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This is the accepted version of this journal article. Published as:

McDonnell, John and Drennan, Judy (2010) Virtual product placement
as a new approach to measure effectiveness of placements. Journal of
Promotion Management, 16(1 & 2). pp. 25-38.

Copyright 2010 Taylor & Francis Group, LLC

This is an electronic version of an article published in Journal of Promotion
Management, Volume 16, Issue 1 & 2 January 2010 , pages 25 - 38, The
Journal of Promotion Management is available online at informaworldTM.

Virtual Product Placement

Journal of Promotion Management, 16:25-38, 2010

DOI: 10.1080/10496490903571365

Virtual Product Placement as a New Approach to Measure

Effectiveness of Placements

Virtual Product Placement

Virtual Product Placement as a New Approach to Measure

Effectiveness of Placements

Dr. John McDonnell

School of AMPR,
Queensland University of Technology
2 George St Brisbane QLD 4001
Tel: +61 3864 4708
Fax: +61 3864 1811
Email: j.mcdonnell@qut.edu.au

and

Dr. Judy Drennan

School of AMPR,
Queensland University of Technology
2 George St Brisbane QLD 4001
Tel: +61 3864 5308
Fax: +61 3864 1811
Email: j.drennan@qut.edu.au

Virtual Product Placement

Virtual Product Placement as a New Approach to Measure Effectiveness of Placements

Abstract
Product placement is a fast growing multi-billion dollar industry yet measures of its
effectiveness, which influence the critical area of pricing, have been problematic. Past
attempts to measure the effect of a placement, and therefore provide a basis for pricing of
placements, have been confounded by the effect on consumers of multiple prior exposures of
a brand name in all marketing communications. Virtual product placement offers certain
advantages: as a tool to measure the effectiveness of product placements; assistance with the
problem of lack of audience selectivity in traditional product placement; testing different
audiences for brands and addressing a gap in the existing academic literature by focusing on
the impact of product placement on recall and recognition of new brands.
Key words: product placement, virtual product placement, brand recall, typology, fictitious
brand
Introduction
Product placement is the inclusion of consumer products or services for promotional purposes
in television (TV) programs and films (Nebenzahl and Secunda, 1993). Gupta and Gould
(1997: 37) define it more specifically as incorporating brands in movies in return for money
or for some promotional or other consideration. Product placement, a hybrid of advertising
and publicity (Balasubramanian, 1994), is widely regarded as providing significant
opportunities for movie and TV producers, as well as marketers. First, it can offset and even
cover production costs, as demonstrated by the James Bond movie Tomorrow Never Dies,
which grossed US$100 million even before cinema release, through product placement deals.
Second, it has created new marketing possibilities. Prominent product placement in the Tom
Hanks movie, Castaway, for example, created a whole new concept for volleyball marketing.

Virtual Product Placement

The volleyball that becomes Hanks best friend, Wilson, is an advertisement for Wilson
volleyballs. Following the success of the movie, the company created a new line of
volleyballs displaying the characteristic bloody face of Wilson.

This was clearly an

attempt by the company to differentiate its product in the marketplace by tapping into the
emotions of moviegoers (Hamlin, 2002).
Product placement messages differ from other types of marketing communications
(Grigorovici and Constantin, 2004) since they are embedded into media content (hence the
term embedded advertising) and are dominated by the media content (Balasubramanian,
Karrh and Patwardhan, 2006). They are also a more subtle, less coercive form of persuasion
than advertising and less likely to raise consumer defences (Meenaghan, 2001).
Virtual product placement, whereby the image of a branded product is digitally inserted into a
film or TV program after the program has actually been made, is a recent development in the
field of marketing.

