Ofcom and Product placement following the changes in European broadcasting legislation

Introduction

UK Regulatory company Ofcom (2011) state that, “Product placement is when a company pays a TV channel or a programme-maker to include its products or brands in a programme”. Product placement has been allowed on UK television for many years in the form of movies and international programmes but regulations have been relaxed as of 28th February 2011 in accordance with the recent changes in European broadcasting legislation (Ofcom, 2011).

Consumer Behaviour

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In order to examine the effectiveness of product placement, it is important to first understand how consumers behave and ways that we can best communicate our advertising message to them. Seminal papers on the topic of consumer behaviour (Stigler, 1961) suggest that consumers behave in a rational and predictable manner. Research done by Stigler (1961), suggests that consumers will continue to perform an information search on a product until the costs of doing so out weight the benefits. Kotler (2003) goes on to suggest that purchase is a purely rational response to a problem and identified that the consumer must execute several steps in order to resolve the problem. Mowen (1988) suggests a five stage purchase process whereby the consumer behaves in a linear and economically rational fashion.

Simon (1957) suggests that consumers are limited by ‘bounded rationality’ and that we have the ability to perform simple rational problem solving tasks but are unable to rationally perform complex problem solving tasks. The theory suggests that in order to perform complex rational problem tasks we must eliminate some of the outcome variables. The simplicity and linear structure of consumer behaviour was first questioned by Palda (1966), in relation to advertising theories suggesting that existing consumer behaviour theories did not allow for whimsical decisions of the consumer. Christensen, Torp and Firat (2005), note how in our postmodern markets fragmentation is a predominant feature and as consumer choice increases, nuclear family structures decline in numbers resulting in an ever increasing number of markets. Goulding (2003) has also analysed the difficulties presented to the postmodern consumer as segment and market fragmentation increase the level of choice and make it difficult for consumers to perform problem solving tasks (Kotler, 2003).

According to Simons (1957) and Gouldings (2003) theories, it could be argued that brands and lifestyle products help to eliminate consumer choice outcome variables by projecting a set of aspiration values to define themselves in the marketplace. The consumer is then able to align themselves with a brand that best reflects the desired projected lifestyle the brand represents (Reynolds, Gengler and Howard, 1995). Jacoby et al., (1977) argue brand names (along with packaging, price and other branding indicators) make this decision process easier for the consumer as they are provided with a ‘chunk’ of learned information associated with the brand reducing the need for further unnecessary information searches.

According to this theory, strong brand equity can add significant advantage in today’s saturated market places as it is the added value to a product or service (Farquhar, 1989). Brand assets add or subtract value and thus to the brand equity (Aaker, 1991) and these assets are communicated through marketing strategies. Keller (1993) suggests measuring brand equity serves two purposes: to establish the financial position of the brand and to establish brand differentiation benefits built through the brand assets. In his summary of brand knowledge, Keller (1993) suggests that brand assets belong under types of brand association and within this are categorised into attributes, benefits or attitudes. In an advertising perspective, it is important to fully utilise brand assets in order to enhance brand differentiation in the marketplace (Wright, 1973).

Marketers use forms of advertising to communicate these brand attributes, of which there are two basic theories of how advertising works; cognitive theories and affect theories. Cognitive theories were the first advertising theories suggested and assume the consumer as ‘a purely rational information-processor’ (Ambler and Vakratsas, 1996). It is likely that in 1898 the seminal advertising theory model AIDA (attention, interest, desire and action) was developed by St. Elmo Lewis (Strong, 1925, p.76). Colley (1961) presents a similar model known as DAGMAR whereby the consumer is first aware of the product and involvement is also a mediating factor. The consumer then experiences an affect response and finally a conative response. The simplicity of these models and assumption of consumer predictability was first criticised by Palda (1966) and is juxtaposed with affect theories. Affect theories suggest that brand attitude and favourability is formed in a post advertisement exposure scenario through classical conditioning (Lavidge and Steiner, 1961). This suggests that affect theories could change attitudes through a number of exposures known as the ‘Mere Exposure Effect’ (Zajonc, 1968).

