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Product placement has existed in movies for a very long time (as this previous question illustrates).

There are even some widely believed rules associated with it like the widely believed idea that Apple won't allow product use by bad guy characters (see this question).

There are even memes on the topic and a whole somewhat satirical Morgan Spurlock documentary on the topic.

But there doesn't seem to be any obvious evidence to assess how much product placement happens or how big it is as a contribution to production budgets.

So how big is it really and how much does it contribute to production budgets? Or, perhaps, what proportion of movies involve some degree of product placement?

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    "how much product placement happens or how big it is as a contribution to production budgets": I find it difficult to research/answer, as many numbers are just undisclosed by contract. Some are: from 3% up to 25%. But are we talking about $$$ or percentage? The General Cigar Company budgeted $250,000 for advertising to promote Paul Muni as having smoked Owl Cigars in Scarface (1931). Does it match the $4,500 plus $150,000 in advertising Bulova Watches paid for in 1949 to producer Chico Marx? You can do the maths :) but there's also the impact and ROI. That would require much more I guess...
    – OldPadawan
    Mar 7 at 16:51
  • 2/2 if we're talking about percentage, a worldwide study could perhaps do it, but with $$$, the country and its GNP is also a big factor. You don't have the same investment and return depending on the product and country. An interesting publication about product placement.
    – OldPadawan
    Mar 7 at 16:54
  • @OldPadawan Exact numbers might be hard but broad estimates might be easier. And, if either are too hard, then an estimate of how many movies do product placement might be possible since some of it has to be credited.
    – matt_black
    Mar 7 at 17:57
  • Every time you see a product logo or hear a name brand mentioned by a character in any movie or TV show, it's almost certainly product placement. This is why if you pay attention you'll see characters using laptops that have no logo and cars with no logo or name badge - they didn't want or get any product placement for that prop so they make it a non-product. Even unpaid product placement could be considered product placement because there is likely consideration granted of some sort (e.g., free props) in exchange for brand mention or display. Mar 7 at 20:35
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1 Answer 1

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This is an attempt at gathering numbers to better estimate the impact of product placement in movie budget. Feel free to edit/improve it, it's a community post.


At this stage of the answer, collecting of this data leads to think that:

  1. product placement will probably surpass all other channels of advertisement (if not already done), as it can be done in movies (theaters/TV), shows, DVD, streaming and even social media influencers.
  2. product placement is probably by far the futur (present?) leading expense item in big companies advertising budget.
  3. product placement has the best ROI of all types of advertising.

Important: It's very difficult to find recent and up to date data. Everything seems blocked before 2020. All numbers are at least 5 to 10 years old. It should be a good estimate though, as the percentage is still roughly the same. But the use of product placement seems to run far much faster than the studies about this growing phenomenon.

2010: USA - fiction movies for theaters (not TV or radio) had an estimated 77 € millions (= $ 111 millions in 2010) gross revenue in product placement.

According to research data by PQ Media, the amount spent on product placement by advertisers in the United States was only US$ 190 million in 1974, but it was US$ 512 million in 1985, US$ 1130 million in 1994, and US$ 3458 million in 2004 (Lehu, 2009). Since then it has even exceeded the magic number of US$ 10.000 million (Onlinemba.com, 2011). The beginnings of product placement in cinematography, literature and fine arts

Far behind the USA, where product placement can account for up to 30% of the total budget of a movie, it tops no more than 5% in France (1) (2).

Public Impact is a company founded by marketing specialist Alain Maes. He made over 500 studies for companies worldwide. Some of the numbers they disclose show how important product placement is for companies who have a marketing budget.

Of the importance of product placement:

A producer's risks are around 20% of the budget of a movie. Product placement can earn more money and help minimize that risk. It seems obvious that most of them will try and get some extra income with product placement.

The hidden history of product placement shows some numbers from the early age of product placement to nowadays.

