Product Placement In Russian Film Industry Media Essay

Because traditional means of advertising become saturated and avoided by the audience, the practice of placing brands in media content has been rapidly developing and attracting attention not only of marketing practitioners, but also of consumers. This research carefully evaluates existing literature on different aspects of product placement in cross-cultural perspective to gain new insights about Ukrainian individuals’ attitudes and feelings towards it and to compare them with those of American audience. A sample of 100 Ukrainian young adults has been used to analyse general patterns in emotions with the help of surveys and short video clips containing different types of product placement. Moreover, four interviews were collected to strengthen further understanding and knowledge formation. The study revealed that in general product placement as an advertising technique was received positively in Ukraine if it is properly done and does not contain harmful products, in particular when advertised for children. Most of the respondents prefer only visual representation of brands on the screen, followed by mentioning products verbally. Viewers enjoy the least the usage type of product placement, which they find obtrusive and irritating. There were some differences between consumers’ attitudes and behaviour in advanced (United States) and developing (Ukraine) economies. Ukrainians are less likely to purchase brands advertised on the screen, have higher concerns about ethics of product placement and are more supportive of government regulations regarding this marketing practice than Americans. Both nations prefer subtle and delicate placements and perceive a product better when it is endorsed by a celebrity.

Introduction

Due to the amplified fragmentation of consumer markets, marketing managers start to use a range of alternative communication channels to reach individuals. One of the rising ways that has been exploited is product placement, which is not a recent concept to the field of advertising (Lai-Man and Wai-Yee, 2008). Product placement is the intentional “incorporation of commercial content into non-commercial settings…a product plug generated via the fusion of advertising and entertainment” (Williams, Petrovsky, Hernandez and Page, 2011:2). Even though it is riskier than the standard advertising, nowadays it becomes a common practice not only in developed markets, such as United States of America and some European countries, but also in developing economies. An increasing number of brands and products are competing for presentations in films and there are various examples of how placing a brand resulted in an improvement of brand performance (Morton and Friedman, 2002). Media globalisation permits product placement to employ delicate means to access local and international consumers. Fragmented audiences and advanced technologies, which allow individuals to avoid the traditional methods of promotion, have added to the increase and popularity of ’embedded adverts’ (Nelson & Devanathan, 2006). In addition, product placement is extensively used in Hollywood films, which have numerous viewers around the world and is believed to be a permanent method of promotion since it can efficiently access target consumer segments globally (Gupta & Gould, 1997).

Prior projects on product placement in movies have concentrated on American (Gupta & Gould, 1997), French and Austrian (Gould, Gupta & Grabner-Kräute, 2000), Australian (Brennan, Rosenberger & Hementera 2004), Indian (Nelson & Devanathan, 2006), Chinese (Lai-Man & Wai-Yee, 2008), Taiwanese (Ming-tiem, Wen-ko & Mei- Ling, 2007) and Singaporean audiences (Karrh, Frith & Callison, 2001). The existing opportunity to comprehend the cultural consequences of globalisation on developing economies is restricted, because sophisticated countries are usually the attention of study (Ribiero, 2006). Ukraine is connected with significant, but difficult historic process of evolution from 70 years of command regime in the direction of a market democracy (Ghesquiere, 2000). Nowadays, the country plays a significant economic role within Eastern and Central Europe. Ukraine has ranked 10th in its area (2006-2010) for the amount of FDI projects and created jobs (Ernst & Young, 2011). Moreover, the economy is the third largest receiver for FDI in financial services in Central and Eastern Europe (2006-2010). However, it still is not commonly used in literature on international marketing.

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Thus, a study that examines current position of product placement in the country and that explores diversities and similarities in how people perceive brand placements in advanced and developing economies, is needed. Ukrainian and Russian marketing managers will have an opportunity to discover how to improve the usage of this technique, so that it will be more effective and will be perceived better by the audience. Moreover, since globalisation has taken place marketing practitioners can alter their strategy for international markets. This research chose United States to be compared with Ukraine since it is one of the world biggest markets and the country is where the technique of product placement was first used and where most of the developing process regarding this practice takes place (Nelson and Devanathan, 2006). The purpose of the study is to explore attitudes and thoughts of Ukrainian young adults towards different aspects of emerging technique of product placement and to compare the results with emotions of American consumers who observe a more established presence of this marketing practice.

