Recent Researches in Applied Mathematics and Economics

The aspects of as a tool in the Czech Republic

JAN KRAMOLIŠ, MARTINA DRÁBKOVÁ Department of Economics, Department of Management and Marketing Tomas Bata University in Zlín nám. T. G. Masaryka 5555, 760 01 Zlín CZECH REPUBLIC [email protected], [email protected] http://www.fame.utb.cz

Abstract: A newly defined type of marketing tool of integration known as product placement has been used in the film industry for decades. Until recently, a controversy existed as to whether or not this tool is acceptable in audiovisual works. This was defined by the committee for radio and television broadcasting in the middle of year 2010 and specified by a new legislation in the Czech Republic. Product placement represents a remarkable marketing tool with highly variable use for both experts and companies. Product placement does not suffer from such a high “ blindness”. Marketing experts have inconsistent opinions on product placement. Some of them consider it to be a new marketing tool while others perceive it to be a new type of advertisement. This article explains the role of product placement and its historical origin and describes its current situation on the Czech market, including the view of experts from the fields of production, television and the committee for radio and television broadcasting.

KeyWords: Product placement, above the line communications, new types of marketing tools, in the Czech Republic, marketing in films, sitcoms and television series.

1 Introduction Czech authors Jana Přikrylová and Hana Marketing communication represents all relevant Jahodová define product placement as the use of a communication with the market. According to real branded product or service usually directly in Vysekalová, “traditional” forms of communication the audiovisual works (films, TV programmes and such as advertising, promotion, public series, computer games), in live broadcasting and relations, direct marketing and sponsoring can all be shows or in books which are not promotional in classed as marketing communications. However, a nature, under clear, contractually agreed conditions. series of changes has been made to these traditional For that reason, it is not considered to be a hidden forms due to new specialized branches, techniques advertising, but rather a certain analogy to and media that have emerged and which need to commercial communications or an advertorial and, employ marketing tools even more. One of these therefore, an alternative way of placing an new, forms of promotion is product placement. [15] advertisement for a product or a brand. [14] The US Federal Trade Commission defines Another definition of product placement can be product placement as a form of promotion in which found in a Czech book by Vysekalová and Mikeš. advertisers insert branded products into They describe product placement as a deliberate and programming in exchange for fees or other paid placement of a branded product into audio consideration. [13] visual works with the aim of its promotion. This is Associate Marketing Professor at Panthéon essentially based on working certain contractor’s Sorbonne University JeanMarc Lehu states that the products or services in a film, serial, musical or expression product placement, or brand placement, other plots. [15] essentially describes the location or, more The above definitions by different authors show accurately, the integration of a product or a brand that product placement could be found in various into a film or televised series. It is also possible to audiovisual works. It is probably the most frequent find commercial insertions within other cultural in films (e.g. James Bond); Lehu also mentions the vehicles, such as songs or novels. [7] use of product placement in series and television programmes (Friends, American Idol), novels and