A study conducted by "1st Place" in 2010 in the U.S shows that 90% of media consumers with digital recorders skip T.V commercials, this in turn highlights the need for advertisers to get inside the content of the show that people prefer to see, thus through product placement, the product placed in any media cannot be ignored as it is an integral part of the movie or show that people wish to view hence zapping is reduced. Product Placement Efficiency in Marketing Communication Strategy

The U.S. is the largest and fastest growing paid product placement market, $1.5 Billion in 2005, $2.9 Billion in 2007, and $3.7 Billion in 2008 (Brandweek, 2007; Quart, 2008; and BNETBusinessWire, 2008). Even though measures of its effectiveness have been problematic, product placement is a fast growing multi-billion dollar industry (McDonnell and Drennan, 2010). According to the research company PQ Media, global paid product placements were valued at $3.07 Billion in 2006 with global unpaid product placements valued at about $6 Billion in 2005 and $7.45 Billion in 2006. Product placement effectiveness: revisited and renewed (emphasis mine)

Facts and numbers about product placement:

A comparative study of product placement in movies -- by Woraphat Banchuen shows a very wide variety of numbers, from which the following tables are excerpted. We can see that worldwide communications services expanditure's main item of cost is "specialist communications" (agencies)(3), mostly responsible for product placement. (France, UK and Germany account for our choice of "Europe" as the main point of comparison in this basic benchmark) Table 12: Worldwide communications services expanditure

From table 14, we can see that "television" gathers one-third of US advertising spending: US advertising spending

Then, table 15 shows that cinema + VOD / DVD + cable-satellite is almost one-third of US consumer's time watching show/movies. US : time watching show/movies

Beth Fossen - Assistant Professor of Marketing, Indiana University research shows (among many others) that, as advertisers struggle to reach consumers, they're increasingly turning to product placement, spending advertising budgets to get their ads into media content in ways that can't be skipped or muted. But as streaming has become more popular, product placements have become an even more attractive option for advertisers. Global spending on them is expected to top US$23 billion in 2021, about a 14% increase over 2020. At the same time, marketers plan to decrease their spending on traditional advertising, like TV and print ads..

Anatomy of a Product Placement by The New York Times Sophie Haigney, quoting Mike Proulx of the research consultancy Forrester, says that because "5 percent of online adults in the United States said they rarely skipped ads, but 74 percent said they often did, [Product Placement] has to be executed in a way that doesn't feel like an advertisement,"


The evolution of product placement

Product placement has been present in Hollywood films since at least the 1920s. While the number of placements in films has increased, the placements themselves have not. From The evolution of product placement - Alex Walton

The evolution of product placement The evolution of product placement


The shares of product placement

A study conducted by Leigh Ann Hornick at West Virginia University shows this pie:

the shares of product placement


Price range for a product placement in the USA:

A wide range (at the moment, this seems to be the closest-to-reality answer)

We're Always Asked- "What Should We Budget?" says Stacy Jones.

The one question our agency can count on to hear at least once a day from a brand inquiry is... so how much does product placement cost. And quite frankly, that's a hard question to give an instant answer to. It is not like there is a schedule out there even similar to a network's media rate card that defines cost A, B or C. And there are so many variables that have to be considered that it makes each brand's inquiry completely unique.

When it comes to product placement costs, there's no one size fits all answer. There are so many variables that can impact the cost of a brand's Product Placement campaign.

Pricing of course depends on the agency, but most established reputable agencies are going to quote between $60k to $250k+ for a brand, and more for a brand with multiple product categories.

Some real numbers:

  1. From The economics of movie product placements, a frequent misconception is that all brands pay a fortune to appear on the silver screen. In some cases this is certainly true:

I. Harley-Davidson paid $10m to get its electric motorcycle featured in Marvel's Avengers: Age Of Ultron (2015).

II. Heineken shelled out an estimated $45m for 7 seconds of screen time in the James Bond film Skyfall (2012).

III. BMW plunked down ~$110m to supply cars for GoldenEye (1995), Tomorrow Never Dies (1997), and The World is Not Enough (1999) before Aston Martin outbid them with a ~$140m offer for Die Another Day (2002).

