The popularity of streaming shows no sign of waning.

Today, 47% of UK households are signed up to the most popular streaming platforms (including Netflix, NowTV, and Amazon Prime Video), while 56% of US adults also watch web-based TV content.

Consequently, there has been a shift in advertising opportunities for brands, with many attempting to find new ways to enter into these ‘ad-free environments’. Product placement is one such opportunity, where a brand pays for its product to feature in a TV show or series.

But what are the limitations (or benefits) of this form of advertising? And how are brands approaching it?

A growing ad market

In 2018, it was reported that 16 to 24-year-olds in the UK spent more time watching Netflix than all of the BBC’s TV services (including BBC iPlayer) combined. This highlights the shift away from traditional television into streaming, and the difficulties for brands who want to reach consumers – particularly of a younger demographic – through traditional advertising.

In response to this, we’ve seen a rise in product placement on streaming sites, which typically involves a brand paying the TV producers of OTT shows in order to be featured. PRWeb predicted that US revenues for product placement would reach $10 billion in 2018, rising from $8.78 billion in 2017.

Interestingly, these types of deals appear to be facilitated by third-party ad companies rather than the streaming platforms themselves. In 2018, KFC made a high-profile appearance in Stranger Things. However, Netflix denied receiving any payment in exchange, instead stating that an external company called Branded Entertainment Network was behind the deal.

Indeed, this seems to be the case for most product placement deals, with streaming platforms typically leaving it to the discretion of producers to arrange. In turn, the benefits can be reduced production costs, as well as the potential promotional opportunities elsewhere.

This is not always the case, however. Hulu, which launched its ad-free version in 2015, now has an internal team dedicated to brand placement. Nicole Sabatini, Hulu’s vp and head of integrated marketing, told AdWeek: “When a show is greenlit, my team immediately talks to the producers and the studio of that particular show to have a general conversation around having brand stories woven in.”

As a result, viewers are now used to seeing brands heavily featured in Hulu’s biggest shows, including The Mindy Project and Four Weddings and a Funeral. The latter recently partnered with Hotels.com for a special episode, where the characters Craig and Zara have their wedding sponsored by the travel brand.

Brand integrations

Product placement deals can be quite straightforward, usually involving a one-off feature in an episode. Brand integrations can go further than this, however, allowing brands to extend the deal season-wide, as well as explore co-promotional opportunities.

The latter is particularly appealing for the streaming platforms as well as program makers, as it means that the OTT show is promoted across the partnering brands’ marketing channels. Again, Stranger Things seems to be a leading example; brands like Coca Cola and Burger King both ran promotional campaigns for the most recent series, with the latter releasing a special ‘Upside Down Whopper’ in its honour.

This type of deal is a win-win, with both Stranger Things and Burger King benefitting from well-timed hype and increased awareness.

But does this type of product placement put viewers off? In the case of Stranger Things and brands such as Burger King, Netflix has insisted (along with the fact that it again has received no monetary gain) that the brand appearances are natural and in-keeping with the 1980’s pop culture theme of the show.

Interestingly, 2013 research from Channel 4, suggests that product placement is appreciated by viewers as it enhances television content credibility – i.e. makes a specific time or place appear more realistic.

What’s more, the research goes on to state that product placement also “implicitly forges brand association with TV content on a subconscious level, unlike more explicit forms of advertising.”

This is particularly pertinent for brands trying to reach a younger demographic, who are perhaps more likely to be averse to ads (with the ability to skip ads now standard on other platforms like YouTube). The ‘native’ effect is also shown to some extent in audio advertising, where brands are able to launch their own podcasts and subtly weave in a more natural and authentic style of ad placement.

What about measurement?

One of the factors which could put brands off product placement on OTT sites is measurement. Or rather, difficulty in measurement.

Most of this stems from streaming platforms’ unwillingness to offer up viewership data, which can leave brands in the dark when it comes to key metrics such as reach. Similarly, due to the often subtle nature of product placements, it’s difficult to measure their real impact without access to concrete data.

Other negatives include the highly limited nature of product placements which – unless a brand negotiates cross-promotional efforts – tend to involve zero marketing messages or brand context.

Finally, there’s also the danger of negative consumer sentiment. While this type of advertising is a relatively new and growing trend within the context of streaming platforms, it might not be too long before viewers once again feel overloaded with ads – no matter how ‘subtle’ they claim to be.