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This is the accepted version of this journal article. Published as: McDonnell, John and Drennan, Judy (2010) Virtual product placement as a new approach to measure effectiveness of placements. Journal of Promotion Management, 16(1 & 2). pp. 25-38.

Copyright 2010 Taylor & Francis Group, LLC

This is an electronic version of an article published in Journal of Promotion Management, Volume 16, Issue 1 & 2 January 2010 , pages 25 - 38, The Journal of Promotion Management is available online at informaworldTM.

Virtual Product Placement 0

Journal of Promotion Management, 16:25-38, 2010

DOI: 10.1080/10496490903571365

Virtual Product Placement as a New Approach to Measure

Effectiveness of Placements


Virtual Product Placement as a New Approach to Measure

Effectiveness of Placements

Dr. John McDonnell

School of AMPR,

Queensland University of Technology

2 George St Brisbane QLD 4001

Tel: +61 3864 4708

Fax: +61 3864 1811

Email: [email protected]

and

Dr. Judy Drennan

School of AMPR,

Queensland University of Technology

2 George St Brisbane QLD 4001

Tel: +61 3864 5308

Fax: +61 3864 1811

Email: [email protected]


Virtual Product Placement as a New Approach to Measure Effectiveness of Placements

Abstract

Product placement is a fast growing multi-billion dollar industry yet measures of its

effectiveness, which influence the critical area of pricing, have been problematic. Past

attempts to measure the effect of a placement, and therefore provide a basis for pricing of

placements, have been confounded by the effect on consumers of multiple prior exposures of

a brand name in all marketing communications. Virtual product placement offers certain

advantages: as a tool to measure the effectiveness of product placements; assistance with the

problem of lack of audience selectivity in traditional product placement; testing different

audiences for brands and addressing a gap in the existing academic literature by focusing on

the impact of product placement on recall and recognition of new brands.

Key words: product placement, virtual product placement, brand recall, typology, fictitious

brand

Introduction

Product placement is the inclusion of consumer products or services for promotional purposes

in television (TV) programs and films (Nebenzahl and Secunda, 1993). Gupta and Gould

(1997: 37) define it more specifically as incorporating brands in movies in return for money

or for some promotional or other consideration. Product placement, a hybrid of advertising

and publicity (Balasubramanian, 1994), is widely regarded as providing significant

opportunities for movie and TV producers, as well as marketers. First, it can offset and even

cover production costs, as demonstrated by the James Bond movie Tomorrow Never Dies,

which grossed US$100 million even before cinema release, through product placement deals.

Second, it has created new marketing possibilities. Prominent product placement in the Tom

Hanks movie, Castaway, for example, created a whole new concept for volleyball marketing.


The volleyball that becomes Hanks best friend, Wilson, is an advertisement for Wilson

volleyballs. Following the success of the movie, the company created a new line of

volleyballs displaying the characteristic bloody face of Wilson. This was clearly an

attempt by the company to differentiate its product in the marketplace by tapping into the

emotions of moviegoers (Hamlin, 2002).

Product placement messages differ from other types of marketing communications

(Grigorovici and Constantin, 2004) since they are embedded into media content (hence the

term embedded advertising) and are dominated by the media content (Balasubramanian,

Karrh and Patwardhan, 2006). They are also a more subtle, less coercive form of persuasion

than advertising and less likely to raise consumer defences (Meenaghan, 2001).

Virtual product placement, whereby the image of a branded product is digitally inserted into a

film or TV program after the program has actually been made, is a recent development in the

field of marketing. This technique is attractive to advertisers in view of the advantages of

inserting the virtual product placement after the initial release of a movie or TV program.

Based on initial audience reaction to the movie, advertisers can target a specific market

segment and tailor the virtual product placement to it. The movie is then released to the rest

of the market, complete with the virtual product placement.

Purposes of the research

This research considers a new approach to the measurement of product placement. Second,

this study aims to address a gap in the existing academic literature by focusing on the impact

of product placement on recall and recognition of new brands. The paper proceeds as

follows. We begin with a discussion of the growing importance of product placement, review

previous research on product placement and virtual product placement and then pose our key

research questions. Next, we describe the research methodology, present key findings and

discuss their implications. We conclude with recommendations for future research.