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plays (The Da Vinci Code), song lyrics (Humble by men. "Cigarettes" have lower results in gender neighborhoods by Pink) or branded videogames differences but follow the trend of "alcohol" and (FIFA 06, London Taxi). [7] "weapons". Among the neutral items, only one Product placement can be used either in a statistically significant difference is identified: dominant or in a nondominant shot. In the dominant "healthy products" is more accepted by women. [2] shot, there is a direct shot at a certain product, In the US, product placement was in 2009 a $5 occupying a significant part of a television screen. billion industry, increasing annually. However, in In this way, the product is immediately identifiable Western Europe, a very different regulatory culture by a viewer. However, when there is an indirect shot has prevailed. The main instrument of European at a product in the background and the product itself television regulation has been the „Television occupies a minor part of the screen, we speak about without Frontiers“ Directive, established in 1989 a nondominant shot. In the latter case, the product is and revised in 1997, not least to include new merely a natural part of the shot that does not provisions on advertising, teleshopping and self disturb. At the same time, the viewer’s perception of promotional channels. In 2007 the European the product is not a condition. [12] Commission unveiled the latest vision, now called Product placement can occur in audiovisual the Audiovisual Media Services Directive works in three different forms: (2007/65/EC). Under the old Television Directive, 1. The product is openly discussed in the works surreptitious advertising was prohibited. Many (there is a verbal reference). states, including Britain, took this to include product 2. The product is being used by one of the placement, but others, notably Austria and Italy, characters in the works (active placement). have allowed advertisers to pay for to appeal 3. The product is captured in a shot in a film or a in programs. [13] television show or placed in a virtual What are the effects of product placement? The environment (passive placement). [14] effect of placement on brand memory, with the Lehu considers product placement from a exception of one study only looked at shortterm different point of view. He distinguishes four types memory effects. Not enough work has been done of product placement, namely classic placement, relating to effectiveness of placements from an corporate placement, evocative placement and organization's point of view. [5] stealth placement, each of them bearing its potential Contrary to the recommendations of Lindstrom benefits and disadvantages. [9], the results demonstrate the interest of favoring • Classic placement has existed since the prominence over plot connection, which remains, technique was first originated. It is much more however, an important characteristic of brand tactical than strategic, since it is a matter of placements. [8] making a product or a brand appeal in the You won’t be a hero, if you spent all your budget camera’s view. only to ATL advertisement. Main target is to • Corporate placement prioritizes the brand over convert prospective to your customers. [4] the product. In the Kozak´s research output is a new • In the case of evocative placement, the marketing rule: “Find out, what the customers operation is more discreet, in the sense that wants, and then bring it to the market” was newly brand does not appear, nor is it clearly cited onscreen. transformed to “Invite your customers to process of • Stealth placement is highly discreet, almost developing new product, use their enthusiasm and undetectable. Often well integrated into the bring to market a new product outgoing from their scene, its unobtrusive presence owes it a ideas. These customers make word of mouth natural aspect, which may generate a more marketing of this product for free. [3] powerful impact and force of conviction when it is identified. [7] According to Guido, Peluso, Tedeschi and 1.1 Legal aspects of product placement in the Nicole, the research highlights product placement Czech Republic acceptability on a gender basis, especially for some After the years of legal uncertainty, a fundamental products. The results show a statistically significant change in the field of advertisement in film and difference for two of the ethically charged products: television in the Czech Republic came on 1 June "alcohol" and "guns" in movies are more accepted 2010. Film and television producers, television

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broadcasting operators, clients, advertising and producers and television studios. This was done by media agencies lived to see the legalization and, means of guided interview, during which the more importantly, establishment of relatively clear individual main points of the questions were noted rules for product placement. The reason for the in questionnaires and, at the same time, recorded on change mentioned is an application of the directive the voice recorder for the purpose of a subsequent 2007/65 ES, which alters the directive 89/552/EHS transcription of full answers that were entered into (known as “Television without Frontiers”). As for the database of results. the previous practice in Czech cinematography and In the second phase of the research, the results television broadcasting, various specific products or were analyzed using quantification and by means of brands used to appear in audiovisual works and seeking a mutual dependence. Structured interviews discussions were led about whether this depiction contained 12 open questions. The experts were represents a hidden advertising or not. Together divided into several categories with common with the concept of product placement, other features. In total, 24 interviewees from television concepts are often used that are relevant for both organizations and other experts took part in the of product placement and determination of research. The results obtained were subjects to a potential effect on viewers. [6] statistical study.

