Table of Content
2. Literature Review
3. Conceptual Framework
3.1 Placement Modality
3.1.1 Implicit Recall
3.1.2 Brand Image
3.2 Perceived Congruence
3.3 Prior Notifications
4. Research Design
4.1 Preliminary Study
4.1.2 Data Analysis
4.2 Main Study
5. Data Analysis
4.1.1 Reliability, Validity, Assumptions and Preliminary Calculations
4.1.2 Main Findings
188.8.131.52 Implicit Recall
184.108.40.206 Brand Image
6.1 Theoretical Implications
6.2 Managerial Implications
7. Limitations and Directions for Further Research
Product placement effectiveness currently receives much attention regarding explicit recall, general attitude and brand attitude. However, few studies investigate the impact on implicit recall and brand image. This study tries to fill these gaps, using modality to distinguish placements. It is hypothesized that audio-only placements perform more effectively than visual–only ones and that audio-visual placements outperform both of the former in terms of both, implicit recall and brand image. Furthermore, two moderating effects are hypothesized, namely perceived congruence and prior notifications. Anderson and Bower’s (1973) HAM theory as well as KPM (Friestad & Wright, 1994, 1995) and the concept of reactance (Brehm, 1981) are used to predict the respective effects. An online questionnaire is used to collect quantitative data from 257 respondents using sequences from the TV show Modern Family. The findings reveal that changing modality indeed leads to better recall and increasing brand image, which is in line with the respective hypotheses. The evaluation of the moderation effects provides mixed results of significance. Theoretical and managerial implications of the findings are discussed in detail and finally, limitations and potential avenues for future research are defined.
"With ordinary advertising you can only say so much. With placement you can hint at what kind of product it is far more effectively" – Advertising Agency Executive (as quoted in Murdock, 1992, p. 19)
“Chuck: To finding the love of your life!
(cheering and drinking)
Lester: Happy bachelor party, my friend! We got you half a dozen five-dollar foot-longs from Subway. That’s six feet of meat!
Jeffrey: (whispering) Five - I ate a foot.
Lester: What’s the matter with you?
Devon: Thanks boys! It's gonna be quite a tasty event… Thank you!
(He grabs the sandwiches)”
While the latter quote could be a perfect script of a TV commercial for the fast-food chain Subway, it is in fact a dialogue taken from the popular NBC action comedy Chuck (S02E18, aired on March 30th, 2009), in which a bachelor party is going to get started by bringing in a couple of Subway sandwiches. This integration of a brand into the storyline of a TV program is an excellent example for a popular and ever-growing phenomenon in the movie and television industry: product placement (PP).
Whether it is Daniel Craig alias James Bond in Skyfall (2012) wearing his Omega Seamaster, while taking a sip of a Heineken beer, or Tom Hanks in Cast Away (2000) screaming the name of the sports supplier Wilson throughout the entire movie, PPs are substantial components of every self-respecting Hollywood blockbuster. However, its usage is not restricted to movies and TV any longer. Placements are common practice in video games, radio shows, novels, music videos and songs or even on Broadway and in theater (Gupta & Lord, 1998; Jin & Villegas, 2007; Wilson & Till, 2011). Nonetheless, following the definition of Balasubramanian (1994), which describes PP to be a “paid product message aimed at influencing movie (or television audiences) via the planned and unobtrusive entry of a branded product into a movie (or television program)” (p. 31), this study focuses solely on placements in motion pictures. Special attention is thereby assigned to the field of television programs. It has been a long time that only blockbuster movies were subject of PP. Even though they still are the main target for marketers, their shares are decreasing (Lehu, 2007). The potential lying in TV shows is discovered increasingly by marketers (Karrh, McKee, & Pardun, 2003; Schneider, 2002), since they offer more segmented target groups, are aired on a weekly basis or even more frequently, and are at the same time substantially cheaper in terms of fees. Sponsoring one season of a popular TV show costs approximately $ 200,000, while one 30s TV advertising campaign accounts for around $ 475,000 (Law & Braun, 2000). Also an ever-growing hype around some shows, mirrored in actor-fees of up to $ 700,000 per episode (Ashton Kutcher, Two and a half Men (Battaglio & Schneider, 2012)), makes them at least as promising a Hollywood movies. Accordingly, they are the central topic of my analysis of PP effectiveness. In addition, from the academic perspective, TV shows receive substantially less attention and thus require additional investigation (Gupta & Lord, 1998).