The Rapid Rise of Product Placement

While product placement has a long history in movies, dating from the 1920s, many consider

the cameo of Reeses Pieces in the 1982 Spielberg film E.T The Extra-Terrestrial to be a

turning point and the stimulus to wider adoption of the practice (see, for example, Goldsmith,

2004a; Wasserman, 2005). The Mars Corporation was approached to permit the use of its

M&Ms in a scene, but Mars declined the invitation. Spielberg then approached Hershey

which was launching a competitor product, Reeses Pieces. Hershey did not pay for the

placement. Hershey claimed that sales for Reeses Pieces rose 66% after the placement in

E.T. (Tylee, 2005) although some say a cross promotion may be responsible for part of this.

Since this time there has been a dramatic increase in the use of product placement in film and

more recently in television and games.

Galician and Bourdeau (2004) analysed the 15 top-grossing motion pictures in 1977, 1987

and 1997 and demonstrated that on-screen placements now account for approximately one

quarter of the length of all movies. They concluded that the number of brand appearances has

remained fairly constant, but the length of placements has increased.

Product placement spending across all media is projected to reach US$6.94 billion by 2009

(PQ Media, 2005), which was a doubling from US$3.5 billion in 2004 (Friedman, 2005).

Placements have become so ubiquitous that in 2005 they were expected to be used in 75% of

prime time network shows (Russell and Stern, 2006). The share of paid placements and

barter arrangements have increased (Graser, 2005), with gratis placements now accounting

for just 7% of the markets value (PQ Media, 2005; Friedman, 2005). Practices differ widely

and vary by producer, studio, type of film and target audience. For example, it appears that

Sony Pictures prefer barter placements while Warners favor payments and the opportunity for

tie-in cross promotion with toy companies and fast food outlets is an important influence

(Interview with Warner VP, 2008). The notion of patterns in product placement by movie


genre and product category was supported by dAstous and Chartier (2000) who found low-

involvement products and comedy films to be the most popular choices for placements.

These patterns are replicated in television according to content analyses of television

programs.

Ferraro and Avery (2000) and La Ferle and Edwards (2006) found a preference for TV

product placements in situation comedies, while Ferraro and Avery (2000) discovered that

news programs also tend to feature many brand appearances. Evidence further exists that

soap operas and dramas are being used more for placements (Pervan and Martin, 2002).

There are a number of reasons for the rapid rise of product placement, particularly on TV.

First, the popularity and impact of traditional television advertising has declined in recent

years. Increased advertising costs, competition from cable and independent networks and

media fragmentation are forcing networks and advertisers to seek alternative forms of

persuasion (Avery and Ferraro, 2000). Second, advertisers have become aware of changes in

viewer behavior, for example, zapping, where viewers switch channels during commercial

breaks or tune out formal advertisements (Lipman, 1991; Elliott, 1992). Similarly, the

development of the Personal Video Recorder (PVR) provides users with the ability to select

what they want to watch. Already popular in the U.S., the PVR is a digital set top box that

automatically scans hundreds of TV channels, recording the shows that conform to the

owners program selections. It can also be programmed to screen out advertisements. In the

U.S. PVR penetration has risen from 8% of homes as recently as 2006 to 22% in 2008

(Shoebridge, 2008).

Survey evidence indicates that viewers are becoming increasingly disenchanted with

traditional advertising techniques. In one Australian survey, for example, 81% consumers

reported that they take less notice of advertising than previously, an increase from 76%

reported only two years earlier. In addition, 66% of consumers found TV advertisements


boring and repetitious (Burbury, 2003). This disenchantment is particularly evident in the

case of Generation Y members, comprised of those born between 1979-1994. They represent

an important demographic segment for many consumer goods (e.g. mobile phones, snacks,

fast food and entertainment), but are often difficult for marketers to target because they

respond to advertising and promotion differently from previous generations. Advertisers have

found that product integration that demonstrates brand usage in naturalistic settings provides

greater reach than traditional advertising (Brennan & Babin, 2004), and product placement

appears to be more acceptable to consumers. Other research (Nebenzahl and Secunda 1993)

reported that 70% of moviegoers believe product placement in a movie is preferable to an

advertisement shown on the screen before the movie.

Members of Generation Y, in particular, respond better to product integration than older

consumers The principal implication of this is a positive one for marketers using placements

in movies and reality tv: the largest audience (by age group) for Hollywood movies and

reality tv is the very age group which responds more favourably to placements (i.e. age group

18-35 years are more tolerant of placements than the group 36-49 years) (Ong, 2004:156).

This finding, combined with the growing popularity of the PDR, has accelerated the trend

towards product placement in TV shows, rather than using traditional advertising breaks to

reach consumers.

