Show Me The Money: The World of Product Placement

From the first product placement in a movie in 1927, to ET, to the latest movies and TV shows, advertisers look for opportunities to give their products starring roles.

It happened on a field at the World Cup in 1970.

Pele was the acknowledged superstar of soccer, and his Brazilian team was facing off against Italy in the final game.

There was also another competition on the field. The two top brands of sport footwear at that time - Adidas and Puma – were competing for player endorsements.

The companies were run by feuding brothers.

Knowing that a bidding war for Pele's endorsement would end up costing both companies so much money that it wouldn't be worth it in the end, both Adidas and Puma agreed to a "Pele Pact" - promising not to escalate an arms race to sign the Brazilian star.

Pele didn't know about the pact. He watched as many other soccer players got juicy endorsement deals, and was mystified why he - the greatest player in the world - wasn't being offered any contracts.

Puma had sent a representative to the 1970 World Cup to sign more athletes. He became friendly with Pele, and when the superstar asked why he wasn't being offered a contract, the rep threw caution to the wind and offered Pele $25,000, a further $100,000 over four years, and a cut of the profits from any Pele-branded sneakers.

The rep brought the deal back to the CEO of Puma, who - realizing they had broken the pact – but also realizing Puma had just avoided a bidding war - instantly approved it. The historic deal was done.

But the best was yet to come, as that deal began with a famously planned product placement moment.

Just as the final game of the World Cup against Italy was about to start, Pele asked the referee for a time out to tie his shoe.

Knowing that all cameras would be on him, Pele slowly bent down, and tied his Pumas.

As the world watched that moment – broadcast via new satellite technology - in Technicolor for the first time in history - Adidas exploded in anger.

That perfectly orchestrated product placement did two things:

It elevated Puma in the eyes of the world.

And ignited the sneaker wars.

The world of product placement is littered with great stories.

From the first product featured in the first movie to ever win a Best Picture Oscar, to a legendary alien encounter, to a lawsuit that shouted, "Show me the money," the practice of embedding brands into entertainment is risky business.

The practice of product placement is by no means a recent phenomenon.

It's believed that when Jules Verne wrote Around The World In 80 Days, back in 1873, shipping firms competed to be mentioned in the book.

The very first movie to win a Best Picture Oscar featured product placement. The film was entitled, Wings, starring Clara Bow. It showed a scene where a chocolate bar was eaten, followed by a long, lingering close-up of the Hershey's logo.

That was 1927.

According to the superbly researched book entitled, Product Placement in Hollywood Films, by Kerry Segrave, filmmakers started to notice that products used incidentally as props sold incredibly well after the film hit theatres.

Fashions worn in movies had a big effect in small towns, where women began asking retailers for the clothes they saw stars wearing on the big screen.

People started asking for the furniture they saw in living room sequences, and the appliances used in kitchen scenes.

American cars used in films shown internationally sparked a demand in Europe, which infuriated European car makers to the point where they asked film exhibitors to obscure automotive brand names.

Clearly, product placements were becoming silent salesmen.

When the Depression hit, movie ticket sales plunged.

This drop in revenue prompted Hollywood studios to look seriously at product placement as a way to save money.

Movies needs lots of props, so why not use free branded products, instead of having to build or rent them.

Brand names also helped with the storytelling, as it gave screenwriters a shorthand.

So, if a movie character pulled up in a Cadillac, it said a lot about his profession, social status and income. If a kitchen had a Frigidaire stove – audiences instantly knew it was an upper class neighbourhood.

At the same time, struggling studios began allowing commercials – or "ad films" as they were then called – to be shown in theatres.

But audiences loudly protested the cinema ads, and even formed "Booing Clubs" in many cities, forcing theatre owners to bring restraining orders against the groups.

Yet, product placement didn't fuel the same negative response.

By the late 1930s, MGM said it was fielding over 100 requests per week from advertisers offering up their products for films.

By the end of the 1930s, Business Week ran a story noting that product placement was on the increase in motion pictures.

Advertising agencies started product placement departments. They also dangled a juicy carrot in front of studios, saying, "If you use our products in your movies, we'll promote your movies in our ads."

Author Kerry Segrave notes that Britain's Tea Bureau increased U.S. tea consumption by 17 million pounds per year by getting tea scenes in over 80 movies in just 24 months. It also persuaded Warner Bros to change the title of its 1950 musical "No! No! Nanette" to "Tea For Two" by promising to spend $2 million dollars cross-promoting the movie.

By the mid-50s, independent product placement companies started popping up. They formed relationships with Hollywood producers and prop managers. They would gain access to scripts before shooting began, look for opportunities for their client's products, and make suggestions to the studios.

Products now had agents.

Then, in 1962, a new film premiered featuring Smirnoff Vodka, a certain British automobile and a secret agent with very definite tastes.

