The value of the product placement market is predicted to reach $6.94 billion by 2009, increasing at a compound annual rate of 14.9% between 2004 and 2009, according to a new report published by US research company, PQ Media.
Television is predicted to increase its share of total product placement spending by almost 7% over the same period to 61.2%, while films are estimated to lose six percentage points between 2004-2009 with a share of 30.2% in four years time.
Other media are forecast to drop one percentage point to 8.6%, while paid placements in videograms and on the internet are expected to rise.
The gaming industry market is experiencing massive growth, with a new report by Kagan Research predicting US video game sales to rise to $16 billion by 2007, up from $10 billion in 2004, a rise of 61% (see Advertisers Devise Ways To Cash In On Games Industry). Advertisers want to cash in on this rapidly expanding market and analyst eMarketer claims that one such way to cash in is through in-game advertising, in which products are placed in games, in the background, in the hands of game characters, or elsewhere.
PQ Media projects the product placement market to rise by 22.7% to $4.24 billion in 2005, propelled by strong growth in each of the three major market segments, paid placements, larger placement deals and deeper penetration of personal video recorders (PVRs).
However, product placement’s growth is coming at the advertising market’s expense, according to PQ Media, as marketers more aggressively migrate dollars away from advertising to alternative media. While product placement spending surged 30.5% in 2004, advertising and marketing expenditures rose just 7% for the year.
Patrick Quinn, President of PQ Media explained: “Technological advances, most notably PVRs, and continued audience fragmentation, due to the growing popularity of new media like the internet and videogames, have left major marketers who are already sceptical of their return on investment in traditional advertising to become even more dispirited with the old means of reaching target audiences.”
The vast uptake of PVRs is causing concern for advertisers, with research firm Accenture predicting that nearly 10% of all television commercials will be skipped by 2009 due to the fast forwarding technology (see US Advertisers To Lose 10% Of Commercial Impacts By 2009).
PVRs are set to enjoy massive growth over the next five years, with penetration expected to reach over 11% of television households world-wide, according to a report from Informa Media (see PVRs Penetration To Reach 30% By 2010).
PVR penetration in the UK is forecast to reach five million in the next four years, with penetration set to reach 21% of the population by 2008, increasing to 34% by 2012, according to research from Starcom (see PVRs Causing Increasing Threat To Advertisers).
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