63% of ANA members integrate branded entertainment and even more important, 52% of the budgets used for that are reallocated from traditional TV advertising resources (Consoli, 2005, March 23). PP has become a popular marketing tool and describes an ever-growing business. In 2010 it accounted for an estimated overall revenue of $ 14bn with a strongly increasing tendency (Graser & Stanley, 2006). This is not surprising, taking into account today’s media environment, in which TiVo, DVRs, PVRs and online piracy make the effectiveness of TV advertising vanish (Karrh, 1998; Lehu, 2007). Additionally, increasing levels of media fragmentation make it difficult for advertisers to reach their respective target groups (Lehu & Bressoud, 2009). Those difficulties can be avoided by using PP. The reduced risk of getting zapped away, the guarantee to not interfere with competitors’ messages and an increased “shelf time” on DVD and Blu-Ray even years after the production make placements even more attractive (d'Astous & Séguin, 1999; Morton & Friedman, 2002). Furthermore, they offer the potential to get embedded in a more multifaceted environment than any commercial ever can. This allows the transmission of what the product is about on a much more complex scale, as it is also indicated by the quote in the beginning of this section. Finally it gives marketers the opportunity to connect the product and a prominent personality with extremely little means. "We saved almost $ 500,000 in production costs and got (…) Tom Cruise to act in it“, noted an Apple executive about the benefits of a placement in Mission Impossible (1996) compared to a TV ad (as quoted in Burrows, Fixmer, & Ricadela, 2012, p. 44). Sales figures prove this reasoning correct. The sales of Ray Ban Wayfarer sunglasses stuck at 18,000 units a year in the early 1980s. After Tom Cruise wore them in Risky Business (1983) they jumped to almost 360,000 a year. By the end of the eighties and after several other placements, like Top Gun (1986), a yearly level of 4,000,000 units was reached (Karniouchina, Uslay, & Erenburg, 2011; Lehu & Bressoud, 2009). Ray Ban continued this strategy successfully over the upcoming years in multiple films like Men in Black (1997, 2002, 2012), Hancock (2008) or Bad Boys II (2003). Similar success applies to Manolo Blahnik shoes, which are a central element of the TV show Sex and the City (1998). “The prices keep escalating, but women will starve themselves to score a pair of his shoes” says Coster (2008). Success stories like these pulled PP from a niche tool to a mainstream position (Gupta & Gould, 1997; Lehu & Bressoud, 2009), while agencies started specializing on bringing together marketers and producers. Nowadays, movies are financed to essential parts due to placement contracts, as the example of the most recent James Bond movie Skyfall (2012) shows: almost one third of its budget is originated in PP (Doll, 2012). Even if no money is paid, which surprisingly is the case in 75% of the deals (Powell, 2007), the producers benefit substantially. Whether GM sponsors all cars for the Transformer movies (2007, 2009, 2011) or the Pentagon provides helicopters for Black Hawk Down (2002), film studios easily save millions. Nonetheless, despite all these promising figures, the knowledge of professionals about the working of placements is still surprisingly limited (Karrh et al., 2003) and most decisions are made based on intuition and gut feeling. To improve the understanding, I perform an empirical examination of the effectiveness of PP. While most of the existing literature has focused on explicit recall, general attitude and brand attitude, few studies investigated its impact on implicit recall or brand image. My study tries to fill these gaps by conducting a quantitative investigation tackling the problem statement: How does modality affect the effectiveness of product placements in TV shows in terms of implicit recall and brand image; and what effects do congruence and prior notification have on these relationships? It is hypothesized that audio-only placements perform more effective than visual–only ones and that audio-visual placements outperform both of the former in terms of both, implicit recall and brand image. Further, congruence is expected to enhance the effect on brand image, while it deteriorates the increase in recall. Due to a lack of regulations, the discussion arose about the mandatory installment of prior announcements to ‘warn’ the audience. This might on the one hand increase the effect on implicit recall but might also harm the impact on brand image. In the development of my hypotheses, I make use of concepts such as Anderson and Bower’s (1973) HAM theory, KPM (Friestad & Wright, 1994, 1995) and the concept of reactance (Brehm, 1981). An online questionnaire is used to collect quantitative data from 257 respondents confronting them with three sequences from the US-American TV show Modern Family, which involve an Apple iPad. The findings reveal that indeed modality levels differ in implicit recall and brand image the same way as it is hypothesized. The assessment of moderation effects supports that congruence is able to enhance the effect on brand image, while it has no impact on implicit recall. Prior notifications show to have no impact on neither of the two dependent variables and thus can be considered irrelevant for professionals.