Dr. No was Dr. Yes when it came to product placement, and as we'll soon see, the Bond franchise would eventually set placement records in the 1990s.

When TV producer Aaron Spelling read a book entitled, "The Love Boats" by author Jeraldine Saunders, he wondered if a TV series built around a cruise ship would be a hit.

So he contacted Princess Cruises, and proposed a partnership. The cruise line loved the idea, and The Love Boat premiered on ABC in 1977.

That product placement didn't only benefit Princess Cruise Lines, it created an industry.

In 1977, about 600,000 people vacationed on cruises.

This year, a record 23 million will.

While a cruise ship benefited from that product placement, it would take a spaceship to show brands how it was really done.

The product placement in E.T. – The Extra-Terrestrial is a well-documented story.

Reese's Pieces was embedded into the storyline as the device that begins the relationship between a lonely boy and his new extra-terrestrial friend.

What you may not know is that Universal had first approached Mars about using M&M's in that scene. But were turned down.

So they substituted Reese's Pieces, and asked parent company Hershey if they were interested in doing any tie-in promotion.

All they could tell Hershey at that point was that their candy was important to the story, the film had no title yet, but it was to be a family movie directed by Steven Spielberg.

With that little to go on, Hershey took a chance and said yes, offering $1 million dollars for promotion.

It was a good bet.

The movie was the #1 runaway hit of the year, and sales of Reese's Pieces jumped 70% in one month. Sixty days later, 800 cinemas that had not previously stocked the candy now had it in their concession stands.

That story became the gold standard in product placement, persuading brands to race to Hollywood hoping for a close-up.

That same year, 20th-Century Fox became the first major Hollywood studio to offer product placement in return for cash. Fees ranged from $10-50K for a placement per film.

Where studios once looked to save money with product placement, they now looked to make money.

There are many pros & cons to product placement.

On the positive side, product placement in movies usually offers brand exclusivity. So there's no competitive clutter.

When audiences watch brand placement done well, they filter the information differently from regular commercials. Their guard is down.

Product placement doesn't have to battle ad avoidance. It's believed that only 30% of the $67 billion spent on TV advertising in North America actually gets viewed.

The rest is skipped or muted thanks to DVRs.

So by my math, that's – four carry the one…

$47 billion in wasted advertising dollars.

But product placement rarely gets fast-forwarded.

Now, on the downside, advertisers have no creative control over the movies or programs their products are placed in.

Timing is difficult, as some movies get delayed for months. So timing a new car launch with a movie launch, for example, can be tricky.

Then there is the bomb factor. A brand might invest millions in product placement and promotional advertising, and the movie might turn out to be a box-office dud. Or the TV show gets cancelled mid-season.

Then there's the problem of having a product appear in a movie or TV show that is grim, or violent.

For the first four seasons of Breaking Bad, no advertiser wanted to be part of a show about a drug dealer.

But as the series won more and more awards, advertisers decided to overlook the drug theme in favour of the growing audience.

Breaking Bad broke all the rules of product placement, as advertisers benefited from the sustained exposure in a hit show.

On the other hand, McDonald's employs consultants to keep their products out of entertainment that is not family-friendly.

Call it "product displacement."

Anyway you look at it, it's risky business.

If you've seen Tom Cruise in Risky Business, you'll know he famously wore Ray-Ban sunglasses in the movie and on the classic 1983 film poster.

Specifically, he wore Rayban Wayfarers.

Here's what you may not know: Wayfarers were developed in 1952. Sales had dropped to only 18,000 pairs by the 80s. Ray-Ban felt the glasses were at the end of their lifecycle, and were about to drop them from the product line.

But after Wayfarers were placed in Risky Business, sales that year jumped to 360,000 pairs, and by 1989, four million pairs were sold.

Product placement saved the product.

With that success, Ray-Ban began placing their sunglasses in about 160 films a year.

As product placement became more nuanced, studios began offering structured rate cards.

Disney, for example, charged $20k for a visual placement, $40k for a brand name mention, and $60k if an actor actually used the product in a scene.

Steven Spielberg broke new ground again when his 1993 film Jurassic Park featured over 100 product placements at different price points.

That same year, Demolition Man, starring Sylvester Stallone, was released. It was directed by Toronto's Marco Brambilla, whom I knew from his early commercial directing days. The futuristic movie contained a new aspect of product placement.

In a scene with Stallone and co-star Sandra Bullock, Stallone mentions Taco Bell.

Now, you can imagine why Taco Bell loved that reference – implying that it was the only fast food restaurant that survived to the year 2032.

But here's the interesting thing: When Demolition Man was shown in Europe, Taco Bell had no presence there. So the very same scene was slightly altered:

Now product placement could be changed with computer technology to suit various audiences, or to make scenes available to multiple advertisers.

The term "retroactive product placement" refers to the practice of going back to existing films or TV shows and changing the signage, the mentions, or even the actual product.