This technique is attractive to advertisers in view of the advantages of

inserting the virtual product placement after the initial release of a movie or TV program.
Based on initial audience reaction to the movie, advertisers can target a specific market
segment and tailor the virtual product placement to it. The movie is then released to the rest
of the market, complete with the virtual product placement.
Purposes of the research
This research considers a new approach to the measurement of product placement. Second,
this study aims to address a gap in the existing academic literature by focusing on the impact
of product placement on recall and recognition of new brands. The paper proceeds as
follows. We begin with a discussion of the growing importance of product placement, review
previous research on product placement and virtual product placement and then pose our key
research questions. Next, we describe the research methodology, present key findings and
discuss their implications. We conclude with recommendations for future research.

Virtual Product Placement

The Rapid Rise of Product Placement

While product placement has a long history in movies, dating from the 1920s, many consider
the cameo of Reeses Pieces in the 1982 Spielberg film E.T The Extra-Terrestrial to be a
turning point and the stimulus to wider adoption of the practice (see, for example, Goldsmith,
2004a; Wasserman, 2005). The Mars Corporation was approached to permit the use of its
M&Ms in a scene, but Mars declined the invitation. Spielberg then approached Hershey
which was launching a competitor product, Reeses Pieces. Hershey did not pay for the
placement. Hershey claimed that sales for Reeses Pieces rose 66% after the placement in
E.T. (Tylee, 2005) although some say a cross promotion may be responsible for part of this.
Since this time there has been a dramatic increase in the use of product placement in film and
more recently in television and games.
Galician and Bourdeau (2004) analysed the 15 top-grossing motion pictures in 1977, 1987
and 1997 and demonstrated that on-screen placements now account for approximately one
quarter of the length of all movies. They concluded that the number of brand appearances has
remained fairly constant, but the length of placements has increased.
Product placement spending across all media is projected to reach US$6.94 billion by 2009
(PQ Media, 2005), which was a doubling from US$3.5 billion in 2004 (Friedman, 2005).
Placements have become so ubiquitous that in 2005 they were expected to be used in 75% of
prime time network shows (Russell and Stern, 2006). The share of paid placements and
barter arrangements have increased (Graser, 2005), with gratis placements now accounting
for just 7% of the markets value (PQ Media, 2005; Friedman, 2005). Practices differ widely
and vary by producer, studio, type of film and target audience. For example, it appears that
Sony Pictures prefer barter placements while Warners favor payments and the opportunity for
tie-in cross promotion with toy companies and fast food outlets is an important influence
(Interview with Warner VP, 2008). The notion of patterns in product placement by movie

Virtual Product Placement

genre and product category was supported by dAstous and Chartier (2000) who found lowinvolvement products and comedy films to be the most popular choices for placements.
These patterns are replicated in television according to content analyses of television
programs.
Ferraro and Avery (2000) and La Ferle and Edwards (2006) found a preference for TV
product placements in situation comedies, while Ferraro and Avery (2000) discovered that
news programs also tend to feature many brand appearances. Evidence further exists that
soap operas and dramas are being used more for placements (Pervan and Martin, 2002).
There are a number of reasons for the rapid rise of product placement, particularly on TV.
First, the popularity and impact of traditional television advertising has declined in recent
years. Increased advertising costs, competition from cable and independent networks and
media fragmentation are forcing networks and advertisers to seek alternative forms of
persuasion (Avery and Ferraro, 2000). Second, advertisers have become aware of changes in
viewer behavior, for example, zapping, where viewers switch channels during commercial
breaks or tune out formal advertisements (Lipman, 1991; Elliott, 1992).

