Product placement is everywhere you look these days. It’s in your favorite Instagram channels, it’s in our movies, it’s in our TV shows, and it’s even in some of our Snapchat stories.

It’s hard to avoid encountering a subtly-placed product in the background of a movie scene, or overlook a strategically placed zinger about a cool new gadget. 

But why does product placement even exist? What exactly is going on? What’s the point of product placement when there’s no call to action to buy?

And does it even WORK?

The answers may surprise you. To find out, we’ll first explore why brands even pursue product placement – and why it’s been around for so long.

Brand Recall & The Availability Heuristic

The strategy of product placement comes down to a tried-and-true marketing performance indicator known as brand recall. David Ogilvy was one of the marketing innovators to establish this KPI as a method of measuring an ad’s efficacy.

In essence, the more easily a consumer can bring to mind (“recall”) your brand, the easier it will be for them to buy.

David Ogilvy, the OG of Madison Avenue.

Martin Lindstrom explains this concept beautifully in his book Buyology:

“Over the years, neuromarketing research has found that consumers’ memory of a product, whether it’s deodorant, perfume, or a brand of tequila, is the most relevant, reliable measure of an ad’s effectiveness. It’s also linked with subjects’ future buying behavior.”

(Side note: if you’re interested in the exact psychological effects happening here, check out my post on the Availability Heuristic and how you can put it to use in your marketing)

So basically, what we’re being told here by Lindstrom is that if you can get your audience to remember you, the next time they have the chance to buy from you, they’ll have a higher propensity to choose you over other brands.

How COOL is that?!

So basically, all you have to do is place your product in front of as many people in your target audience as possible, right?

mmmm.. Not so fast.

Before you go buying up huge swaths of TV and radio spots, we need to ask a very important question: Does it actually WORK?

This is a more complex question, and the answer is (as you’d expect) a big hard “…maybe.”

The Key To Profitable Product Placement

It’s been found that the effectiveness of product placement is wholly contingent on how “well-integrated” the product is with the overlying content it’s being placed in.

In Buyology, Lindstrom gives the example of ET coming out of hiding by following the trail of Reese’s Pieces left by the little boy in the movie. The Reese’s Pieces were an integral part of the story. Without them, ET would never come out of hiding and there wouldn’t have been a movie (well actually not true, it would have been more like “hey, there’s an alien in the bush. Call the government.”)

ET

Reese’s Pieces were an integral part of the movie E.T., and the profits showed.

As Lindstrom mentions in his book, if the little boy were just mindlessly eating the Reese’s Pieces while riding his bike, they wouldn’t have been an integral part of the story, and thus the product placement wouldn’t have worked.

Since they WERE integrated properly, however, sales of Reese’s Pieces tripled in the week following the release of ET.

This isn’t a fluke, either.

The same effect was found when Ray Bans placed their signature shades on Tom Cruise in Top Gun (and then again in Risky Business) as well as more recently by Coca Cola.

Coca-Cola vs. …Ford?

You may be familiar with a show called American Idol (four hundred thousand seasons, international blockbuster TV show, etc.)

Well, it just so happens that two of their biggest sponsors are Coca-Cola and Ford. Both of these companies spend tens of millions of dollars for prime-time brand exposure during American Idol. They’re both on the same playing field. They’re both dealing with the same content, the same 30-second ad restrictions, and the same costs.

But one of these sponsors made it rain with their American Idol involvement while the other sponsor busted the bank.

Two different approaches were used: Ford decided to place 30-second ad spots in the commercial breaks while Coke decided to use product placement as its main strategy. The results speak for themselves.

Coca Cola Product Placement on American Idol

Coca Cola made itself an integral part of the show, permeating almost every second of screen time. As a result, they experienced major brand exposure and a boost in sales.

Over the course of watching an episode of American Idol, the viewing audience was exposed to Coca Cola’s brand a staggering 60% of viewing time. Six out of every ten seconds viewed of American Idol involved some level of exposure to Coke’s brand.

There were Coke cups on the judge’s table. There were signature Coke-red doors that contestants walk through after their audition. Even the judges’ chairs were designed to mimic the signature shape of a Coke bottle.

Coke decided their product was going to become an integral part of what Martin Lindstrom calls the “narrative” of the show. Without those elements, there would have been catastrophic problems with the show.

Now let’s compare Coke’s product placement strategy to the traditional advertising strategy of Ford.

While their 30-second ad spot appeared during every commercial break, their performance was atrocious. Brand recall actually went negative for Ford. (We’ll get to why in a moment.) Those traditional advertising spots completely failed, even though Ford was placed in front of the same audience (which was in its demographic) and had several aggregated minutes of advertising exposure.

So why did they all flop?

The problem lies with the fact that the ads had nothing to do with American Idol. Viewers were there to watch the show, not get a sales pitch from a car company. Ford was perceived as completely independent of American Idol, and thus not an integral part of the show. If they had decided to have contestants driven out onto the stage, or filmed arriving in Fords from the airport to audition, maybe it would have been a bit different.

But Ford went with the traditional advertising strategy and, as you can expect, they didn’t fare so well.

The $26 million they invested in those advertising spots may as well have been lit on fire. In fact, in a stunning recent finding through neuroscience research, Ford likely lost even more than their $26 million investment.

Why It Pays To Be Remembered

It’s been found that if you compare recall of brands which are simultaneously being promoted to an audience, the brands which are more integrated into the story’s narrative not only benefit from greater consumer recall, but they crowd out the memory of other brands with less integrated product placements.

Let me repeat that in a simpler way:

Coca-Cola did SUCH a good job of making themselves known and recognizable that viewers’ brains focused so much on the idea of “Coke” that Ford was not only ignored, but crowded out and recalled even less after the show than it was at the beginning.

As Lindstrom puts it:

“Products that play an integral part in the narrative of a program… are not only more memorable, they even appear to have a double-barreled effect… they not only increase our memory of the product, but they actually weaken our ability to remember the other brands.”

This integration of the product and the media is a deal-breaker. If you don’t have it, the placement won’t work. If you do have a well-integrated product, you’re set up for success.

Conclusion

If you’re currently considering investing in exposure of your brand through another experience/medium that you know your target audience enjoys, ask yourself one very powerful question:

How can I integrate my product so it’s irreplaceable in the context of the greater narrative?

To answer that, you need to first understand the story. Then you need to understand the context of your product within that story (rule of thumb: if your product is removed from the story, the writing team should need to re-write the script). Finally, you need to ensure that your product is represented accurately and that the functionality/purpose of your product in the story is the same as in real life (see Neuromarketing Code Of Ethics: Bona Fide)

If you do all of the above, then a product placement might be the right move for your brand!

Stay Brilliant,

Dan