During Monday’s IAB NewFronts, Amazon and NBCUniversal introduced advertising innovations for their streaming services. Amazon, for example, announced that some Prime Video and Freevee (the former IMDb TV) series will feature virtual product placements (VPPs).
Virtual product placement is a post-production technique for inserting a brand into a scene. It allows the platform to insert new ads in the future and continually remonetize a piece of content. At NewFronts, Amazon demonstrated a VPP insertion of an M&M's poster in a scene from “Making the Cut” on Prime Video.
While Amazon did not name specific brands that are beta testing VPP, it did report that one consumer packaged goods brand saw a 6.9% increase in favorability as well as a 14.7% jump in purchase intent attributable to its VPP campaign.
Meanwhile, NBCUniversal launched a similar ad-style on its streaming platform Peacock, dubbed In-Scene Ads. Peacock is experimenting with the potential for advertisers to embed their ads within programs after production, such as on a billboard displayed inside a specific frame.
The number of streaming services is on the rise: 65% of paid video subscribers owned three or more subscriptions in 2021, up from just 32% in 2018, per Activate. Therefore, according to eMarketer’s latest report, that is likely to lead more consumers to ad-supported platforms, which is why Netflix is openly mulling its ad-supported tier plans. But no platform wants to disturb the viewing experience more than necessary — which means platforms may see product placements as a legitimate way to bring in ad revenue without interrupting the viewing experience.
In-scene ads, shown on billboards in the background, are not particularly obtrusive. Many advertisers feel that television product placement works. 2019 figures from PQ Media show that product placement in TV, digital, and film surpassed $20.5 billion. Furthermore, global spending on product placement was projected to be $23.3 billion in 2021, per PQ Media. That is a 13.8% increase versus 2020, a significantly greater growth rate than marketing spending (5.9%) on the whole. Despite that, product placement is less favored as a brand touchpoint across generations, falling behind most others in a 2021 Data Axle study.
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