2 Problem Formulation 3 Problem Solution The present study aims to investigate the forms and The current state of the use of product placement activities of the marketing communication tool of and the knowledge of this marketing tool in subjects product placement from the point of view of examined on the Czech market are characterized by producers of audiovisual works, representatives of the following queries. In the case of a majority television companies and specialists. It also attempts consensus, the data are quantified by a relative to analyze and identify the methods that will help indicator and supplemented by important findings in optimize the selection and the combination of the form of a comment. In the case of fragmentation particular elements and activities of product of answers, only the most important findings in the placement between prospective producers and surveyed area are listed. television advertisers. Emphasis is placed on the How do you perceive product placement? issues related to the correct targeting of such What is your attitude towards the above- activities, which is closely related to product placement. Finally, based on an analysis of the data mentioned tool? collected, the study shows the current situation, the The vast majority of the subject examined (90 %) level of awareness and the opinion of marketing takes a positive attitude towards this tool. A neutral specialists on the possible use of this new tool on attitude could be interpreted as having some the Czech market. knowledge about this tool without a subjective assessment of an attitude. The results of the survey showed that nobody has stated they are not 2.1 Methods used familiar with the term “product placement”. This Due to a narrowness of Czech market, a structured fact could be attributed to the information activities interview with the experts in film, series, sitcom and of the Czech media in the half of year 2010, when television program making has been chosen as the an amendment to the Act No. 231/2001 on most suitable tool for the investigation of these Operation of Radio and Television Broadcasting [1] issues. In the first phase of research done in the first regarding product placement was being discussed in half of year 2011, a method of fullystructured media across the country. interview was used. It was designed by the authors The term of product placement has most of the paper based on the experience from their frequently been associated with three areas: previous research. The inquiry covered all principal 1. The tool has its historical past, it is a few television organizations in the Czech Republic (TV decades old and it has been developed the NOVA, PRIMA, and Czech Television). Television whole time (35 %). Therefore, it is merely a advertising experts as well as experts from the new name for an old tool. committee for radio and television broadcasting 2. In film, series and sitcom production, product were addressed. The primary aim was to investigate placement represents an often left out source of what forms of product placement are used by funding (17 %).

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3. Product placement is related to modern exceeds supply, which means that clients pressure marketing or it represents a modern marketing producers to promote their products by means of tool (48 %). product placement. It can therefore be said that all of the selected Even though supply still exceeds demand, the subjects examined know this marketing tool. To experts have mentioned many times that after the what extent they are familiar with the tool was new legislation entered into force, several investigated by means of following questions. companies tried to put this marketing tool into their Which products are most often promoted via portfolio of marketing communication. product placement? Different opinions exist as to the development of Table 1 – Products promoted via product placement demand for product placement after approval of the (relative share) amendment to the law in the Czech Republic. One Products promoted via product placement of the opinions could be characterized by a curve, Automotive Alcoholic/s Daily need which shows that the demand was relatively low Others industry oft drinks products during summer months (immediately after the 40 % 15 % 20 % 25 % amendment to the Act). This was mainly due to the newness of the product. However, the interest in the Table 1 implies that the tool is the most product increased during autumn. After a certain commonly used for promotion in automotive time, the number of companies interested in industry (40 %), following is the section called application of this tool decreased again. This was Others (the most numerous in this group were due to the fact that companies often lacked practical banking institutions and electrical appliances experience, they were unable to assess the including mobile phones), daily need products attractiveness of this marketing tool and the reality occupy the third position and 15 % are made up by was not as they had expected. alcoholic and soft drinks. Another opinion suggests that product placement The sale price of automobiles is still high and has not experienced a boom, although everyone therefore the automotive industry also continues to expected a sudden huge source of revenue for exploit classic ATL (above the line) [10] marketing television companies, which did not occur. tools, especially a fullpage advertisement in However, a certain expert holds a completely magazines, outdoor advertising, TV commercials different opinion. He claims that product placement and other expensive marketing tools which address is beginning to gain momentum after a year on the the masses. Czech market. Clients and agencies have already got What is the attitude of clients? Does supply acquainted with its possibilities and a permanent exceed demand for product placement? increase of interest in this tool has occurred. Product Fig.1 – Supply (producers of audiovisual media) placement is undoubtedly the fastest growing versus demand for product placement (clients) product on our market. It has what it takes to reach the volume of sponsoring in a few years. When there is a demand for product placement on the market, it is, according to experts, a demand from the companies that have extensive experience with using this tool in films and that would like to approach the audience even more by promoting the products also in television shows. In Czech environment, these companies are most frequently represented by automobile and beverage factories. Another opportunity to increase the demand for

product placement is to prepare packages of Rather a surprising finding was that more than 90 individual television shows that would be suited to a % of interviewees had claimed that supply certain product. This offer from television companies would be more attractive for clients, significantly exceeds demand, which means that even though product placement represents a new producers, authors and television companies offer marketing communication tool. this tool to potential clients. On the other hand, less than 10 % of interviewees had claimed that demand

