If you're unfamiliar with the term, product placement is a form of advertising where companies pay or barter for their products to be used as "props." So, for example, Batman uses the not-yet-released Nokia XpressMedia 5800 cell phone to foil the Joker in "The Dark Knight," because Nokia arranged for it.
They even give movie product placement awards.
Product placement is best known in movies, but it also happens in TV shows, music videos, stage plays, video games and even books.
Apple's use of product placement or "brand integration," is legendary, and why more than half the computers you see in major movies and TV shows are Macs, while in real life the company's market share is below 10%.
I hate movie and TV product placements for two reasons: 1) it's sneaky, because advertisers arrange to influence brand perception without disclosing the arrangement; and 2) product placement feels like an artistic sell-out.
So why am I optimistic about product placement on the Web?
Monetizing Web content is a bitch. Everyone expects writers, bloggers, news organizations, video producers and others to simply give away content. For years, the best model has been advertising in the form of banner ads or those big take-over-the-whole-screen ads that deliberately put commercials in front of whatever you're trying to look at. I suspect these forms of advertising will be with us forever on print content.
But other promising form of Web content, namely online video, virtual 3D social environments and social networks, aren't as friendly to banner ads. Video and 3D environments can also be more bandwidth-intensive and, as such, more expensive to deliver. Sure, you can put print-style ads off to the side of the video, but these ads are easier to ignore, especially if you click a video's full-screen mode.
That's why product placement is hot and growing fast for online videos, social networks and virtual environments.
Actor Ashton Kutcher introduced blahgirls.com, which appears to be a cartoon-themed gossip site for children or, as Kutcher calls it, "a dynamic interactive celebrity pop culture environment." The site is supported in part by product placements.
The blahgirls.com site was rolled out at the TechCrunch 50 event last week, at which investor Ron Conway predicted that inside-video product placement would become a "multi-billion dollar market."
An original drama/comedy/action series called The Bannen Way has reportedly landed product placement advertising from Apple, as well as Jaguar, Ray Ban and Prada.
Most ad revenue for Web studios Next New Networks, Revision3, ManiaTV and For Your Imagination come from "brand integration" and "host shout-outs," according to TV Week.
Advertisers have even shown interest in hitching their brands to high-viewership viral videos. Tay Zonday, the "Chocolate Rain" guy, got a Dr. Pepper sponsorship for a subsequent video, for example. And, of course, the "Where's Matt?" video maker gets his entire income from the sponsorship of a single gum company.
TechCrunch 50 also witnessed the launch of Hangout.net, a virtual 3-D social environment aimed at children and teens. The service is similar to Google's Lively environment. As these online social spaces grow in sophistication and popularity -- and they will -- companies will offer both virtual objects, clothing and other items for sale, and also real versions of the virtual stuff. So people will dress their avatars in cartoon versions of actual clothes, for example, that can be purchased by simply clicking on the items.
This kind of user-generated advertising, where the user chooses the placement, mirrors the opportunity on social networks. People already associate brands with self expression. Social networking sites will increasingly offer users the ability to post products on their profiles that are linked to catalogs where copycat friends can buy their own.
What's So Great About Online Placement
The reason I hate movie and TV placement is that it's sneaky. It only works if the viewer is kept ignorant about the fact that the advertiser paid for placement.
The reason I love online product placement is that it's not sneaky. It works best if the placement is "outed" as a paid advertisement.
Advertisers turn placed products into doorways to their online catalogs. So when you see a product you want to buy in an online video, 3D environment or social network, you can just click to buy.
This is great for advertisers, because they can actually sell things, rather than just improve brand recognition. But it's great for the public, too.
Because actually selling something is so valuable, advertisers will happily bankroll a new era of bandwidth-intensive content. In many cases, they'll be more than willing to pay users and even small-time content producers for placement. And it's all above board, because everyone will know what's an ad and what isn't.
Product placement will drive development of ever more sophisticated online content, which will further peel eyeballs away from TV screens and make the Interactive Internet the primary medium for news, entertainment, social activity, games, news and more.