More modern theorists (such as Batra and Ray, 1986 and Biehal et al., 1992) suggest that in low involvement situations liking the ad can have positive effects on brand attitude which is in some circumstances linked to brand persuasion and choice. Theoretically it could be argued this is where the idea of product placement stems from. If the entertainment medium the placement is contained in is considered ‘the advert’, as consumers liking for this increases so should the liking for the brand. Lutz et al. (1983) propose 5 influencers which will affect how the advertisement is perceived: (a) the credibility of the ad; (b) other perceptions of the ad; (c) attitude toward the advertiser; (d) attitude toward advertising in general; and (e) the recipient’s general affective state or “mood” at the time of exposure.

These 5 antecedents could be applied into a product placement context when considering Petty, Cacioppo and Schumann (1983) peripheral processing theory. This theory suggests that a person’s change of attitude can occur not purely through logical consideration of the pros and cons of an advocacy but that an attitude change can be influenced by positive or negative cues or the individual’s disposition before exposure to the advocacy (Batra and Stayman, 1990). William’s (2001) findings on the influences soap operas can have on developing nations support the application of these 5 perception influencers in a product placement context. Williams (2001) found that non-advertising soap operas were creating a demand for sewing machines and condoms in developing countries. This suggests that attitudes towards the programme or movie (or the characters placed within it) can have an effect on purchase intention, perception and behaviour even when no brands or products are specifically being promoted. Karrh (1998) has found that products placed in a movie elicit better explicit memory brand recall then those that are not placed within a movie. Conversely, brand favourability is positively enhanced after exposure to a prominent placing when viewers have reported a disliking to a product placement medium or television programme (Cowley and Barron, 2008). It is important to note that in these circumstances the product placement was very prominent and lacked modality to the plot.

A common finding within the literature suggests that modality and plot connection to the product or brand being placed can increase positive attitude change in subtle product placements. Russell’s (2002) research on modality and plot connection to product placement effectiveness shows that if the brand placement is well connected to the plot it can have a positive effect on attitude change. Hudson and Hudson (2006) discuss the increasing use of placements of placements with high levels of plot modality and the stronger emotional connection this technique can potentially create with the target. Russell (2002) also found that in low plot connections visual only placements could be more persuasive then audio only placements. Interestingly, Gupta and Lord (1998) found that in high modality placement situations there was a 37.5% brand recall rate for audio only placements in comparison to a 5.6% recall rate for visual only placements. Law and Braun’s (2000) research also reflects these audio/visual comparison results.

If there is little modality between the brand and the plot this can unfavourably effect brand attitude and the brand is often discounted if it is a subtle placement. Conversely, a highly prominent incongruent placement can result in increased brand recall and better explicit brand memory (Von Restorff, 1933; Russell, 2002; Brennan et al., 1999; d’Astous & Chartier, 2000). Yang and Roskos-Ewoldsen (2007) discuss the consequences of better understanding the consumer’s ability to process and comprehend the story within a movie or television programme and how it can affect explicit memory. They suggest using situation models and identifying enablers within the story line in order to better place a product within the plot. They use the example of Reece’s Pieces in the movie E.T. and how they are used to lure the alien inside the house. Here, the product is described as the enabler as it enables the plot of the film to progress forwards.

Attempting to obviously elicit a strong explicit memory response can have repercussions. Bhatnagar et al. (2004) uses the adverse reaction to Fay Weldon’s book The Bulgari Collection as an example of the critique and negative associations that can occur as a result the palpable placement of Bulgari jewellery in the title. Balasubramanian (1994) suggests that these adverse reactions and cognitive dissonance are created through the knowledge that it is a persuasion effort. In their seminal paper, Friedstad and Wright (1994) were able to identify that consumers have developed a way of coping with persuasion attempts in order to achieve their own goals such as a consumers internal beliefs as to how they process and utilise a persuasion attempt. The model illustrates how the agent’s topic, persuasion and target knowledge leads to a persuasion attempt. When in contact with the target this then becomes the persuasion episode and leads to persuasion coping behaviour. This exposure can then potentially lead to topic knowledge, persuasion knowledge and even agent knowledge.

