Your Ad Here... And Here

As stations search for a sustainable business model, product placements keep seeping into local TV.

By Michael Malone -- Broadcasting & Cable, 5/31/2010 12:01:00 AM

When McDonald’s contracted to have its branded iced coffee cups on the set of KVVU Las Vegas’ morning newscast in 2008, the fast-food behemoth got way more bang for its buck than it had bargained for. The Las Vegas Sun wrote about the product placement play, as did The New York Times a day later.

Pundits weighed in on the ethics of working product plugs into a newscast; KVVU countered that the cups—which were actually props as opposed to real cups—appeared in the 7-9 a.m. segment of the program, when the news was lighter, and did not affect content.

KVVU is now taking the branded integration concept several steps further. The Fox affiliate introduced an on-set bar on its live show More Jan. 1, featuring bar stools and a flat-screen TV sponsored by burger chain Sonic, and a month later added a green room sponsored by the bottled-water brand Dasani. Both locales—and their sponsors—figure prominently in the 9 a.m. program. “The bright red bar is the hot spot for celebrity interviews, cross-fire chat and the backdrop for ‘question of the day,’” read KVVU ad materials.

More recently, KVVU added a segment where More guests spin a Bally slot machine for charity, with Bally getting generous plugs.

While it’s hard to miss the sponsors’ logos, KVVU also made an operational maneuver that viewers may never notice. In September, it moved More, which does not feature breaking news, out of its newsroom and into its own division, mollifying church vs. state dilemmas for its reporters.

“The newsroom’s job is to do news; they’re concentrating on doing 6½ hours of news a day,” says VP/General Manager Darrin Mc- Donald. Adds Director of Marketing and Entertainment Programming Terri Peck: “They’re true journalists; we don’t want them to have to think about [product placement on More].”

The Vegas outlet is hardly alone in this conflict. Stations, battered by the recent recession, are increasingly confronted by the lure of product placement lucre, and the effect it may or may not have on years of viewer trust. Branded integrations have long been a staple of network entertainment programming—Telemundo, for one, built an ersatz Subway restaurant at its studio in Colombia and flew in brand spokesman Jared for an elaborate plug. And now they are becoming increasingly common in local TV, whether it’s Pepsi containers on WIAT Birmingham’s Wake Up Alabama, Verizon FiOS branding on WNBC New York’s sports reports, or KFOR Oklahoma City branding its helicopter with the name of a local auto dealer. The LIN group has even built a stable of product placement-driven morning shows, including WNAC Providence’s The Rhode Show and WISH Indianapolis’ Indy Style.

Whereas a typical station chief may have frowned on paid plugs in local shows a few years ago, more and more managers, pushed harder to maintain profit margins on a slashed budget, are coming around to the concept. “The pressure to perform is so great that you’ve got no choice but to take a hard look at it,” says WIAT President/General Manager Bill Ballard, who adds that he would not allow placements in a “hard” evening or late newscast. “If there’s significant revenue behind it, you’re going to take a look.”

Appealing to ‘More’ advertisers
It’s not hard to understand product placement’s appeal to stations. It gives vendors considerably more airtime to tout their product than a spot does, and it deepens the pool of potential local advertisers. As the station typically owns the show, it’s also a more lucrative option than a syndicated program—assuming the viewers find the content compelling and don’t feel like they’re watching an infomercial.

KHOU’s product-driven Great Day Houston grabs three times the revenue that a syndicated show would in the 9 a.m. slot. “It’s a huge improvement for the time period,” says President/ General Manager Susan McEldoon. But KHOU goes to considerable lengths to segregate the show from the Belo station’s award-winning news division, including producing the show on a separate floor.

While prices of course vary, insiders say an advertiser might pay $350,000 annually to sponsor a leading midsize station’s sports reports. Branded props on the set of that station might go for around $300,000, though that sum would include traditional spots, too. KFOR President/ General Manager Jim Boyer says the station’s helicopter sponsorship runs in the low six figures annually. “It allows us to pretty much keep the helicopter in the air,” he says.

Selling naming rights to elements of the set is getting more popular. KVVU’s “long-term integrated pieces,” as the plugs are known within Meredith, are contracted for a year, with an option for a multi-year deal. And they are lucrative; each represents a six-figure annual sum. The station airs new editions of More at 9 a.m. and 4 p.m. daily. The sponsorships were sold by the station, not an outside product placement firm, and station GM Mc- Donald says they represent about a third of More’s revenue.

More was designed for product integration, according to McDonald, as was Meredith’s Better program, which will air on 63 stations come fall. While the TV purists have expressed their distaste for on-air product plugs, KVVU viewers have not. “There have been almost zero complaints about it,” McDonald says.

As the local TV economy gets back on its feet, multiple general managers say clients and agencies increasingly express a sense of “entitlement,” as one puts it, hatched during stations’ more desperate days not long ago. Many now expect stations to bend the church-state rules and plug their product as part of a spot buy.

“More and more buyers must have grown up in a vacuum, because they’re asking for [plugs] as part of their proposal,” says KITV Honolulu President/General Manager Michael Rosenberg, who says he “avoids assiduously” any sponsored content on the Hearst station. “I guess some stations around the country are doing it, or the buyers wouldn’t be asking for it.”

Some industry watchers feel that the handwringing over local product placement is merely a case of TV professionals taking their content—and themselves—a bit too seriously. Some see branding as a return to the old days of television, when Geritol or Marlboro might sponsor the evening news.

Several give KVVU credit for both moving a product placement show out of the newsroom and making it crystal-clear to viewers precisely what is sponsor-supported. (And it’s hard to miss who sponsors KVVU’s “Dasani Green Room.”) “The purist in me thinks there should be no sponsorship of anything that resembles news due to the risk of sponsors getting favored treatment,” says Jane Kirtley, professor of media ethics and law at the University of Minnesota’s Silha Center. “But from a transparency perspective, the sponsor’s name is front and center, and alerts the public to the program tie-in.”

Not sold on plugs
Pundits universally acknowledge the financial pressures stations are under, but some believe local product placement is a short-term fix that may have longer-term consequences. A station moving such a show out of news may satisfy internal ethical quandaries, some say, but the viewer may still believe that everything featured on a show is there on its own merit—not because it’s been paid for.

“Viewers perceive news much more than news people see news,” says Radio Television Digital News Foundation chairman Stacey Woelfel. “It worries me that stations are adding to the confusion. At best, it’s clutter. At worst, it’s confused allegiance.”

Some station executives question whether product placement revenue even adds to the bottom line, or simply shuffles around the same ad budget. “There’s only so much advertising money in a market,” says WJRT Flint-Saginaw President/General Manager Tom Bryson. “I believe the money for product placement comes out of other aspects of an ad budget.”

KVVU’s managers and other proponents of the model disagree. When the initial McDonald’s coffee promotion ended, KVVU’s sales crew started brainstorming how to expand the pay-to-play model. Next up: selling the naming rights to an outdoor cooking facility being built for More.

The McDonald’s cups—and other props or plugs—may even return to KVVU’s newscasts. “I’d do it again tomorrow,” McDonald says, “if it made sense for the show.”

E-mail comments to mmalone@nbmedia.com and follow him on Twitter: @StationBiz