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As stations search for a sustainable business model, product placements keep seeping into local TV. 5/31/2010 01:01:00 AM Eastern

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

 

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