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What is the pricing of this tool? being the novelty of this tool. In addition, most of Table 2 – Formation of price of product placement domestic companies are unacquainted with this tool Formation of price of product placement and marketing departments lack flexibility in a Barter Agreement Cross decisionmaking process. Calculation exchange (other) promotion However, there are no unambiguous opinions 43.75 % 25.0 % 18.75 % 12.5 % regarding the development of this situation. According to some experts, product placement The price of product placement is mostly (43.75 continues to gain attention and companies have a %) formed by a mere calculation. In this case, growing interest in this tool. Other experts consider product placement represents a price list item and this novelty as a big disappointment that did not the price depends on the type of product placement. bring the income they had expected. The last The second most common way of price formation is opinion suggests that a boom in product placement barter exchange and following are various types of occurred; causing an overuse and often an agreement. Another frequently recorded item is inappropriate use of this tool on television screens, crosspromotion, which is often represented by and that product placement currently experiences a mutual promotion (a client places a logo or a sign of slow decline and stagnation. Understandably, sales a television show on its product or promotion departments and media agencies are trying to make materials which causes association and, at the same this tool more attractive for customers and thus time, producer’s audiovisual works is promoted in encourage the demand by offering a certain type of this manner and a target group is affected). This packages suited for specific clients. naturally happens within integrated marketing The current situation is probably the reason why communication and by using other marketing tools. calculation (in other words, a price calculated by Should we consider pricing of product placement certain charts) prevails in the pricing of product according to the roles of experts interviewed for this placement. A barter exchange and agreements study, calculation is most often employed in between clients and providers are also frequent. This television sales department. Due to financial enables media representatives to react on the lack of attractiveness resulting from longterm cooperation demand and to gain funds. According to some with a client, various types of agreement are also experts, this ratio will change and various types of common in television companies. agreements will be more common in future. On the other hand, crosspromotion is most The question of products that are the most frequently mentioned by producers, who appreciate frequently promoted via product placement is also this type of promotion because it helps them gain related to this topic. The answer to this question funds and promote a particular audiovisual work. stems not only from the experience of clients who have used product placement in film making, but 3.1 Product placement as marketing also from the suitability and spontaneity of communications tool in the Czech Republic integration of products into audiovisual works. Even though the amendment to the Act No. Nevertheless, the key aspect, i.e. the attitude 231/2001 on Operation of Radio and Television towards product placement, is identical with almost Broadcasting [1] regarding product placement has all of the interviewed experts. The positive attitude been in force for over a year (in other words, since prevails, which represents a challenge for potential June 2010), product placement still represents a customers. novelty on the Czech market. Both clients (i.e. companies) and providers (i.e. producers and television sales departments) have been learning to work with this marketing tool ever since. 4 Conclusion From the point of view of companies as potential The research in this area will continue in future. customers, there are positive findings which suggest However, for comparison with the results presented that media representatives by no means have a in this study, studies by Media Master agency state negative attitude towards product placement and that cars, consumer electronics, mobile phones and they gladly accept the amendment. personal computers, food, beverages, travel According to our research, supply still agencies, destinations, services and transport significantly exceeds demand on the Czech market. companies occur most frequently in audiovisual works. [11] This is due to numerous factors, the most relevant