Similarly, the

development of the Personal Video Recorder (PVR) provides users with the ability to select
what they want to watch. Already popular in the U.S., the PVR is a digital set top box that
automatically scans hundreds of TV channels, recording the shows that conform to the
owners program selections. It can also be programmed to screen out advertisements. In the
U.S. PVR penetration has risen from 8% of homes as recently as 2006 to 22% in 2008
(Shoebridge, 2008).
Survey evidence indicates that viewers are becoming increasingly disenchanted with
traditional advertising techniques. In one Australian survey, for example, 81% consumers
reported that they take less notice of advertising than previously, an increase from 76%
reported only two years earlier. In addition, 66% of consumers found TV advertisements

Virtual Product Placement

boring and repetitious (Burbury, 2003). This disenchantment is particularly evident in the
case of Generation Y members, comprised of those born between 1979-1994. They represent
an important demographic segment for many consumer goods (e.g. mobile phones, snacks,
fast food and entertainment), but are often difficult for marketers to target because they
respond to advertising and promotion differently from previous generations. Advertisers have
found that product integration that demonstrates brand usage in naturalistic settings provides
greater reach than traditional advertising (Brennan & Babin, 2004), and product placement
appears to be more acceptable to consumers. Other research (Nebenzahl and Secunda 1993)
reported that 70% of moviegoers believe product placement in a movie is preferable to an
advertisement shown on the screen before the movie.
Members of Generation Y, in particular, respond better to product integration than older
consumers The principal implication of this is a positive one for marketers using placements
in movies and reality tv: the largest audience (by age group) for Hollywood movies and
reality tv is the very age group which responds more favourably to placements (i.e. age group
18-35 years are more tolerant of placements than the group 36-49 years) (Ong, 2004:156).
This finding, combined with the growing popularity of the PDR, has accelerated the trend
towards product placement in TV shows, rather than using traditional advertising breaks to
reach consumers.
DeLorme and Reid (1999: 82) reported that informants in both their studies, regardless of age
or moviegoing experience, felt irritated and insulted by generic product props (e.g. in the
movie Repo Man) that were judged to interfere with movie realism and to interrupt the
movieviewing experience. Hence audiences prefer the subtle use of brands to generic props
onscreen. Moreover, studies on consumer attitudes towards the use of product placement
have typically found that consumers welcome the practice. Consumers believe that it can
enhance reality, aid in character development, enrich the plot/ theme/ characters, and provide

Virtual Product Placement

a sense of familiarity (Babin and Carder, 1996; DeLorme and Reid, 1999; Gould, Gupta and
Grabner-Krauter, 2000; Gupta, Balasubramanian and Klassen, 2000; Gupta and Gould, 1997;
Hirschman and Thompson, 1997; Karrh, 1998; Nebenzahl and Secunda, 1993; Ong and Meri,
1994; Zimmer and DeLorme, 1997). This also appears to be the case in television (Gould
and Gupta, 2006; Stern and Russell, 2004; Tiwsakul, Hackley and Szmigin, 2005). The fact
that some consumer groups respond better to product placement than others facilitates for
advertisers the targeting of specified, pre-segmented audiences (McKechnie and Zhou, 2003).
Previous Research on Product Placement
Prior research on product placement has focused on its efficacy (Babin and Carder, 1995;
Gupta, Balasubramanian and Klassen, 2000; Gupta and Lord, 1998; Vollmers and Mizerski
1994) and ethical acceptability (Gupta and Gould, 1997; Nebenzahl and Secunda, 1993).
These researchers found little evidence to support the premise that brand attitudes change as a
result of exposure to product placement, but some evidence to support enhanced brand
recognition and recall (Babin and Carder, 1995; Gupta and Lord, 1998).
There is also verification that prominent placements can induce better recall than advertising
(Gupta and Lord, 1998). Recall depends on a number of factors including duration of the
exposure, explicit inclusion in the script, prominence of display of the product, plot
integration and certainly actor endorsement or character usage (e.g. Balasubramanian, 1994;
DeLorme and Reid, 1999).
Russell and Stern (2006) examined the influence of product placements in serial TV
comedies on consumer attitudes towards the products, especially the way that characters
relations to placed products and consumers relations to the characters affect consumers
attitudes to the products. They found support for the predictions that consumers align their
attitudes toward products with the characters attitudes to products and that this process is
driven by the consumers attachment to the characters.