The paper continues with a section of literature review, which discusses the development of product placement in both countries and significant legal, ethical and practical aspects of it. Sections of conceptual framework and methodology bring understanding to the process of data collection and are followed by the section of analysis and results.

Literature Review

Nowadays in the era of globalization and postmodernism, the mass media becomes more fragmented, consumers turn to be more demanding and advertising grows to be less effective (Mackay, Ewing, Newton and Windisch, 2009). Some empirical evidence shows that around 70% of television viewers change channels or turn off the sound during commercial breaks since they find advertising annoying or irrelevant (Kiley, 2006). Moreover, today the rising use of DVRs (digital video recorders), which were present in 31% of American homes in May 2009 and continues to increase nowadays, is considered the main threat to the efficiency of TV advertising (Bellman, Rossiter, Schweda and Varan, 2011). The reason behind this is the fact that audience can avoid advertisements to some extent or completely due to functions of fast-forwarding, skip-buttons and channel-change. Thus, product placement, as a hidden and delicate promotion demonstrates its effectiveness to reach both active consumers and non-users and is considered as a future of TV advertising (Smit, van Reijmersdal and Neijens, 2009).

Development of Product Placement in USA

According to literature about the history of product placement in the USA, there are few examples of this phenomenon before 1980s (Newell, Salmon and Chang, 2006). However, some argue that activities that follow the same principle were taking place around 1930s (Eckert, 1978) or mid-1940s (Wasko, 1994). During that time product placement was not an organized business and did not have a proper term. The original purpose of this practice was to decrease the cost of production for film studios and television networks by borrowing props (Williams et al., 2011).

One view on the appearance of product placement is concerned with the arrival to American TV screens of the ‘Popeye The Sailor Man’ cartoon (pic.1) in 1924 (Gromceva, 2004). Nobody knows what came first – the character of Popeye or the idea to include him into the national US campaign with the aim to improve the American health and lifestyle. However, the figures show that after the cartoon became popular the sales of canned spinach have increased by 30% all over the United States (Gromceva, 2004).

Pic.1 (Source: www.serafinosays.com, 2012)Thirty-three years later, this idea was brought to a completely new quality level by Albert R. Broccoli, producer of the legendary series about James Bond (Sancton, 2012). Up to now it stays the most classical, consistent and successful example of American product placement. Starting from the advertisements of vodka and cars in ‘Doctor No’ in 1962, Broccoli had managed to delicately implement many other brands in his later movies (Harlow, 2011). For over fifty years, James Bond still remains an un-aging cultural reference point for many people all over the world and continues to play with new and more sophisticated gadgets each year (Sancton, 2012). He represents the everlasting fantasy of every middle-aged male and thus is a fantastic promotion vehicle for advertisers targeting this segment. Throughout the history of all movies Bond character is known for being promiscuous with women and authentic to vodka martinis, for driving Aston Martins and BMWs and wearing Omega watch. One-third of the budget (around $45 million) for the latest movie with the British spy – Skyfall that will come out in November 2012, will be provided by the brands that appear on the screen, which will make it the biggest product placement practice in the whole history of the cinema industry (Harlow, 2011). This figure equals more than twice the previous product placement record of the Steven Spielberg’s Minority Report ($20 million) in 2004 (Sancton, 2012).

Pic.2 (Source: Steinbrunner, 2008)Nonetheless, the turning point for product placement has taken place in 1980s when the world has witnessed the appearance of the movie by Steven Spielberg ‘E.T.: The Extraterrestrial’ (pic.2) (Newell et al., 2006). In one of the scenes the main character makes the alien visitor come out of the woods with a trail of Reese’s Pieces. At that time the Hershey’s Company was paid to have a right to use its product in a movie. However, when the sales have increased dramatically (around 65% rise) media managers understood that the process should be opposite and companies should pay media producers, so that their products can be advertised (Newell et al., 2006). According to some sources, Mars Company, which produces M&M’s, was very upset, since it had refused to take part in the movie (AdvertMe News, 2012). After that the product placement quickly became a commonly used part of advertising and promotion, many agencies were created and started to offer such services to their clients.

