Package-Goods Advertisers Turn to Product Integration

Manufacturers of package goods face the same problems as other advertisers: audience fragmentation, commercial clutter and technologies that threaten to dilute the value of their ad expenditures. For the purveyors of detergents and toothpaste, though, overcoming the problems may be more urgent because they need winning new products to boost sluggish growth.

Through October 2002, major package-goods advertisers spent an estimated $7.3 billion on TV, cable and radio commercials, according to data compiled by Nielsen Media Research. The question is how many viewers actually watched and listened to those commercials? After all, isn't that what the mute and channel buttons on the remote control are there for, to eliminate all commercial clutter?

Here's a bigger worry: Five years from now, media executives say, will any viewers be watching TV commercials or, instead, will they simply let personal recording devices like TiVo and Replay zap them right out of existence?

"It may be in only 4 million homes right now, but, as it rolls out to set-top boxes and satellite services, by 2005, you could be looking at 40 million-plus PVR-equipped homes," said Bob Riordan, senior vice president, New York-based ad agency MPG. "How do you combat that?"

One way is through product integration: placing products on the sets and working brands into scripts. It's something the sports industry and syndicated game shows have been doing for years. Name a bowl that doesn't have a sponsor's named attached, with lots of signage throughout the stadium. Game shows such as Wheel of Fortune have been giving away vacations (sponsored by airlines, cruise lines, hotels and the like) and cars for years.

But it has been only recently that network entertainment shows have gone after product integration more aggressively as the economics of television have grown increasingly tougher. Survivor on CBS and American Idol on Fox are recent examples.

So far, though, agencies and their clients have done a lot more talking about product-integration strategies than actually executing them. "They're always looking to do it, and there are a lot of 'what-if' conversations, but the fact is, a lot advertisers aren't set up to easily to do it," said one high-level sales executive. "It's very time-intensive although I think everybody is getting more geared up to do it."

Procter & Gamble, the biggest package-goods advertiser (by Nielsen's estimate, P&G spent $1.3 billion on TV, cable and radio for the first 10 months of 2002), said it is interested in product integration but has done only a limited number of deals to date, including one for Swiffer on Discovery's Trading Spaces. A P&G spokeswoman said the deals represent the kind of "comprehensive marketing packages" the company intends to do more of in the future.

In the current season, ABC has a product-integration deal with package-goods marketer Reckitt Benckiser and its agency, MPG, for Lysol, which is featured prominently in Monk, about a private eye with an obsessive/compulsive disorder. He's constantly cleaning things—with Lysol—before he touches them.

At MPG, product integration is seen as so key that the agency has just created a new unit called On Set Media. Its mission: work with producers, networks, syndicators and other distributors to create as many product-integration opportunities for MPG clients as possible.

While PVRs are a big concern, so is commercial clutter. "So advertisers are saying, find us something different that separates us from the pack," said Tom Decabia, executive vice president, PHD New York. It's a concern for all advertisers, he said, "but especially for package goods, which have fallen on hard times with very little growth. So it's that much more of a challenge for them as they launch new products to stimulate growth."

Package-goods advertisers have a reputation for buying massive amounts of airtime at the cheapest rates possible and sort of shot-gunning the audience with as many impressions as possible. MPG's Riordan said advertisers are "still after the best possible CPM they can get. But we're trying to go beyond that" with product-integration strategies, which he believes work for many clients beyond the package-goods category.

And guess which household cleaner is being discussed as part of a possible product-integration deal for CBS's upcoming sitcom adaptation of the hit film My Big Fat Greek Wedding. For those who have seen the movie, the answer is obvious: Windex—good for windows and good for what ails you. Sources stress, however, that talks about such an arrangement are early.

ABC has a sitcom in development called Lost at Home, with Gregory Hines as a workaholic ad-agency executive whose clients include Volvo, Timberland and the pain reliever Midol.

Both buyers and sellers stress that product-placement deals have to have a natural fit. If they're forced, the audience will see right through them and maybe even be turned off, said Michael Teicher, senior vice president of media sales for Warner Bros. Television Distribution. "It has to work in a very natural way, and it has to be relevant and entertaining to viewers." It's also something that Warner Bros. doesn't overdo because much of the reason for doing it in the first place is so that the product will stand out, he said.

Recently, Warner Bros. has integrated Fuji disposable cameras and Ocean Spray drinks into the content of the Caroline Rhea talk show.

Beyond that, sources also talked about "virtual" integration, with products added to shows after the fact with computer insertion techniques. One media executive believes that some syndicators are talking to Princeton Video Image Inc. about virtual product placement for off-network shows.