DeLorme and Reid (1999: 82) reported that informants in both their studies, regardless of age

or moviegoing experience, felt irritated and insulted by generic product props (e.g. in the

movie Repo Man) that were judged to interfere with movie realism and to interrupt the

movieviewing experience. Hence audiences prefer the subtle use of brands to generic props

onscreen. Moreover, studies on consumer attitudes towards the use of product placement

have typically found that consumers welcome the practice. Consumers believe that it can

enhance reality, aid in character development, enrich the plot/ theme/ characters, and provide


a sense of familiarity (Babin and Carder, 1996; DeLorme and Reid, 1999; Gould, Gupta and

Grabner-Krauter, 2000; Gupta, Balasubramanian and Klassen, 2000; Gupta and Gould, 1997;

Hirschman and Thompson, 1997; Karrh, 1998; Nebenzahl and Secunda, 1993; Ong and Meri,

1994; Zimmer and DeLorme, 1997). This also appears to be the case in television (Gould

and Gupta, 2006; Stern and Russell, 2004; Tiwsakul, Hackley and Szmigin, 2005). The fact

that some consumer groups respond better to product placement than others facilitates for

advertisers the targeting of specified, pre-segmented audiences (McKechnie and Zhou, 2003).

Previous Research on Product Placement

Prior research on product placement has focused on its efficacy (Babin and Carder, 1995;

Gupta, Balasubramanian and Klassen, 2000; Gupta and Lord, 1998; Vollmers and Mizerski

1994) and ethical acceptability (Gupta and Gould, 1997; Nebenzahl and Secunda, 1993).

These researchers found little evidence to support the premise that brand attitudes change as a

result of exposure to product placement, but some evidence to support enhanced brand

recognition and recall (Babin and Carder, 1995; Gupta and Lord, 1998).

There is also verification that prominent placements can induce better recall than advertising

(Gupta and Lord, 1998). Recall depends on a number of factors including duration of the

exposure, explicit inclusion in the script, prominence of display of the product, plot

integration and certainly actor endorsement or character usage (e.g. Balasubramanian, 1994;

DeLorme and Reid, 1999).

Russell and Stern (2006) examined the influence of product placements in serial TV

comedies on consumer attitudes towards the products, especially the way that characters

relations to placed products and consumers relations to the characters affect consumers

attitudes to the products. They found support for the predictions that consumers align their

attitudes toward products with the characters attitudes to products and that this process is

driven by the consumers attachment to the characters.


Evidence for the effect of product placement on purchase intention is mixed. Some studies,

such as that reported by Baker and Crawford (1995), suggest that there may be an effect in

that results showed purchase intention for placed brands to be higher than for brands

previously identified as favourites. A study by Russell and Puto (1999) suggested that

connectedness may moderate the effect of television placements on behaviour, that is,

individuals with a strong connection to a television program are more susceptible to

consumption images. Other studies, such as Ong and Meri (1994) and Tiwsakul, Hackley

and Szmigins (2005) did not find a strong relationship between product placement and

purchase intentions. A study by Van Reijmersdal, Neijens and Smit (2007) found product

placement can influence brand image and that this depends on the frequency of exposure.

The results suggested that the effect on brand image was not mediated by brand memory

(recognition), or brand attitudes.

To date, however, no research has been undertaken on the impact of product placement on

recall and recognition of new brands, and an objective of this study is to address this gap in

the literature.

One of the challenges in assessing the value of product placement as a marketing tool is the

difficulty in measuring its effectiveness. Advertisers and marketers are increasingly being

held accountable for measurable results, yet the measurement of the effectiveness of

placements is extremely difficult. First, the process of building a brand image is long-term,

and the full effect of a single, isolated exposure to a brand placement can therefore be

difficult to measure. Second, when assessing the effectiveness of a product placement, it may

be difficult to separate its impact from that of other marketing communications. Finally, it is

difficult to measure the potential for product placement as an advertising technique because

of difficulties in collecting enough examples to evaluate. The cost of product placement is

extremely expensive, which may deter advertisers from using it. Payments for a product


placement are determined by the estimated size of the audience and it is notoriously difficult

to predict the size of movie audiences. This creates a catch 22 situation where advertisers

may be reluctant to use a form of promotion that they feel may be of dubious value, and those

wishing to evaluate the effectiveness of product placement are unable to gain accurate

measures because there are is not a large enough sample to evaluate.

Measuring the effectiveness of product placement presents other difficulties for researchers.