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mentioned findings are accurate. The most [4] V. Kozák, Marketingová komunikace frequently promoted products are cars, followed by vybraných výrobců potravin, Sborník beverages and daily need products (not only food, konferenčních příspěvků ze 4. ročníku but also drugstore and cosmetic products could be mezinárodní conference (KO)MÉDIA included in this group). The calculation of price of (Marketing communication of selected grocery th product placement is usually available on websites producers in 4 edition of international of most television and media agencies. However, in conference (KO)MEDIA), Zlín: Univerzita the most cases, the exchange of services in the form Tomáše Bati ve Zlíně, 2009, ISBN: 97880 of an agreement or a barter exchange occurs. 73189037. [5] S. Kureshi, V. Sood, IUP Journal of Marketing Payments for incorporating product placement range Management, Hyderabad: FebMay 2010, Vol. from tens of thousands to a hundred thousand for a 9, Iss. 1/2, p. 23. passive reference and from 250 thousand to 300 [6] P. Kůta, 60969. Product placement se konečně thousand for an active dialogue. As for the various dočká právní úpravy, epravo.cz (Product agreements, the specific price is very difficult to set placement is in legislation), 9.4.2010, and it has to be agreed on with each client http://www.epravo.cz/top/clanky/product individually. placementsekonecnedockapravniupravy Possibilities in future research are clearly visible: 60969.html. obtain the attitude of advertiser. For example what [7] J.M. Lehu, Branded Entertainment: Product amount of budget are they able to invest and how to Placement & Brand Strategy in the measure the feedback. And at the last the a attitude Entertainment Business, London: Kogan Page, of viewers. 2007, ISBN 9780749449407. [8] J.M. Lehu, É. Bressoud, Recherche et Applications en Marketing (English ed.), Paris: Acknowledgment 2009, Vol. 24, Iss. 1, p. 7. Supported by IGA (Internal Grant Agency – Faculty [9] M. Lindstrom, Buyology: Truth and Lies About of Economics and Management) Project Nr. Why We Buy, Crown Business; First Edition IGA/53/FaME/11A. edition, 2008, ISBN 9780385523882. [10] L. Lingham, Marketing/Above the Line Advertising, AllExperts.com, 5/28/2006, http://en.allexperts.com/q/Marketing References: 1090/abovelineadvertising.htm. [1] Česko, Zákon č. 231 ze dne 17. května 2001 [11] Media Master, Product placement na TV o provozování rozhlasového a televizního obrazovce (Product placement on TV screen), vysílání a o změně dalších zákonů, Sbírka 3.6.2010, http://www.media zákonů České republiky (Czech Republic, Act master.cz/files/Novinky/Product%20Placement No. 231 of 17 May 2001 on radio and television %20seminar%20MM.pdf. broadcasting and change of other laws [12] M. Pálková, Product placement: Základní Collection of Laws of the Czech Republic), charakteristika a pravidla jeho použití v České 2001, televizi a TV Barrandov (Basic characteris and http://aplikace.mvcr.cz/archiv2008/sbirka/2001/ main rules for using in Czech TV and TV sb08701.pdf. Barrandov), 1.6.2010, http://www.media [2] G. Guido, A. M. Peluso, P. Tedeschi, Ch. master.cz/files/Martin/PP/Pravidla%20pro%20 Nicole, et al., International Journal of Product%20Placement_2010.pdf. Marketing Studies, Toronto: Nov 2010, Vol. 2, [13] H. Powell, J. Hardy, S. Hawkin, I. MacRury, Iss. 2, p. 34, ISSN 1918719X. The Advertising Handbook, London: [3] V. Kozák, Marketingová komunikace Routledge, 2009, ISBN 9780415423113. vybraných středních pivovarů v ČR, kapitola v [14] J. Přikrylová, H. Jahodová, Moderní monografii „Tradiční a nové v marketingové marketingová komunikace (Modern marketing komunikaci“ (Marketing communication communication), Prague: Grada, 2010, ISBN selected brewing companies in Czech republic 9788024736228. in Traditional and new marketing [15] J. Vysekalová, M. Mikeš,Reklama, Jak dělat communication), s. 91 – 98, Zlín: 2011, reklamu (Advertising , How make Ad), Prague: VeRBuM, ISBN 9788087500040. Grada, 2010, ISBN 9788024734927.

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