Development of Product Placement in Russia

Pic.3 (Source: Nashe Nasledie, 2010)In 2009, total US branded entertainment spending on consumer event and product placement has reached almost 25 billion dollars and this amount is expected to double by 2014 (PQ Media, 2010). In contrast, product placement spending in Russian market is accounted for approximately 30 million dollars a year (Kalysheva, 2010). There are different opinions regarding the appearance of product placement in Russian film industry. Some think that the first example of the technique was observed during the Soviet times (Gromceva, 2004). In 1925 black-and-white movie Battleship Potemkin had a scene of a red flag (pic.3). That shot was coloured by hand by the director of the film, Sergei Eisenstein, and represented product placement of communist values and celebration of revolution (Gromceva, 2004). However, this case cannot be considered as a product placement in its purest form, because Soviet regime forbade advertising of the consumption culture and products. During those times, the main point of making a movie was to promote heroism and compassionate feelings among people towards each other. In general, no product brands were differentiable, but were perceived as small parts that formed the total production industry (Gromceva, 2004).

Professional Russian marketers, especially those that work in the area of embedded marketing, think that the beginning of product placement has happened with the arrival of the movie Present to a Lonely Woman in 1975, created by the production studio in Riga, Lithuania (AdvertMe News, 2012). According to critics, the film looked like one big advert of goods produced by Lithuanian companies and plants (AdvertMe News, 2012). The audience was observing national beer, female tights with a slogan ‘if you wear them, you will look ten years younger’, scooters and even axes (AdvertMe News, 2012). The advertisement of ‘Riga beer’ looked somewhat similar to the recent advertisements of Smirnoff vodka. The character in the movie when noticing a beautiful girl, looked at her through the bottle of beer, and could see her without clothes (AdvertMe News, 2012). Even though it was a very brave and risky scene for USSR for that time, which would be definitely remembered by the viewer, the message was strengthen by the next shot that demonstrated the long row of beer bottles, the logo of the plant and encouragements to buy ‘Dark Riga Beer’.

Sometimes the government, being both the client and the producer of product placement, had intentionally put the brand into the film and made it the main focus of the movie. For example, Sportlotto-82 had appeared in 1982 and quickly became the best film of the year in USSR. The plot of the movie was concerned with the lottery, which had begun the ‘lottery-boom’ all over the country and had lasted for more than 5 years (Gromceva, 2004). The government taught the public through product placement how to buy tickets, how to fill them correctly and when and where to put them to take part in the next lottery draw. The main character, Kostia encourages everybody to take part in the game by saying ‘The thing is that only for 60 kopecks I buy hope’ (AdvertMe News, 2012).

Pic.4 (Source: http://seshet.ru)When looking back at the Soviet movies, there were global brands present. However most of the time, they were not paid for by anyone and the message conveyed was not concerned with promoting those brands. For instance, in the movie Ivan Vasil’evich Bach to the Future (1973) viewers were observing Grundig tape recorder and Marlboro cigarettes (pic.4), being smoked by the main character (Gromceva, 2004). In reality these goods were what every person was dreaming of and what everyone was trying to get by any means from speculators. Promoting brands and goods that were not available for mass consumption was not reasonable, thus producers were advertising the idea that people can have a better life.

Product placement in Russian film industry had its long way from promoting communist values and better quality of life, having government both as a client and producer of product placement and towards its established presence in 1995 when the movie Features of the National Fishing came out and contained the promotion of some famous brands, such as Kia Sportage, Red Bulls beer, vodka “Urozhai” and cigarettes “Peter I” (pic.5) (Gromceva, 2004). Nowadays, Russian product placement market is rapidly expanding and

Pic.5 (Source: Gromceva, 2004)new agencies, offering professional services are created. National companies are more attracted to work with TV series or movies that have many parts, such as Burzhui’s Birthday (1 and 2), where Whiskas and Catsan brands were promoted and Kamenskaya (1, 2 and 3), where LG identification system was shown (Gromceva, 2004). The main reason for such behaviour is that clients are not very familiar with this relatively new for the country marketing technique.