For example, Brennan and Babin (2004) discuss the problem of adjusting recognition scores

for a placement exposure in their research. To test whether superior encoding of familiar

brand placements produces a recognition advantage over less familiar brands, they used

facilitated recognition scores to control for the effects of brand familiarity in measuring the

effectiveness of a placement. The use of real brand placements in existing movies also creates

problems of inter-brand comparisons. Differences emerge across treatments (i.e. placement

execution) and conditions (Babin and Carder, 1996; Law and Braun 2000). Russell (2002)

manipulated placements in fictitious TV programs by producing his/her own films to generate

unconfounded tests of placement executions. Budgetary constraints, however, will prohibit

many researchers from adopting this methodology.

The advantages of virtual product placement

Virtual product placement has the potential to be a sophisticated research tool for marketers

and academics attempting to devise, market and measure the effectiveness of product

placements. Another problem with traditional product placement is the lack of audience

selectivity in the movie medium. Research suggests that this could be a problem with

different demographic segments, since younger audiences like generation X respond to

placement much better than older audiences (Ong 2004; DeLorme and Reid 1999). Virtual

product placement makes it possible to consider different versions of releases to different

areas, reflecting demographic differences.


A more significant problem with product placement is that the major audience for American

movies (and some TV shows) is the international market, yet the major vehicles for product

placement are still U.S. in origin. Consideration of different consumer preferences is

particularly relevant when domestic movies are distributed to countries around the world. .

Many brands may mean nothing to non-U.S. audiences while others are associated with

American cultural values and lifestyles (Foscht et al, 2008; Reardon et al, 2005; Cateora and

Graham, 2007). Marketers and producers should consider the possibility of negative

reactions and misinterpretations on the part of foreign moviegoers and TV viewers (DeLorme

and Reid 1999). This is an issue in some countries today and it is relevant to this paper to the

extent that virtual placement offers a possible solution to this dilemma for film and TV

producers and marketers.

Potential conflict between placement sponsors and ad break sponsors has been a constraint on

placement in syndicated TV shows for years since such programs may be shown in many

countries over a long period. However the new technique of virtual product placement

enables brand items to be added digitally to the video when the series goes out on syndication

(Reed, 2001). If a TV series is syndicated to international markets, virtual placements allow

different products to be inserted for each market, hence allowing placements which are

consistent or at least not conflicting with local sponsors in ad breaks, whereas with traditional

placements there can be no change.

Research Questions

To investigate the potential impact and use in measurement of virtual product placement, we

posed the following research questions:

R.Q.1 What is the effect of virtual product placement in film clips on unaided recall of

product type?


RQ 2: What is the effect of virtual product placement in film clips on unaided recall of

fictitious brands?

RQ3: How does the duration of exposure of virtual product placement in film clips affect

unaided recall of fictitious brands?

RQ 4: How does audio and visual exposure of virtual product placement in film clips affect

unaided recall of fictitious brands?

RQ 5: What is the effect of virtual product placement in film clips on recognition of

fictitious brands?

Research Method

For this study, we selected a series of video clips and inserted virtual product placements of

fictitious brands to show to a group of undergraduate students. The aim was to identify scenes

of different duration to explore the effect of varying product exposures on subject recall. The

assistance of an experienced media technician and the use of a TV production studio were

obtained for the purposes of this research. The software employed enabled minimal camera

movement in the part of the scene where the fictitious product image was inserted. A realistic

residence or location for the image within the scene was also required. For example, realistic

and natural placement of a wine or beer bottle required the identification of a table, bar,

mantelpiece etc. where the digital image of the bottle could be inserted. This image needed to

be close enough to the camera that it could be read clearly, but not too conspicuously placed

as to appear unnatural or annoying to the viewer. Copyright constraints also restricted the

choice of a movie or TV scene, leading to an extensive search for suitable scenes. Finally, a

series of film and TV clips was selected, totaling about 8 minutes.


Once suitable video clips were identified, a number of bottles resembling the shapes of a

wine bottle, a beer bottle, a tomato sauce or ketchup bottle were selected for product

placement and cleaned of all identifying marks. A series of fictitious labels was then

prepared and placed on the bottles. A digital still camera photographed these bottles against a

blue screen and all background imagery was removed on a computer. The images of the

bottles were scaled to match the scene where they would be placed, and then shadows were

digitally created to match the lighting in the scene. A number of the images were placed in

bar or tavern scenes with very subdued lighting. Considerable efforts were made to make the

images appear completely natural. One complication that did not become apparent until the

clips were shown to the audiences was that the ambient lighting in the scenes was so subdued

that it was a little difficult to discern the brand names. A range of scenes was selected to

enable different exposure duration, ranging from about 2 seconds to 8 seconds to 17 seconds

A total of 153 undergraduate students (nearly all Generation Y i.e., over 90%) were shown

the video clips in three exposure groups. No information was given in the introduction to alert

them to the purpose of the experiment, i.e. product placement. A survey was distributed

immediately after viewing. Initial questions in the survey asked for unaided or free recall of

brands and products. Further questions asked about attitudes to product placement. These

questions used a five point Likert scale anchored by strongly agree to strongly disagree and

were based on a scale developed by Gupta and Gould (1997). Data on age and gender were

also collected.

