European product placement set to grow

Editor ©RapidTVNews | 06-10-2011

Relaxed regulations across the EU will see steady growth in product placement revenues in the UK, France and Germany according to new research by IHS Screen Digest.

Regulation has long bee the key to product placement and the UK in particular has only recently seen an easing of what were very prescriptive rules. Since May 2011, product placement has been authorised nearly everywhere in the EU, following member states’ transposition of the Audiovisual Media Services Directive, a set of guidelines for media regulation issued by the European Commission.

IHS believes that the practice will bring many intangible benefits and suggests that more important than the revenue growth directly generated by product placement is the possibility of new business models that can be developed. However, the business models and value chains of paid product placement have yet to be defined and will vary across different regions.

As a result of a more business friendly approach, IHS believes that in the UK alone product placement revenue in the will reach €45 million by 2015, up from just €3 million in 2010.

In France, revenue during the same period will hit €72 million, up from €5 million, as shown in the figure below. Germany’s product placement revenue are expected to will climb to revenue of €49 million in 2015 from €5 million in 2010 for broadcasters alone, not even including other parts of the value chain.

Yet the analyst also cautions that product placement revenue in the major European television markets will represent only a tiny portion of total broadcast TV revenues in the short term. And even in five years, placement revenue will account for just a miniscule percentage of the total TV advertising market.

“Although product placement has been used in TV productions for years—typically with car and computer brands—only producers, not broadcasters, were benefiting from it,” said Daniel Knapp, head of advertising research, at IHS.

“Today, because of regulatory changes across EU member states, there is potential for converting some of that activity in cash product placement deals with revenue shared between broadcasters and producers and to attract new advertising budgets. And product placement can have a positive impact on non-standard TV advertising revenues, such as branded content and TV sponsorship.”