The setup of my study is the following. First, a short overview about the existing literature is provided. This conceptual background and its underlying theories, in combination with models like HAM, KPM or reactance, are the foundation for the hypotheses development. Third, an empirical study assesses these hypotheses and provides additional findings. Fourth, implications for academic theory as well as for managerial purposes are outlined. Finally, limitations and avenues for further research are provided and a short summary wraps up the main findings.
2. Literature Review
First PPs go back more than 100 years (Chan, 2012) and movie-makers started using them in a professional manner already in the 1930s by installing specialized offices to deal with it (Karrh et al., 2003). However, the topic was neglected by academics until the 1980s, when a frightened, little alien in search for sweets got their attention. In Steven Spielberg’s E.T. the Extra-Terrestrial (1982), Reese Candies were the snack that lured him out of his hide and sales rocketed +65% after the release of the movie (Gupta & Lord, 1998; Russell, 1998; Tsai, Liang, & Liu, 2007). This story, being a prime example for PP, made researchers alert of its potential and let them start investigating. Over the following decades, a rich body of academic research evolved, which deals with multiple aspects of PP and its effectiveness. Before I perform a thorough empirical analysis, it thus is essential to first provide an overview of the existing finding in the literature.
The earliest, clearly stated definition of product placement emerged in the 1990s with Balasubramanian (1994) calling it a „paid product message aimed at influencing movie (or television) audiences via the planned and unobtrusive entry of a branded product” (p. 31). Over time this definition was refined, especially due to the increasing share of non-financial agreements (Powell, 2007), yielding the current definition of IIC code of advertising and marketing communication, calling it the “inclusion of a product so that it is featured in a program in return for payment or other considerations (emphasis added)” (Chan, 2012). Meanwhile, other authors put more emphasis on the subtleness of manipulation, defining PP as a “combination of advertising and publicity designed to influence the audience (…) such that the viewer is unlikely to be aware of the persuasive intent (emphasis added)” (Cowley & Barron, 2008). Consequently, many studies try to capture the subconscious impact of PP (Cowley & Barron, 2008; Fuller, 1997; Law & Braun, 2000; Tiwsakul, Hackley, & Szmigin, 2005). Finally, it is noteworthy that numerous authors in the literature use the terms brand placement and product placement interchangeably (Chan, 2012; d'Astous & Séguin, 1999; Lehu & Bressoud, 2009; Morton & Friedman, 2002). To avoid confusion, I refer to it as product placement (PP) from here onwards, as this is the term used in the majority of studies.
A first stream of research deals with the acceptance of and the attitude towards placements in general. Multiple authors examine this relationship and find positive evaluations by the respondents (Argan, Velioglu, & Argan, 2007; DeLorme & Reid, 2000; Gould, Gupta, & Grabner-Kräuter, 2000; Gupta & Gould, 1997; Nebenzahl & Secunda, 1993). Reporting the respective results and its circumstances would go beyond the scope of this study as they are not essential for my research, which is why I decide to not cover them in detail.