Finally, a multiple choice question assessing recognition (as opposed to free or unaided recall

in the survey) was presented via a Classroom Performance System using electronic handsets

distributed to the students. The students selected their response to the recognition question

using their handsets and the results were recorded with a CPS receiver and laptop computer.

This use of the CPS after the survey was collected meant that the free unaided recall


questions in the survey were not compromised by any exposure to the written brand names in

the recognition question, which includes all the brand names.

Major Results

Results from an unaided recall test show that 36% of respondents stated that they recalled

seeing products or brands during the viewing of the video clip. From this group of

respondents, it was found that, in almost 5% of cases, the name of at least one of the

unfamiliar new product brand names was correctly recalled, while familiar products were

recalled in 23.5% of cases. It is notable that, in approximately 10% of cases, respondents

were able to recall product or brand names that were presented with both audio and visual

input in the film clip.

The extent to which duration of exposure of fictitious virtual product placement impacted on

unaided recall was also tested. No Bull wine was shown twice with durations of 10 seconds

and 6 seconds, and was recalled by 2.1% of those respondents who stated that they recalled

seeing products or brands. Bulla Red wine, which was exposed for 8 seconds was recalled by

1.4% of respondents, while JJ Sauce, exposed at two intervals for 10 seconds and 6 seconds

was not recalled by brand name at all. However, it was recalled as a product by 2.8% of

respondents. Although Dan Jack whisky was only shown for 2-3 seconds in the film clip, it

was still recalled by 1.4% of respondents. Despite the fact that Pats Beer was shown for 17

seconds, it was recalled by only .7% of respondents. Gender differences were found in terms

of unaided product or brand recall with more males (60.4%) than females (39.6%) indicating

that they saw products or brands while viewing the video clip. As discussed previously, a

second test was undertaken to assess recognition of the new fictitious brands. Results from

the multiple choice questionnaire show that 13% of total respondents were able to recognize

all of the four new fictitious product brand names. Thirty percent were able to recognize

Bulla Red wine, No Bull wine and Pats Beer, but confused Dan Jack with the familiar Jack


Daniels, which had not been shown in the film clip. (There was no evidence that subjects

confused other fictitious names with real brands but it is conceivable.)

Implications and conclusions

At first glance, the recall and recognition scores found in this study appear much lower than

in previous studies on product placement. However these studies used fictitious brands that

subjects had not been previously exposed to, unlike previous studies. Other studies generally

used existing film and TV stock which contain known brand names. In fact, based on the

results of previous research, we could expect lower recall and recognition in this study for a

number of reasons. Recall is higher for familiar than unfamiliar brands (Delorme and Reid

1999). The placements in this study were deliberately very subtle which have lower recall

than prominent ones (Law and Braun, 2000; Gupta and Lord, 1998). Second, the virtual

placements used were entirely visual. Some research on placements suggests that audio

placements are better recalled than visual only placements (Russell 2002), especially for

subtle rather than prominent placements (Gupta & Lord, 1998).

Our findings suggest that virtual product placement may be a method to evaluate the effect of

a single placement and its value, as well as a component in an integrated campaign for new

products. Unaided recall of these fictitious brands was low, but suggests that even short

exposure duration can be effective for some viewers. More importantly, product placements

are not typically intended to change consumer attitudes or behaviour from a single exposure;

they are used as part of an integrated campaign. The fact that the recall scores are lower than

previous studies should not distract from the focus of this study, i.e., to provide a point of

comparison with previous studies, which have used familiar brand names. While further

research is clearly needed, this study is about an approach to measure the effect of a single

placement with no prior exposure. Recall of familiar brands was 23.5%; this is almost

identical to the 25% result quoted by Law and Braun (2000). We have noted above that it is


quite unrealistic to expect similar results for unfamiliar brands, yet 30% recognized 3

unfamiliar brands, compared to 46% for Law and Braun (2000) and 33% recognition by over

30% of viewers in another study (Babin and Carder 1996).

Measuring the effectiveness of product placement presents difficulties for researchers and

practitioners, such as measuring the effectiveness of a single placement, separating that

impact from other communications and adjusting recognition scores for brand familiarity.

Virtual product placement may offer new insights in dealing with these questions as well as

greater audience selectivity and targeting.

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