How will product placement impact traditional TV advertising?

This Morning became the first UK TV show to feature product placement, when Nescafe’s Dolce Gusto coffee machine was featured in This Morning’s kitchen set this week.

This follows OFCOMS recent unveiling of its new warning symbol for programmes containing product placement Commercial broadcasters and the advertising industry will obviously welcome this move, given the challenges facing the more traditional forms of advertising in the UK. What may not be so clear is how this could affect the revenue flow between broadcasters, advertisers, and production companies. Where advertisers were traditionally working with broadcasters, will product placement lead to production companies such as Endemol getting a bigger share of the advertising pie?

The restrictions on where it can be used, and the logo for shows that feature it, seem to be a reasonable compromise between slowing the decline in advertising revenue and maintaining the public’s trust. Along with differences in TV culture between the two countries, it is unlikely that the UK will go as far down the product placement road as the USA.

While some people consider product placement to mean TV shows are “selling out” to advertisers, the reality is that less advertising revenue means fewer new TV shows getting produced. As PVRs have become popular, we’ve already seen the content of TV ads change so that they’re still effective when played at 8x or 16x normal speed. This is just the logical next step for the advertising industry in overcoming the challenges introduced by technology. The trick for advertisers will be to make sure it’s noticeable enough to have the desired effect, but not so noticeable that it makes people change the channel.