International Legal System and Pricing

The concept and definition of product placement is not included in Russian legislation system and it is not regulated (Patlah, 2010). Looking at this technique from the global perspective, the United States has particular legal considerations that limit activities of marketers and in particular advertisers and those concerned with product placement (Schejter, 2004). On the other hand, until recently in most countries of the European Union it was forbidden, with some exceptions including Austria (Ginosar and Levi-Faur, 2008). Nonetheless, because some countries felt that they were disadvantaged and losing some sources of profit due to the ban of product placement, which has become common for other European countries, in 2006 European Union governments and European Parliament came to an agreement to allow the technique all over the Union (Patlah, 2010). The arrangement included rules that state, during which types of programs it is permitted to include advertising.

In Russian market and legal system, film producers and companies that want to employ their products in the movies try not to use terms ‘product placement’ and avoid to talk openly about this topic, because from a particular perspective this kind of promotion can be regarded as a hidden advertising, meaning that it influences consumer without them knowing about it, which is forbidden in Russian Federation (Patlah, 2010). This situation creates additional difficulties with the development of this marketing strategy in the country and can be regarded as one of the significant reasons for its weak current position. Even though product placement can be viewed as a prohibited concealed advertising, many agencies continue to offer their services of promoting brands through films, books or video games. Moreover, due to the recent introduction of relatively severe limitations regarding TV promotion and, as a result, the rapid increase in prices for the advertising time, product placement becomes a very interesting, comparatively inexpensive and successful alternative. Average price for the presence in the scene starts with $15 thousands, which includes either detailed discussion of all main benefits of the product by the main characters or visual demonstration of the advertised product’s functions (Patlah, 2010). For example, in one of the recent Russian blockbuster Shadow Boxing, during the chase scene the key star was driving Audi and managed to get away from the followers. If the company wants its brand to be incorporated in the script, implemented into the plot and demonstrated throughout the whole movie, it will cost around $100-200 thousands. On the other hand, promoting a brand during the film in the United States can be handled through barter (95% of product placements) or the production studio can ask for cash, which is relatively rare. In general, the prices range from $1000 till hundreds thousands (Lapuz, 2011).

Effectiveness and Product Placement

According to Lizzat Ashikbaeva, the coordinator of sponsorships from the ‘Central Partnership’, there are no single criteria about the pricing of product placement in Russian marketing industry, because the efficiency of this strategy is extremely problematic to measure (Patlah, 2010). Moreover, the organizations usually have doubts, since it is difficult even for professionals to predict the effect of placing a specific brand into the advertising texts. As for today, the only way to compute the efficacy of the product placement in Russian marketing industry, which is nationally acceptable and widely used, is to calculate the number of potential viewers, who will watch the scene with the promoted product (Patlah, 2010). Other methods, such as conducting focus groups prior to the production of the film and analyzing the number of viewers’ contacts (other people that the intended audience might spread the news to, advice to watch the movie and extend the word-of-mouth) are still used, but not as extensively as in Europe and the United States. Another method of product placement evaluation, which is still in the development stage in the country, is the assessment of the media strategy popularity. This scheme is based on several criteria, in particular such as the ranking of the star for the last three month, target audience of the product and the market capacity of a given commodity group (Patlah, 2010). However, with time the national market becomes better structured and production companies are trying to stick to a particular level of prices for different subcategories of product placement.