Bhatnagar et al. (2004) believe that it is most consumers’ unawareness to the fact that a product placement effort is a persuasion attempt is what makes it successful. Karrh et al. (2003) conversely claim that placements unable to induce brand recall with the target are deemed unsuccessful, this could be due to the fact that recall demonstrates a cognitive response which according to early advertising theories (Colley, 1961) may lead to an affect state and eventually a conative response. Studies have however shown that despite inability to perform brand recall, high frequency placement exposures where persuasion knowledge is low and involvement is high have shown to positively affect brand attitudes (Matthes et al., 2007). The ‘Mere Exposure Effect’ should also be considered here as it suggests an individual’s favourability towards a target will increase with each target exposure (Zajonc, 1968; Kunst-Witson and Zajonc, 1980).

There is great debate not only in the literature but also from a regulatory perspective, about the ethical validity of a target’s topic knowledge without persuasion or agent knowledge. This type of knowledge is stored using implicit memory. Law & Braun-LaTour, (2004) discuss the importance of considering both implicit and explicit memory when exploring product placement. Findings produced by Bhatnagar et al. (2004) indicate the potential power of product placement through the fact that participants involved in their study were able to perform brand recall yet were unable to recall where and when the brand was placed suggesting the application of implicit memory. Schacter (1987) examines a history of implicit memory and how subjects involved in implicit memory studies do have the ability to learn without cognition. Kunst-Wilson and Zajonc (1980) exposed subjects to geometric shapes for a period of time which was deemed too short for them to consciously acknowledge (1 ms) thereby reducing the chances of explicit memory recall. Despite this subjects involved were able to show implicit memory use through distinct preference of shapes they had been exposed to.

Research has shown that not only does implicit memory give an individual the power to recall without cognition but it can also influence perception and attitude (Bargh and Pietromonaco, 1982). Bargh and Pietromonaco (1982) exposed subjects to subliminal hostile words and then asked the subjects to rate a target. The subjects exposed to the hostile words consistently rated the targets more negatively than the control group. Lewicki (1985) found that after subliminal exposure to adjective-noun pairs (for example big-dog), subjects had a tendency to choose the preceding adjective when asked how they “felt” about the noun (for example is the dog old or big?). Despite the inquisitive experiments in the early to mid 1980’s, advertisers had already been using subliminal techniques for thirty years.

In 1957 Coca Cola produced its first subliminal advertising attempt provoking public outrage and shock (Moore, 1982). Audience members viewing a movie in progress were presented with superimposed flashes of ‘Eat Popcorn’ and ‘Drink Coca Cola’ on screen. After these exposures, sales of popcorn and Coca Cola during the movie increased by 57.5% and 18.1% respectively (Rodgers, 1992). The ethical indignation is the issue of directly influencing audience members – without their knowledge – to buy a product they neither desired nor required (Klass, 1986). It has been suggested that some practitioners might consider product placement to be a subliminal method of advertising (Karrh, 2003; Balasubramanian, 1994; D’Astous & Chartier, 2000). If the subject does not experience persuasion knowledge and the persuasion effort is below the conscious threshold, does this mean they are being subliminally targetedConversely it has been accepted that even advertisements above the conscious threshold level do not always reach a subject’s conscious level (Klass, 1986). This could explain the delicate issue of product placement aimed at children who are often unable to recognise even obtrusive persuasion attempts (Auty and Lewis, 2004).

