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30-second TV spots may have lost some punch, so advertisers want new ways to sell products. Now companies can buy a whole show, and networks face mounting criticism for it.

By Leon Lazaroff
Tribune National Correspondent

June 25, 2004

NEW YORK -- With its eye on The Learning Channel's popular "Trading Spaces" reality show, ABC television approached Sears, Roebuck and Co. in the summer of 2003 with an enticing proposal.

Rather than just inserting a few products into the new show "Extreme Makeover: Home Edition," ABC was eager to follow an emerging model for advertising known as "branded entertainment."

"This was a case of working with an advertiser, understanding their needs, and then seeing whether that fit with a program we were looking to do," said Dan Longest, ABC's senior vice president for integrated marketing and promotion. "As a network, we're not in the business of just selling product placements. With Sears and `Home Edition,' we're selling their brand but we're also extending our own."

Because corporate advertisers have become increasingly unsure that 30-second commercials reach an audience large enough to warrant their high prices, companies now seek a consistent and recognizable presence in the shows themselves.

During the recent television advertising sales period known as the "upfronts," more advertisers were interested in the kind of deals formed by Sears, Longest said.

Jump-started on cable TV by programs such as "Sex in the City," branded entertainment shaped Coca-Cola's sweeping involvement in Fox television network's "American Idol" and Ford Motor Co.'s "24," just two of the growing number of prime-time examples.

"Advertisers want to be in on the front end figuring out how best to integrate their product into programming," said Laura Caracciolo-Davis, Chicago-based director of Starcom Entertainment, a division of Publicis Groupe. "At the same time, the networks are getting smarter about owning the space between the commercials. They want to commoditize product placements."

Even Nielsen Media Research has begun tracking product placements. In a study that began in September, Nielsen reports that about 101 programs per month shown during prime time on network television contained at least one product placement.

ABC and Sears agreed the Hoffman Estates-based retailer would not only include its products in the hands of the show's host and main characters, but that "Home Edition" would become the center of one of its larger print, radio, online and in-store marketing campaigns.

"This is what we call disrupting viewers in a positive way, and the convergence of our brand with a makeover show for deserving people has really worked for us," said Sears spokesman Ted McDougal.

About the time that Sears was talking to ABC, TLC was negotiating with Home Depot about weaving its stores, salespeople and products into the script and scenery of "Trading Spaces."

John Costello, a marketing executive at Home Depot, said the home improvement show provided the perfect opportunity to feature the store's products in their intended environment.

"We want to reinforce the 30-second commercial, not replace it," Costello said. "That involves using a broad range of advertising in order to reach our customers in a variety of environments."

Home Depot not only buys 30-second spots on "Trading Spaces," but features personalities from the show in print and radio ads, holds in-store events with those personalities and has a contest to win a home makeover.

For ABC, which has struggled to find a blockbuster reality show, "Home Edition" has become one of the network's few prime-time bright spots.

"It's not enough to just stick your product in the background and hope people see it," said Rich Stoddart, a marketing communications manager for Ford.

"When we do branded entertainment, the goal is to amplify that content experience, find ways to integrate our brand in ways people care about, in what they do themselves," he said.

Not everyone is thrilled with the evolution of product placements into branded entertainment.

Gary Ruskin, director of Commercial Alert, argues that just as the Federal Trade Commission requires marketers to post the word "advertisement" on print ads, corporate television sponsors should be required to do the same.

Commercial Alert successfully forced Internet search engines two years ago to reveal when they were inserting an advertisement into their search results. Last year, Ruskin's group, based in Portland, Ore., petitioned the FTC and the Federal Communications Commission to require product placement disclosure at the beginning of a program rather than at the end.

"Viewers have the right to know when something is no longer just entertainment but an attempt to persuade them to buy something," Ruskin said.

Product placement, in its most basic form, has been around since the earliest days of TV. In the 1940s and '50s, General Electric and Phillip Morris sponsored programs in exchange for giving their products a high profile within the show. For at least 20 years, soap operas and the film industry used placements to generate additional revenue. Only in recent years have placements made their way onto prime-time shows.

"The networks have fertile ground here because they are looking for new sources of revenue and, in some cases, new advertisers," said Patti Ganguzza, chief executive of AIM Productions Inc., a New York product placement group that represents Kraft Foods Inc., Unilever and the Snapple Beverage Group, among others.

Though producers talk often about the importance of "organic" integration and "respecting the viewer," producers and corporate advertisers have to watch that they don't go too far.

Earlier this spring, the MindShare division of England's WPP Group announced a deal to work with ABC to develop comedies and dramas with advertisers in mind.

Kmart recently signed a deal with the WB network, which is partially owned by Tribune Co., whereby characters on various shows will wear the retailer's clothing. Kmart plans to feature those same characters as part of a national ad campaign.

"If we push the line, that alienates viewers and raises legal questions," said Starcom's Caracciolo-Davis.

"We're still on the learning curve with branded entertainment, but one thing's for sure, it's too late for it to go back into the closet."

Copyright © 2004, Chicago Tribune