The United States is the country with the largest and most quickly growing paid product placement (Williams et al., 2011). To attract the attention of regular users and potential consumers and to be noticed, nowadays brands need to get inside the content. However, embedded marketing can still be burdened with uncertainty. For instance, the product may not be portrayed in the advertising text as predicted, the movie may not be issued as arranged and the audience may not behave according to the producers’ or advertisers’ expectations (Williams et al., 2011). Because of the vagueness of the practice and the inability to predict its effects as explained above, there is no generally acceptable agreement of what forms an effective product placement. Nevertheless, according to a group of scholars (Balasubramanian, Karrh and Patwardhan, 2006), who had created a useful integrated framework, changing the input may influence the outcome of the model, which in turn can help advertisers to predict the result of implementing the product placement technique. The framework consists of four elements (appendix A): (1) execution/stimulus factors, for example category of the program or genre of the film, flexibility of the implementation, prospect to manage, placement modality and priming; (2) individual-specific factors, such as knowledge about a brand, thoughts and attitudes regarding the fit of placement and towards the technique as a whole and the audience’s level of involvement or connection to the program or film; (3) depth or level of conscious processing; and (4) outcomes of the message that reveal the efficiency of the placement. The authors argue that the first two criteria affect the processing depth, which in sequence influences the message results (Balasubramanian, Karrh and Patwardhan, 2006). Even though the framework is comparatively new and untested, it provides an additional insight and knowledge about the technique of product placement and its effectiveness.

Types and Primary Strategies of Product Placement

In the international literature, there are many perspectives on the classification of product placement sub-categories. According to Williams et al. (2011), this marketing strategy can be of three types: only visual, only audio, or joined audio-visual. Most of the brand placements are visual, which comprises display of a brand, product, or illustrative brand identifies with no sound present. On the other hand, in an audio placement, the only mentioning of the brand or product is done verbally without the visual occurrence taking place. Unfortunately, these two types of product placement may not get spotted. According to the statistics, only one in ten brands on television are verbally distributed and the promotion itself lasts on average for about 5.5 seconds, meaning that this sub-category is not in a very much favour of the advertisers and producers and is not commonly used (Williams et al, 2011). Moreover, visual brand placements usually appear on the screen for 6.2 seconds on average. If the company wants viewers to form attitudes and associations with their product that is being advertised, the brands have to stay at the display for a longer time or with a greater impact. As follows from the term, the combined audio-visual placement strategy involves both the visual representation of the product in the advertising text and the verbal introduction or description of it by the characters (Williams et al, 2011). According to La Ferle and Edwards (2006) recall is improved by dual-modality processing. This twofold approach demands creativity and larger cost, because it may obstruct with the normal flow of the cultural text.

According to available literature (Gromceva, 2004), Russian marketers also divide product placement into three broad categories. The first type is visual product placement and follows the explanation above, which is when the product, service or logo is visible to the viewers. However, there are some differences between the understanding of spoken (or auditory) product placement in the United States and Russia. In the later, academics divide this type of the marketing technique into verbal and non-verbal. Verbal dimension includes phrase or dialogue that advertises the product, service or company. On the other hand, non-verbal dimension contains sound that is an inseparable function or characteristic of the brand, for example the sound of the opening the Coca-Cola bottle. However, it is used rarely (Gromceva, 2004). Lastly, the usage product placement, which corresponds to the combined audio-visual approach by Williams et al. (2011), is regarded the most powerful and preferred type of product placement, because it is not always easy to create a desired image by using only audio or video method (Gromceva, 2004).

Following from the types of product placement, producers and advertisers may implement one of the following primary strategies (d’Astous and Seguin, 1999). First of all, implicit product placement strategy (1) contains the brand, the company, logo or the product, which are passively portrayed with only apparent visibility in the program or film without proper demonstration. This strategy is concerned with more contextual or background representation that do not illustrate the advantages of the product, for example when a character wears clothes with the name of the sponsor or is portrayed in front of the brand’s store. Another version of this type of strategy is when the product or brand is actually used in a scene, but there is no verbal emphasis on the product present. Secondly, in integrated explicit product placement strategy (2) the brand, the organization, logo or the product itself plays an important and active role in a scene and is displayed appropriately in the program, movie or within the plot. For example, in a scene where a group of teenagers are hungry and order pizza, Domino’s delivers it quickly and everyone enjoys it. This picture illustrates the major attributes and advantages of the company, which also might be emphasized by the main character. In common, this type of strategy is more effective than the previously explained one (Panda, 2004). Lastly, non-integrated explicit product placement strategy (3) refers to the advertising of the brand, the company, logo or the product that is officially represented, but is not part of the content of the program or film. For example the show, TV series of the movie may be sponsored by Mercedes. This strategy usually embodies sponsorship deals.