Another stream in literature, and at the same time the most extensive examination, deals with the assessment of PP’s effectiveness. The first component of it involves the placement’s impact on product recall. Recall refers to the ability of the audience to remember the featured product after being exposed to the placement. Multiple authors examine this relationship and mainly find PP to have a positive impact (d'Astous & Chartier, 2000; Gupta & Lord, 1998; Karrh et al., 2003; Law & Braun, 2000; Lee & Faber, 2007; Lehu & Bressoud, 2009; Russell, 2002; Yang & Roskos-Ewoldsen, 2007). This includes aided as well as unaided recall measures. It is noteworthy that in those studies, all authors but Law and Braun (2000) and Yang and Roskos-Ewoldsen (2007) use explicit measures. Explicit recall measures refer to asking subjects which brands they can recall from the video clip (i.e. unaided) or to let them choose from lists (i.e. aided). However, there is common agreement that implicit measures might be more appropriate to address PP’s recall effectiveness (Chan, 2012). Law and Braun (2000) argue that the conscious ability to recall the placement is limited, while people do realize it on the subconscious level. Especially regarding the trend of academics to assess PP’s subtle effectiveness, this reasoning gains importance. Letting subjects perform decision-making activities, which are not associated to the video clip, provides results that include also their subconscious recall. Implicit measures thus are a promising option to better capture the placement’s recall effectiveness. Both, Law and Braun (2000) and Yang and Roskos-Ewoldsen (2007) indeed find support for the its effectiveness and further prove it to be superior in comparison to explicit measures. Since the existing research in this field still remains limited, my study will also rely on implicit recall measures to extend these findings.
Clearly, a placement’s recall is the most pragmatic measure of PP effectiveness and also the most likely outcome and therefore receives much attention (Karrh, 1998; Sawyer, 2006). However, several authors argue that measuring only recall is not sufficient and that additionally, also affective measures should be discussed (Chan, 2012; Craig-Lees, Scott, & Wong, 2008; Russell, 1998, 2002), because recall is a bad predictor of persuasion (Mackie & Asuncion, 1990). Therefore, a more recent body of research is dealing with this dimension of PP effectiveness. This work can be broken down into two different dependent variables that are examined. First of all, multiple studies investigate the effect that placements can have on brand attitude. Some studies show only limited or no impact (van Reijmersdal, Neijens, & Smit, 2007), while most others reveal a positive connection (d'Astous & Séguin, 1999; Matthes, Schemer, & Wirth, 2007; Russell, 2002; Wei, Fischer, & Main, 2008; Yang & Roskos-Ewoldsen, 2007). However, in case of repeated or overly prominent implementations as well as in cases of knowledge about the persuasive intent, these positive brand attitudes can shift to the negative side (Campbell & Kirmani, 2000; Cowley & Barron, 2008; Homer, 2009; Wei et al., 2008). Very recently the focus changed, from brand attitude to the second affective measure of PP effectiveness: brand image. Literature suggests, by making use of Anderson and Bower’s (1973) human associative memory, that PP has the ability to improve a brand’s image by shifting (favorable) associations from the host entertainment to the brand (Karrh, 1998; Powell, 2007; van Reijmersdal et al., 2007). Despite this promising potential, van Reijmersdal et al. (2007) are, to my knowledge, the only ones addressing the issue empirically. In their study, they find indeed a positive impact on brand image, but the topic requires additional research. Based on this gap in the literature, my upcoming analysis investigates on this topic, using brand image in addition to implicit recall as a dependent variable.
To complete the review of existing research on PP effectiveness, three other measures might be noteworthy. First, several authors examine the effect of PP on behavioral intent, i.e. purchase or choice intentions (DeLorme & Reid, 2000; Law & Braun, 2000; Matthes et al., 2007; van Reijmersdal et al., 2007). Furthermore, others examine the impact on actual choice behavior (Yang & Roskos-Ewoldsen, 2007). Finally, also the impact on the corporate financial performance is assessed by using event studies to evaluate stock price fluctuations (Wiles & Danielova, 2009). All three of these aspects are not connected to the methodology of my study. As they would go beyond the scope, I am not going into detail about the respective findings in that area.