Virtual Product Placement

Evidence for the effect of product placement on purchase intention is mixed. Some studies,
such as that reported by Baker and Crawford (1995), suggest that there may be an effect in
that results showed purchase intention for placed brands to be higher than for brands
previously identified as favourites. A study by Russell and Puto (1999) suggested that
connectedness may moderate the effect of television placements on behaviour, that is,
individuals with a strong connection to a television program are more susceptible to
consumption images. Other studies, such as Ong and Meri (1994) and Tiwsakul, Hackley
and Szmigins (2005) did not find a strong relationship between product placement and
purchase intentions. A study by Van Reijmersdal, Neijens and Smit (2007) found product
placement can influence brand image and that this depends on the frequency of exposure.
The results suggested that the effect on brand image was not mediated by brand memory
(recognition), or brand attitudes.
To date, however, no research has been undertaken on the impact of product placement on
recall and recognition of new brands, and an objective of this study is to address this gap in
the literature.
One of the challenges in assessing the value of product placement as a marketing tool is the
difficulty in measuring its effectiveness. Advertisers and marketers are increasingly being
held accountable for measurable results, yet the measurement of the effectiveness of
placements is extremely difficult. First, the process of building a brand image is long-term,
and the full effect of a single, isolated exposure to a brand placement can therefore be
difficult to measure. Second, when assessing the effectiveness of a product placement, it may
be difficult to separate its impact from that of other marketing communications. Finally, it is
difficult to measure the potential for product placement as an advertising technique because
of difficulties in collecting enough examples to evaluate. The cost of product placement is
extremely expensive, which may deter advertisers from using it. Payments for a product

Virtual Product Placement

placement are determined by the estimated size of the audience and it is notoriously difficult
to predict the size of movie audiences. This creates a catch 22 situation where advertisers
may be reluctant to use a form of promotion that they feel may be of dubious value, and those
wishing to evaluate the effectiveness of product placement are unable to gain accurate
measures because there are is not a large enough sample to evaluate.
Measuring the effectiveness of product placement presents other difficulties for researchers.
For example, Brennan and Babin (2004) discuss the problem of adjusting recognition scores
for a placement exposure in their research. To test whether superior encoding of familiar
brand placements produces a recognition advantage over less familiar brands, they used
facilitated recognition scores to control for the effects of brand familiarity in measuring the
effectiveness of a placement. The use of real brand placements in existing movies also creates
problems of inter-brand comparisons. Differences emerge across treatments (i.e. placement
execution) and conditions (Babin and Carder, 1996; Law and Braun 2000). Russell (2002)
manipulated placements in fictitious TV programs by producing his/her own films to generate
unconfounded tests of placement executions. Budgetary constraints, however, will prohibit
many researchers from adopting this methodology.
The advantages of virtual product placement
Virtual product placement has the potential to be a sophisticated research tool for marketers
and academics attempting to devise, market and measure the effectiveness of product
placements. Another problem with traditional product placement is the lack of audience
selectivity in the movie medium. Research suggests that this could be a problem with
different demographic segments, since younger audiences like generation X respond to
placement much better than older audiences (Ong 2004; DeLorme and Reid 1999). Virtual
product placement makes it possible to consider different versions of releases to different
areas, reflecting demographic differences.

Virtual Product Placement

10

A more significant problem with product placement is that the major audience for American
movies (and some TV shows) is the international market, yet the major vehicles for product
placement are still U.S. in origin. Consideration of different consumer preferences is
particularly relevant when domestic movies are distributed to countries around the world. .
Many brands may mean nothing to non-U.S. audiences while others are associated with
American cultural values and lifestyles (Foscht et al, 2008; Reardon et al, 2005; Cateora and
Graham, 2007).

