indeed, are we turning back to the way it used to be?
For that matter, How much of “The Price is Right is Advertising”? (They place nearly every single product on the show, after all.)
I think the real question is not if it can survive on placement alone, but rather, if it can survive at all, with out it.
To the OP, What about “The Truman Show” ? Granted, its a movie, but at least back then, the idea of Product Placement as only income maker was explored.
The cost of introducing a new product for an entire metropolitan area is estimated at no more than $20,000. While those costs nationally can reach a million or two, without any other type of promotion, they are minuscule compared to total sales or total profits. And that’s a maximum. Other allowances are much less than that and many products require no fees at all.