Ethical Issues and Consumer Attitudes towards Product Placement

The majority of consumers and academics think that overall product placement is an extreme commercialization of the mass media and an offensive invasion into the life of the audience, since people visit theatres and movies not to observe advertising, but to escape from their routine and real life into the fantasy world and imaginary situations (Panda, 2004). The main mission of the collaboration between the producers and advertisers is to create visible, but not excessively disturbing brand placements that preferably and possibly will be connected with the story of a movie or one of the characters to build strong and positive associations in the minds of consumers (Panda, 2004). If those conditions are not maintained, product placement usually loses its purpose and becomes useless. In general, this technique is used to make audience notice brands while they are in their ordinary environment. Moreover, statistic shows that people overall not only tend to like product placement if it is not extremely obvious or irritating, but also find it acceptable, entertaining, enjoyable and dynamic (Nappolini and Hackley, 2008). In addition, consumers believe that this approach increases the feeling of realism and a sense of familiarity in the movie, creates historical context and helps to develop the personality of the character, connect to him and to create associations between him and the product or brand (Williams et al., 2011). Yet, if viewers become conscious that the brands were placed in a film with a purpose of advertising, it may influence their judgments and ruin the intended message (Hackley, Tiwsakul and Preuss, 2008).

Looking at the previously done studies on attitudes towards the phenomenon of product placement in Russia, the results are somewhat different, but expected. Yanina Nedbaeva (2004) had conducted research among 200 movie-goers (100 males and 100 females) aged 16-33 years. The sample represented people that are sociable, socially-oriented and that value relationship with other people and care how they are being perceived by others, meaning that they are concerned about their looks and pay a lot of attention to prestige of their possessions. The results revealed that the attitudes towards product placement were mixed and not clear, but most of the respondents had noticed material products especially those that of high prestige and status. The diverse reactions are understandable, because feelings towards this technique are just forming and thus should not influence the effectiveness of persuading the audience (Nedbaeva, 2004). In particular, the analysis of questionnaires has shown that 64% of respondents have noticed that brands were placed in the movie, 77% – were able to name at least one of the product displayed. Out of fourteen product categories present in the film, the viewers had labelled twelve, logo of which was clearly recognizable and observable (Nedbaeva, 2004). According to the research conducted by Russian advertising agency New Media Strategies (MediaRevolution, 2006), around 70% of Internet users are expressing neutral or positive attitudes towards product placement in movies, if it is done ‘smartly’ and ‘unobtrusively’ and does not ruin the feeling of entertainment.

Some viewers feel that product placement is menacing and should be prohibited or at least openly stated in the credits during (as part of the commercial breaks, like in sponsorship deals) or at the end of the program or movie. Moreover, individuals’ attitudes and thoughts about the ethical implication of this technique considerably vary across product categories, for instance there is more moral anxiety for alcohol, cigarettes and guns (d’Astous and Sequin, 1999), as well as toys because of product placement that is oriented towards children (Auty and Lewis, 2004) and pharmaceutical products (Williams et al, 2011).

Since psychologists have proven that movies and TV can form and influence consumer tastes, values and habits, generations that have risen watching TV series and films that are full of product placement would repeat exactly those models of behaviour that were shown by the favourite characters (Berezkina, 2009). In Russian market the most disturbing ethical issue regarding this marketing technique is its influence on children. According to research, more than 70% of Russian children more value the opinion of their cartoon idols than of their own parents (Berezkina, 2009). By influencing not completely formed minds of teenagers and kids, product placement can be regarded as one of the reasons for them to begin smoking, just like the characters in the movies are or become overweight or get diabetes, because of the continuous promotion of the fast food in programs. For example, in recent popular Russian TV series My Wonderful Nanny ‘Big Bon’ potato chips were advertised for almost five years (Berezkina, 2009). Moreover, if in the United States placing pharmaceutical products is somewhat regulated (Ta and Frosh, 2009); in Russian Federation it is fully uncontrolled. A lot of debates have occurred around the combined audio-video type of product placement, when the brand is incorporated into the story of the program, especially in reality and TV shows and the audience has no opportunity to separate themselves from the advertising effect.

Conceptual Framework