Product Placement Surges 40%

NEW YORK Global paid product placements across all media were worth $2.2 billion last year and will top $3 billion in 2006, according to estimates by PQ Media, a research company in Stamford, Conn.

Global placement spending in 2005 rose nearly 40 percent compared to 2004, while the U.S. outlay surged 50 percent to more than $1.4 billion.

Those numbers reflect dramatic growth in the branded entertainment arena, according to PQM’s “Global Product Placement Forecast 2006,” which was released Wednesday.

Because so much product placement takes the form of add-ons, freebies, barter and non-cash or value-added deals, PQM said the actual value of global placement activity was nearly $6 billion in 2005, a rise of 28 percent from the previous year.

Free placements are on the decline, but “the lack of standard metrics in the U.S. and abroad continues to pose challenges for the growth of this alternative marketing tactic,” according to PQM.

In the U.S., paid TV placements topped $940 million last year, while film placements were worth almost $500 million, per PQM. (No specific numbers were given for media such as video games or the Internet, but PQM said only $58 million was spent globally on “other” media.)

Over the last two years, PQM has made an effort to develop measurement standards for placement media. Estimates are based on quizzing “more than 50 of the world’s leading authorities in product placement,” in addition to drawing on the company’s SpendTrack database, which it describes as “the largest advertising and marketing spending database in the world.” Finally, it estimates value by using the “Q-Ratio,” a measurement system developed by iTVX in New Rochelle, N.Y.

PQM’s estimates have been criticized by some branded entertainment agencies, which, looking at their clients’ budgets, cannot understand how the numbers can be so high.

The numbers released yesterday are relatively consistent with PQM’s previous estimates. For example, a Brandweek analysis of PQM’s 2005 report calculated that paid placements in the U.S. totaled approximately $1.2 billion, out of a universe (including freebies) of $4.2 billion [Brandweek, Dec. 19].