The ethical concerns associated with product placement could explain the independent UK regulations authority for the UK communications industry, Ofcom’s (2011) effort to make product placement ‘transparent’ and ensure ‘consumer protection’ in the UK. New regulations (see appendix 1 for a full list of UK regulations) state that a special product placement logo (consisting of the letter ‘P’ with a bold outline – appendix 2) must precede the beginning, recommencing of a programme containing paid-for brand placement and again at the end. Ofcom (2011) have provided basic information on product placement, the changes in law and what UK consumers are now to expect on their website and are also broadcasting campaigns to raise awareness of the regulation changes. In addition, measures have been taken by Ofcom (2011) to further protect consumers by insisting placements must be ‘programme-related material’ and banning the placement of smoking, alcohol, gambling, instant formula, any product that is already banned from appearing on television and food and drinks high in salt or sugar. The restrictions on placing ‘programme-related material’ only could mean that brands advertising on UK television could see greater brand attitude transformation (Russell, 2002) and a reduced brand memory function (Von Restorff, 1933; Russell, 2002; Brennan et al., 1999; d’Astous & Chartier, 2000) unless it is in an audio only situation (Gupta and Lord, 1998; Law and Braun, 2000).

Product placement as an evaluation of a mass media = Product Placements in Movies: A Cross-Cultural Analysis of Austrian, French and American Consumers’ Attitudes Toward This Emerging, International Promotional Medium.(Statistical Data Included), Journal of Advertising, December 22, 2000 Gould, Stephen J.; Gupta, Pola B.; Grabner-Krauter, Sonja = uses a US movie and collects a questionnaire across international boarders in order to study brand perceptions on a multi national basis. Uk product placement will be directly targeted at a UK audience. Will it be at the right target audience if it is in the right programme and the right characters are using it?

Celebrity endorsement theories hold the potential to providing additional leverage for placed brands. Research has suggested that the use of celebrity endorsements can lead to an increase in brand favourability (Till et al., 2008) and even an indirect increase in brand equity (Spry et al., 2011). Comparable to the ‘parasocial theory’, Agrawal and Kamakura (1995) discuss how a successful celebrity endorsement can reflect some of the brand’s attributes. Halonen-Knight and Humerinta (2010) concur with this theory, suggesting that meanings and values can be transferred from the celebrity endorser to the brand and vice versa. White et al., (2009) attract our attention to the possibility of negative attitude transference from the celebrity endorser to the brand if the endorser’s reputation has for some reason been compromised. Silvera and Austad (2004) have suggested in their study that the target’s perceived similarities between themselves and the endorser can be an influence when measuring celebrity endorsement effectiveness. This principle could theoretically be applied to the target’s perceived similarities between themselves and a character within the television programme using or wearing the placed brand.

Russell and Stern (2006) found that consumers align themselves with placed products in accordance with how characters in the programme align themselves with the product. Their research discusses the ‘genre theory’ whereby characters are associated with the brands and products they use in order to help the viewer identify the character’s social grouping. The ‘parasocial theory’ suggests that viewers form attitudes and relationships with sitcom characters and the running length of a sitcom is therefore important so as viewers can form a deeper, trusting relationship with the character. The ‘parasocial theory’ could mean that placements within television programmes could be more effective then product placements in movies (Avery and Ferraro, 2000). These theories are combined by the ‘balance theory’ which is based upon Heider’s (1946, 1958) balance theory in social psychology and explains an individual’s desire to maintain consistency among a triad of linked attitudes.

Using celebs helps to gain audience attention

Limited capacity of attentionGamers are they more focussed then passive viewersAdvertising noise

Practitioner attitudes towards product placement – Bhatnagar et al. (2004) claim that “companies expect consumers to form attitudes towards brands based on the contexts in which they are presented” suggesting that industry professionals have a simplistic and linear approach to product placement. Difficulties in measuring product placement performance, helps to relieve squeezed income streams due to recession for broadcasters, practitioners might think it will help them get around the problem of ad avoidance behaviour

Product placements trends – more zapping, gupta and lord 1998 found that product placement induced better brand recall then commercial advertisements, saturation of advertising mediums Ben Kozary and Stacey Baxter http://anzmac2010.org/proceedings/pdf/anzmac10Final00353.pdf, ad avoidance behaviour, Marian Friestad and Peter Wright pre-empt = teaching adolescents when they are being targeted

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