IV. Apple is notorious for not paying to have their products in films, but you would have definitely thought they'd spent millions on product placement when watching Mission Impossible 4: Ghost Protocol. According to Business Insider Apple's product placement value in MI4 would have been close to $24 million.

V. More than 100 brands (including Gillette, Nokia, and Carl's Junior) offered a combined $160m to be featured in Man of Steel (2013).

  1. Top 10 film product placements of 2021: Concave Brand Trackings ranks the top product placements in 2021 movies based on their advertissing value.

  2. 46 Product Placement in Movies Statistics

  1. Branded content comprised 32% of overall marketing, advertising, and communications budgets.

  2. 20%. That's the increase in brand awareness that can be expected from the inclusion of a product placement in a movie.

  3. The standard product placement cost for a brief movie mention runs an average of $22,000 per placement. But the average cost to produce a traditional television commercial and run it on a national campaign is $392,500.

  4. $24.6 billion. That's the amount of money that film studios were able to raise in 2009 just from products.

ROI - Estimated value of product placement

The process of determining this value is complex and varied, but Dominic Artzrouni, from Concave Brand Tracking, says it can be simplified into a basic formula:

(Exposure on screen) x (Viewership) x (Cost of TV commercials)

It's not an exact science, but it spits out a rough dollar amount that equates a brand's film placement to the value it would've derived from traditional TV commercials. Each year, he publishes a list of the brands that derived the most value out of product placements.

Estimated value of product placement

Felix Dietrich at the IPAM Marketinf School conducted a study about effectiveness of product placement and introduces it by discussing considerations behind sample choice, procedure and research instruments and presents results and conclusions including managerial implications on how marketers should move forward.


Price range for a product placement in Europe:

In a cinema movie, product placement ranges from 5.000 € to 300.000 €. Compare the number to a one-time aired ad in prime-time on a national TV: 15.000 € (for less than 30 secondes).

In a TV movie or serie or show, price ranges from 10.000€ to 30.000€.


More:

USA - Minority Report generated $ 25 millions for product placement, on a total budget of $ 102 millions.

Europe - Sky_Fighters gathered 3% of its 20 millions € budget.


When Demolition Man was released in 1993, in the movie, the only restaurant that survived in 2032 was Taco Bell. When it was shown in Europe, Taco Bell had no presence there. So the scene was modified, and Taco Bell became Pizza Hut:

Public Placement Blog claims to be "the largest product placement database on the internet" where "77768 paid and unpaid (organic) product placement examples from films, TV shows and official music videos" are published.

Trivia: There is an award show for product placement. It's called the Brand Cameo Awards, run by Brand Channel.


Europe

This section needs improvement with data, facts and numbers if any.


What needs to be clarified/answered:

how many movies do product placement?

This section needs improvement with data, facts and numbers if any.


how much does product placement impact budget of a movie?

This section needs improvement with data, facts and numbers if any.


(1) France is the biggest movie market in Europe, that's why I took the numbers from this country to illustrate the examples and compare them from the USA and Europe point of view. It seemed obvious that the biggest market in Europe would get the most accurate and in-depth studies when it comes to talking big money.

Cinema attendance in the five main European markets in 2016

(2) CNC - National Center for Cinema and Animated Images

(3) "In order to match companies and movies, BEN (a company owned by Bill Gates), uses AI and automatic learning. We can predict the futur success of a movie/serie and the matching of its public to the target of the company's product." Erin Schmidt. More reading about product placement in a Belgian newspaper (in french): L'echo

(4) Robert Langdon Product Placement

(6) Brands & Films

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    Looks like a good start!
    – matt_black
    Mar 8 at 16:48
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    I've added some more data from research, I hope the structure is still good to present the facts and numbers, if someone has a better idea/organisation...
    – OldPadawan
    Mar 9 at 14:06

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