Marketers and producers should consider the possibility of negative

reactions and misinterpretations on the part of foreign moviegoers and TV viewers (DeLorme
and Reid 1999). This is an issue in some countries today and it is relevant to this paper to the
extent that virtual placement offers a possible solution to this dilemma for film and TV
producers and marketers.
Potential conflict between placement sponsors and ad break sponsors has been a constraint on
placement in syndicated TV shows for years since such programs may be shown in many
countries over a long period. However the new technique of virtual product placement
enables brand items to be added digitally to the video when the series goes out on syndication
(Reed, 2001). If a TV series is syndicated to international markets, virtual placements allow
different products to be inserted for each market, hence allowing placements which are
consistent or at least not conflicting with local sponsors in ad breaks, whereas with traditional
placements there can be no change.
Research Questions
To investigate the potential impact and use in measurement of virtual product placement, we
posed the following research questions:
R.Q.1 What is the effect of virtual product placement in film clips on unaided recall of
product type?

Virtual Product Placement

11

RQ 2: What is the effect of virtual product placement in film clips on unaided recall of
fictitious brands?
RQ3:

How does the duration of exposure of virtual product placement in film clips affect
unaided recall of fictitious brands?

RQ 4: How does audio and visual exposure of virtual product placement in film clips affect
unaided recall of fictitious brands?
RQ 5: What is the effect of virtual product placement in film clips on recognition of
fictitious brands?

Research Method
For this study, we selected a series of video clips and inserted virtual product placements of
fictitious brands to show to a group of undergraduate students. The aim was to identify scenes
of different duration to explore the effect of varying product exposures on subject recall. The
assistance of an experienced media technician and the use of a TV production studio were
obtained for the purposes of this research. The software employed enabled minimal camera
movement in the part of the scene where the fictitious product image was inserted. A realistic
residence or location for the image within the scene was also required. For example, realistic
and natural placement of a wine or beer bottle required the identification of a table, bar,
mantelpiece etc. where the digital image of the bottle could be inserted. This image needed to
be close enough to the camera that it could be read clearly, but not too conspicuously placed
as to appear unnatural or annoying to the viewer. Copyright constraints also restricted the
choice of a movie or TV scene, leading to an extensive search for suitable scenes. Finally, a
series of film and TV clips was selected, totaling about 8 minutes.

Virtual Product Placement

12

Once suitable video clips were identified, a number of bottles resembling the shapes of a
wine bottle, a beer bottle, a tomato sauce or ketchup bottle were selected for product
placement and cleaned of all identifying marks.

A series of fictitious labels was then

prepared and placed on the bottles. A digital still camera photographed these bottles against a
blue screen and all background imagery was removed on a computer. The images of the
bottles were scaled to match the scene where they would be placed, and then shadows were
digitally created to match the lighting in the scene. A number of the images were placed in
bar or tavern scenes with very subdued lighting. Considerable efforts were made to make the
images appear completely natural. One complication that did not become apparent until the
clips were shown to the audiences was that the ambient lighting in the scenes was so subdued
that it was a little difficult to discern the brand names. A range of scenes was selected to
enable different exposure duration, ranging from about 2 seconds to 8 seconds to 17 seconds
A total of 153 undergraduate students (nearly all Generation Y i.e., over 90%) were shown
the video clips in three exposure groups. No information was given in the introduction to alert
them to the purpose of the experiment, i.e. product placement. A survey was distributed
immediately after viewing. Initial questions in the survey asked for unaided or free recall of
brands and products. Further questions asked about attitudes to product placement. These
questions used a five point Likert scale anchored by strongly agree to strongly disagree and
were based on a scale developed by Gupta and Gould (1997). Data on age and gender were
also collected.
Finally, a multiple choice question assessing recognition (as opposed to free or unaided recall
in the survey) was presented via a Classroom Performance System using electronic handsets
distributed to the students. The students selected their response to the recognition question
using their handsets and the results were recorded with a CPS receiver and laptop computer.
This use of the CPS after the survey was collected meant that the free unaided recall

Virtual Product Placement

13

questions in the survey were not compromised by any exposure to the written brand names in
the recognition question, which includes all the brand names.
Major Results
Results from an unaided recall test show that 36% of respondents stated that they recalled
seeing products or brands during the viewing of the video clip.