Beyond the effectiveness of PP, also the different characteristics of placements and their respective impact have been assessed by academics. A first category that obtained substantial attention relates to the placement’s prominence. Prominence is defined as "the extent to which the product placement possesses characteristics designed to make it a central focus of audience attention” (Gupta & Lord, 1998, p. 49). Multiple authors assess the differences between the various levels of prominence. The differentiation thereby varies between space occupied by the product or its size (d'Astous & Chartier, 2000; Gupta & Lord, 1998; Lehu & Bressoud, 2009), duration (Avery & Ferraro, 2000; Cowley & Barron, 2008; d'Astous & Chartier, 2000; Gupta & Lord, 1998; Lehu & Bressoud, 2009; van Reijmersdal et al., 2007), existence of simultaneous placements (Gupta & Lord, 1998), number of appearances (Bressoud, Lehu, & Russell, 2008, June; Lehu & Bressoud, 2009), plot connection (Avery & Ferraro, 2000; Cowley & Barron, 2008; Gupta & Lord, 1998), character interaction (Avery & Ferraro, 2000; d'Astous & Chartier, 2000), or product position (Avery & Ferraro, 2000; d'Astous & Chartier, 2000; Gupta & Lord, 1998; Lehu & Bressoud, 2009). While more prominent placements lead to substantially higher levels of recall (Cowley & Barron, 2008; Gupta & Lord, 1998; Law & Braun, 2000; Lehu & Bressoud, 2009), they deteriorate the brand attitude of the featured product (Campbell & Kirmani, 2000; Cowley & Barron, 2008; Homer, 2009). As pointed out by Sawyer (2006), obviously and noticeably placed brands often annoy people and therefore lead to negative evaluations. Although high prominence is therefore a double-edged sword in terms of PP effectiveness, it still determines the fees of contracts between movie producers and marketers (Gupta & Gould, 1997). The necessity for another categorization is evident. An antecedent of prominence, modality, might serve as a solution. Modality describes the type of the placement and is defined by whether a placement is visual, verbal, or a combination of the two (Gupta & Lord, 1998). Following this conceptualization, multiple authors categorize placements by its modalities to perform their research (Cowley & Barron, 2008; d'Astous & Séguin, 1999; Gupta & Lord, 1998; Homer, 2009; Law & Braun, 2000; Lehu & Bressoud, 2009; Russell, 1998, 2002; Wilson & Till, 2011). The concept of modality is broken down into 3 categories, which go back to Gupta and Lord (1998) namely, visual-only, audio-only, and audio-visual placements. Russell (2002) describes modality to be a crucial determinant of the effectiveness of PPs. However, only few studies evaluate the impact of modality on recall, mostly indicating that audio-only placements are more effective than visual-only ones and that audio-visual ones outperform both of the former (Gupta & Lord, 1998; Russell, 2002; Wilson & Till, 2011). Regarding brand image, to my knowledge, there is no study assessing modality’s impact. To explore this research gap, I use modality levels as independent variables in the upcoming analysis and assess and compare their effects on implicit recall as well as on brand image.
