Research Stories

by Debbie Freeman

Television viewers armed with TiVo and other digital technologies love to speed through commercials. That’s not good for advertisers. As a result, they are looking for new ways to reach a buying audience.

Get ready to see more ads when you go to the movies. New research results show that successful product placements in films actually give the featured companies a boost in stock prices.

“There’s quite a bit of value to be gained from film product placement because the spots are impossible to avoid,” says Michael Wiles. “You’re able to tie your product to the characters and what’s portrayed to get rich symbolic associations with the movie and pop culture.”

Wiles is an assistant professor of marketing at Arizona State University’s W. P. Carey School of Business. He is co-author of a new study published in the July 2009 issue of the Journal of Marketing.

“We looked at 126 product placements in 2002 films,” Wiles explains. “We found an average abnormal stock price jump of .89 percent for the related companies during the films’ openings. Interestingly, the bumps up didn’t reverse.”

Wiles worked with Anna Danielova, an assistant professor of finance at McMaster University. The professors studied films with opening weekend grosses of at least $20 million. They looked at placements where the product’s name was shown on the screen and/or audibly mentioned in the movie. They found that several factors relate to how well the placements worked.

“The most successful product placements included a tie-in advertising campaign linking the product with the film and announcing the association before the movie’s release,” says Wiles. “Also, if the brand was already well-known, the product placement was more memorable. As expected, placements in higher-grossing films tended to be worth more.”

However, the study also found a bigger audience doesn’t guarantee the most effective placements. For example, "Blade II" and other extremely violent movies contained mostly negative product placement results.

Wiles thinks the products may have become associated with aggression or the companies were seen as condoning violence. Also, placements in critically acclaimed movies were found to be less valuable.

Wiles thinks that viewers expect these more artistic movies to be free of ads and the placements may disrupt the film experience. Placements work best if they seem natural and the movies are only “moderately enjoyable.” Wiles says if the viewers are too engrossed, they don’t notice the placements.

“It’s a difficult balancing act to figure out which ones will be worth the most,” Wiles says. “You also have to avoid having too many placements in the same film. As more brands get mentioned in a film, the placements compete and become less valuable.”

Wiles says some of the most successful placements he’s seen were for Pepsi in "Austin Powers in Goldmember," Mini Cooper in "The Italian Job," and Ford in the James Bond film "Die Another Day." He says the Pepsi and Mini Cooper placements were directed toward the right audiences for the products, and the films included characters those consumers would like. The James Bond spot cast a broad net, featuring several Ford brands, including Thunderbird, Jaguar and Range Rover, in addition to the Aston Martin usually associated with the character, and of course, it’s desirable to be associated with Bond.

Hopefully, most moviegoers don’t mind product placements because they are here to stay. Wiles quotes previous research by PQ Media showing that marketing firms paid $722 million in fees, free products, and promotional support for film product placement in 2005. That study claims the amount is expected to grow to $1.8 billion by 2010.

For more information, visit Knowledge @ W. P. Carey