From this group of

respondents, it was found that, in almost 5% of cases, the name of at least one of the
unfamiliar new product brand names was correctly recalled, while familiar products were
recalled in 23.5% of cases. It is notable that, in approximately 10% of cases, respondents
were able to recall product or brand names that were presented with both audio and visual
input in the film clip.
The extent to which duration of exposure of fictitious virtual product placement impacted on
unaided recall was also tested. No Bull wine was shown twice with durations of 10 seconds
and 6 seconds, and was recalled by 2.1% of those respondents who stated that they recalled
seeing products or brands. Bulla Red wine, which was exposed for 8 seconds was recalled by
1.4% of respondents, while JJ Sauce, exposed at two intervals for 10 seconds and 6 seconds
was not recalled by brand name at all. However, it was recalled as a product by 2.8% of
respondents. Although Dan Jack whisky was only shown for 2-3 seconds in the film clip, it
was still recalled by 1.4% of respondents. Despite the fact that Pats Beer was shown for 17
seconds, it was recalled by only .7% of respondents. Gender differences were found in terms
of unaided product or brand recall with more males (60.4%) than females (39.6%) indicating
that they saw products or brands while viewing the video clip. As discussed previously, a
second test was undertaken to assess recognition of the new fictitious brands. Results from
the multiple choice questionnaire show that 13% of total respondents were able to recognize
all of the four new fictitious product brand names. Thirty percent were able to recognize
Bulla Red wine, No Bull wine and Pats Beer, but confused Dan Jack with the familiar Jack

Virtual Product Placement

14

Daniels, which had not been shown in the film clip. (There was no evidence that subjects
confused other fictitious names with real brands but it is conceivable.)
Implications and conclusions
At first glance, the recall and recognition scores found in this study appear much lower than
in previous studies on product placement. However these studies used fictitious brands that
subjects had not been previously exposed to, unlike previous studies. Other studies generally
used existing film and TV stock which contain known brand names. In fact, based on the
results of previous research, we could expect lower recall and recognition in this study for a
number of reasons. Recall is higher for familiar than unfamiliar brands (Delorme and Reid
1999). The placements in this study were deliberately very subtle which have lower recall
than prominent ones (Law and Braun, 2000; Gupta and Lord, 1998). Second, the virtual
placements used were entirely visual. Some research on placements suggests that audio
placements are better recalled than visual only placements (Russell 2002), especially for
subtle rather than prominent placements (Gupta & Lord, 1998).
Our findings suggest that virtual product placement may be a method to evaluate the effect of
a single placement and its value, as well as a component in an integrated campaign for new
products. Unaided recall of these fictitious brands was low, but suggests that even short
exposure duration can be effective for some viewers. More importantly, product placements
are not typically intended to change consumer attitudes or behaviour from a single exposure;
they are used as part of an integrated campaign. The fact that the recall scores are lower than
previous studies should not distract from the focus of this study, i.e., to provide a point of
comparison with previous studies, which have used familiar brand names. While further
research is clearly needed, this study is about an approach to measure the effect of a single
placement with no prior exposure. Recall of familiar brands was 23.5%; this is almost
identical to the 25% result quoted by Law and Braun (2000). We have noted above that it is

Virtual Product Placement

15

quite unrealistic to expect similar results for unfamiliar brands, yet 30% recognized 3
unfamiliar brands, compared to 46% for Law and Braun (2000) and 33% recognition by over
30% of viewers in another study (Babin and Carder 1996).
Measuring the effectiveness of product placement presents difficulties for researchers and
practitioners, such as measuring the effectiveness of a single placement, separating that
impact from other communications and adjusting recognition scores for brand familiarity.
Virtual product placement may offer new insights in dealing with these questions as well as
greater audience selectivity and targeting.
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