The first instance of product placement in a movie occurred in 1896 when the Lever Brothers’ (now known as Unilever) Sunlight Soap brand appeared in a French film called “Défilé du 8é Bataillon.” In one of the film’s scenes, a handcart branded with the words “Sunlight Soap” is wheeled into the foreground as a battalion parades through a city street.
Since then product placement has become big business for advertisers and movie producers. Children of the 1980s remember the Reese’s Pieces scene in Steven Spielberg’s “E.T.”; a young Michael J. Fox sported self-lacing Nike shoes in “Back to the Future II”; and Twentieth Century Fox’s movie “Cast Away” put a spotlight on Wilson Sporting Goods, which still sells special movie edition volleyballs.
Scholars have researched the practice of product placement and the effect it has on audiences. Their studies show that product placement can improve consumer awareness, brand images and sales of placed products. But until a few years ago, not much was known about how product placements affect the performance of the programing itself.
Assistant Professor of Marketing Dr. Reo Song, who has been studying movie industry data for the past seven years.
He’s published four papers on the movie industry, with another four working papers. One of those papers, published late last year in the Journal of Advertising Research, revealed the results of his study on the relationship between product placement and movie performance.
“One common sense conjecture was that if people see a lot of advertising in a movie, most people would not like it and feel it is disrupting,” Song said. “But I thought that this might not always be the case because a reasonable amount of actual brands in movies or dramas can enhance the realism.”
Song said he thought that enhanced realism could mean increased consumer enjoyment, which would positively affect word-of-mouth reviews and ticket sales. A successful example is Pixar’s “Toy Story” franchise. Brands like Mr. Potato Head, Slinky, Barbie and Etch-a-Sketch are essential to the movie and how the audience relates to it.
In order to see just how product placement can contribute to the success of a movie, Song and his co-authors, Jeffrey Meyer of Bowling Green State University and Kyoungnam Ha of the University of New Haven, mined data on 122 movies released from 2000- 2007 and found 1,497 instances of product placements.
Taking into account other movie characteristics such as the caliber of actors, directors and producers, amount of advertising, production budget, number of screens and Motion Picture Association of America ratings, Song found that product placements do indeed help movie performance (as measured by gross weekly ticket sales). However, the positive relationship between product placements and movie revenues takes a turn after around 40 placements. That is when placements are deemed excessive and leads to negative consumer reviews and diminished ticket sales.
“The implication for this study is that traditionally, companies have to pay to place a brand or product in a movie, but if the product placement can actually help the performance of the movie, then the negotiation power can shift from the movie studio to the advertiser,” Song said.
Song is currently working on another paper that takes the research one step further and parses actual consumer movie reviews submitted online at sites like IMDB.com. He’s collected text reviews on roughly 150 movies and is using a text mining technique to determine the sentiment of each review and investigate how people actually feel about brand placement. He hopes to complete that paper by the end of the year.