A second aspect of characteristics of PP deals with the embedment of the placement in the program. Two similar, yet distinct, concepts can be identified here, plot connection and congruence. The first one, plot connection, is defined by Russell (2002) to be the degree of association between brand and scenario in terms of providing a significant contribution to the story. Empirical findings imply that high levels enhance the effect of PP on brand attitude, as it leads to more character endorsement, empathy and tightens the connection to the hosting program (Karrh, 1998; Russell, 2002). In terms of recall the findings are inconsistent, being positive in some studies (d'Astous & Chartier, 2000) and negative in others (Lehu & Bressoud, 2009). The second component, congruence, describes the unobtrusiveness of the placements’ implementation. Dave Brennan, research and strategy director for the UK broadcasters' marketing-body think box, defines a PP as being congruent “as long as it is natural and adds to the reality of a program, because it will then reflect the real world we live in" (as quoted in Costa, 2010, p. 22). Therefore, if the presence of a brand is not justified by the story or when a visual brand becomes the focus when it should play an accessory role, it is perceived to be incongruent (Russell, 2002). Often congruent placements are therefore described to be due to producer's efforts to enhance the realism of a scenario (Costa, 2010; Solomon & Englis, 1994). Both, plot connection and congruence often go along with each other. However, plot connection puts more emphasis on the story-related importance while congruence is less restricted and just describes the level of naturalness. As outlined before, PP sometimes leads to decreased levels of brand attitude. Empirical research reveals that this effect is often caused by incongruent placements that disturb or annoy the audience (Russell, 2002; Sawyer, 2006). On the other hand, high levels of congruence have the potential to aid the placement’s effect on brand attitude as it is reported by d'Astous and Séguin (1999). Regarding its relationship to implicit recall and brand image, no knowledge exists yet. To extend the current literature in this direction, congruence’s impact is one key aspect of my upcoming analysis
A last component of research that requires to be mentioned is prior disclosure. This concept refers to informing the audience upfront about the placement. This can be done on a direct level as well as via subconscious priming. Findings suggest that brand recall and the general attitude towards the placement can be improved by it (Bennett, Pecotich, & Putrevu, 1999; d'Astous & Séguin, 1999). Using priming in the form of inserted commercials, Cowley and Barron (2008) are able to replicate these results. In that context, it is noteworthy that calls are rising for a mandatory prior notification in case of PP. Due to the ever-increasing amount of placement and due to lacking regulations, multiple parties perceive placements to take advantage of customers by being deceptive, threatening and manipulative (Morton & Friedman, 2002; Nebenzahl & Secunda, 1993). “It's very alarming advertisers are allowed to have so much control (…) It's time for Congress to move in and hold hearings on the role advertising is playing in shaping content as the audience goes uninformed”, says Jeff Chester, executive director at the Center for Digital Democracy in Washington (as quoted in Elliot, 2002). Accordingly, the call for mandatory disclosure in the beginning of a program to warn the audience from its persuasive and potentially manipulative intent is getting stronger (Avery & Ferraro, 2000; DeLorme & Reid, 2000; Tiwsakul et al., 2005). The EU already proposed a respective requisition (Campbell, Mohr, & Verlegh, 2007; Eisend, 2009); a tool described as prior notifications. Despite the obvious up-to-dateness of the topic, to my knowledge and backed by the review of Chan (2012), no research is conducted yet to assess the impact of such notifications on PP effectiveness in terms of affective measures. To shed light on this topic, the moderating impact of prior notifications is one of the key aspects of my framework, which is investigated in this study.
Finally, it is noteworthy to point out that most of the existing literature focuses on PP in the movie industry (Bressoud et al., 2008, June; Chan, 2012; d'Astous & Chartier, 2000; Gupta & Gould, 1997; Gupta & Lord, 1998; Lehu & Bressoud, 2009), while the findings for TV shows are limited (Law & Braun, 2000; Lehu, 2007; Schneider, 2002; Wilson & Till, 2011). However, since its shares regarding placements are increasing, and due to the promising aspects that I outlined before, the focus of this analysis is on the television industry.
Despite of all the findings outlined above, still the academic work on product placements is far from maturity and multiple authors ask for more research (Chan, 2012; Taylor, 2009). Based on the existing literature, I identify several gaps that need further investigation, which brings me to the following problem statement:
 A potential explanation is that most of the research on PP is US-based and that EU-regulations, for the moment, do not affect the American movie industry. However, still the displeasure is increasing in the USA as well (Elliot, 2002), making notifications’ impact also important for marketers there. Furthermore, on the academic level, an investigation of the topic is of interest, since findings about prior disclosure are limited and since affective measures so far got no attention at all.