For example, a magazine advertising the movie Zoo Keeper was featured in a re-run of How I Met Your Mother. The movie debuted in 2011, but the sitcom episode was from 2007.

As we move away from live TV and DVDs to streaming services, companies can use algorithms to digitally serve you unique product placements, based on where you live, your salary and your shopping history.

This practice is already used with music videos. For example, a billboard for Grand Marnier was inserted into a Darius Rucker music video two years after the video first aired.

Retroactive product placement holds true for video games, too. Many games have internet capabilities, so product placement can be inserted, replaced or deleted almost instantaneously.

Billboards for Obama were inserted into 18 different video games during his first election.

In the video game EverQuest II, players could even order and pay for a Pizza Hut pizza onscreen while playing the game.

It's becoming a powerful advertising medium, as 58% of North Americans play video games, and 45% of those gamers are women.

Here's something else you may not know.

There is an award show for product placement. It's called the Brand Cameo Awards.

For over a decade, this show has been tracking the product placements in all the #1 films in Hollywood each year.

And here are a few of the highlights from the 2014 awards:

The award for Overall Product Placement went to Budweiser. The beer brand appeared in nearly one quarter of all the #1 films of the year.

The award for Product Placement Achievement In A Single Film went to Pain & Gain, starring Mark Wahlberg. It featured 39 different brands.

And the award for Product Placement Production went to Smurfs 2 – the film covered the entire cost of its $105 million dollar budget with $150 million worth of product placement deals.

The movie Castaway starring Tom Hanks had two very interesting product placements. First, FedEx agreed to let their brand be used in the movie, even though it showed their plane crashing. The company reconciled that issue with the fact the story had a positive message. And in the ultimate product placement, FedEx founder Fred Smith even has a cameo in the film.

Secondly, a Wilson volleyball actually becomes a character in the story.

The ball actually won a Critic's Choice Award and an MTV movie award.

I kid you not.

But more than any other film, it was the Bond franchise that kicked product placement into the stratosphere.

In the 1995 film, Goldeneye, BMW spent $3 million to replace Bond's famous Aston Martin with its new Z3. BMW saw a $240 million dollar lift in sales.

1999's The World Is Not Enough broke all records for selling $100 million dollars worth of product placements.

And in Skyfall, Heineken paid a reported $45 million to replace the seemingly irreplaceable – as 007 skips his usual vodka martini for the Dutch beer.

It's amazing what can happen when a studio says, "Show me the money."

Which brings us to the story of Jerry McGuire.

In the movie, Tom Cruise plays a sports agent desperately trying to hold on to his ethics, and his one remaining client, football player Rod Tidwell.

At various points in the film, Tidwell (played by Cuba Gooding, Jr.) rants at Reebok for not hiring him to endorse the brand.

Tristar, the studio behind the movie, approached Reebok and offered the sneaker company a product placement with a happy ending.

The film was to conclude with Tidwell as hero, finally appearing in a big Reebok commercial.

Reebok agreed, and shot an elaborate $200,000 commercial at their expense. Reebok also provided the movie studio with $1.5 million of merchandise, and television and radio advertising to let consumers know its role in the big film.

But - just 16 days before the movie opened - after Reebok's Jerry McGuire tie-in advertising had already been on the air for two weeks - Tristar informed the company that the happy commercial ending had been cut. Now, the biggest Reebok moment in the film was Tidwell lobbing the F-bomb at Reebok.

Reebok was incensed, and filed a breach of contract suit, asking for $120 million dollars in damages. The president of Reebok said the way Tidwell swore at his brand was almost as if it had been "scripted by Nike."

Not long after, a ruling on whether the Jerry Maguire lawsuit should be dismissed had to be postponed when the U.S. district court judge making the decision fell asleep watching the film.

Then, one day before the trial was to start in Federal Court, Reebok and Tristar announced they had reached an out-of-court settlement.

Somebody had clearly shown somebody else the money.

Product placement offers advertisers one huge benefit:

A unskippable moment where viewers filter the brand information in a non-commercial, highly engaged way.

That's why over $5 billion dollars was spent on product placement last year.

I was watching the Bill Murray movie, St. Vincent, the other night. As the credits rolled, the product placement company got a mention. Along with two people who placed the products.

Now product placement gets film credits.

While there's still a high degree of risk involved, with big risk comes big rewards. Rayban's Wayfarers were saved by product placement, BMW sold twice the number of Z3s it had hoped for, and Reese's saw their Pieces jump 70%.

As a marketing strategy, it's still an evolving practice. Retroactive product placement is now revising the shows of our past, Breaking Bad showed Madison Avenue that the association with an imaginary bad guy is less important than the association with a hit show, and Reebok learned the hard way that there's always a chance you'll end up on the cutting room floor.

But for many advertisers, it's still worth the gamble to get their products in front of a captive and captivated audience…

…when you're under the influence.