Expanding the Industry

Excerpted with permission from Chapter 4 of Wasko, Janet (2003) How Hollywood Works (London: Sage), pp.154-161.

Hollywood and the film industry are constantly changing, and usually expanding, due to the continual search for profit. Some of the industry's expansion strategies have involved efforts to commercialize various areas, to produce additional products, to connect to other diversified activities, and to seek additional retail markets. This chapter will discuss these trends, namely, commercialization, commodification, diversification, and globalization, as they apply to the US film industry.

Commercialization/Commodification

In the past few decades, the Hollywood industry has become more explicitly commercialized through the practice of featuring products in films. In addition, more commodities are being produced in conjunction with feature films in the form of merchandise, as well as the production of media products that flow out of the primary film commodity. The next sections will discuss commercialization in the form of product placement and commodification in terms of merchandising.

Product placement

The latest James Bond film, Die Another Day, features over 20 branded products that were not included in the film by accident. Bond drives an Aston Martin, the bad guy (Zao) drives a Jaguar, and the heroine (Jinx) is assigned a Thunderbird. Meanwhile, Range Rovers are used extensively as utility vehicles. Bond drinks Finlandia vodka, sips Bollinger champagne, and shaves with the latest Norelco electric shaver.

All of these products were deliberately "placed" in the film. While some of the companies paid specific fees for their products to appear in the film, most placements were arranged on a barter basis with the companies supplying products and technical assistance to the production company. But, more importantly, 007's "partners" coughed up over $120 million in advertising that featured the film as well as the products. The campaign included global television, print, radio, and outdoor advertising, plus various sweepstakes and other promotions. No wonder Time magazine suggested that the film might have been called, Buy Another Day.

During the 1980s, product placement evolved into a full-fledged industry. By the end of the decade, the major studios included departments specifically dedicated to product placement and the process began to gain widespread recognition (Turcotte, 1995).

We've moved from an unstructured era of product placement - where products got into movies because $50 was put in the pocket of the prop master if he would put that soft drink in front of the camera - to where companies are professionally reading scripts, looking for opportunities for their clients, and paying fees directly to the production to have that product in the movie (PBS, 2001).

This section will consider different types of product placement, the various players involved in the process, and some of the implications of this development.

Product placement types. Three basic types of product placement are often discussed: visual, spoken and usage. A visual placement occurs when a product, service, or logo can simply be observed. A spoken placement occurs when an actor or off-screen voice mentions a product, service, or corporation. A usage placement occurs when an actor or actress actually handles or interacts with a product, service, or corporation. A placement that involves usage often includes both a visual and spoken element as well (Turcotte, 1995). More recently, of course, products have moved into important narrative roles with entire movies revolving around specific products, as in the case of Cast Away and You've Got Mail. Branded products and services played major roles in these two films, with narrative elements structures around the products. At least in the case of Cast Away, the two products featured (Federal Express and Wilson Volleyballs) reportedly appeared without direct payment. However, the major narrative role given to these products was significant and pushed the product placement phenomenon to a new level.

It is difficult to estimate how much is generated overall or even from specific product placement deals, as they vary tremendously. While huge amounts have been claimed from key placements, as noted above, no payment is made for some product appearances. On the other hand, arrangements often involve a barter deal, as in the case of Die Another Day above. In addition to paying for the placement of a product in a film, the process also increasingly involves promotion and marketing campaigns. An earlier example was the $100,000 that Nabisco paid for Baby Ruth candy bars to be shown in The Goonies. But the company also agreed to provide $1.5 million dollars in network advertising and to give away movie posters with the purchase of its candy at displays in 37,000 stores. Although a producer may benefit from payment received for placing the product in the film, distributors may find that promotional campaigns are often the most alluring aspect of a product placement deal.

Product placements with promotional tie-ins are invaluable for a films marketing campaign, as explained by a successful marketing executive:

The value of a promotion to the marketing department is if you can have other people supporting the movie - and it's their money, not the studio money - it just adds to the pressure in the marketplace. It adds to the awareness of the movie. . . It's not only the studio that's talking about it. It's on the front page of Time magazine. Dateline had it on last night with the star. I go to my 7-Eleven, the soft drink I buy is doing it. It's everywhere. (PBS, 2001).

In addition, some deals are developing into more elaborate corporate partnerships. For instance, in July 2001, Vivendi Universal and Toyota arranged a marketing and promotion partnership that they claimed was the biggest deal ever between a show business conglomerate and a major automobile company. The agreement covers all of Universal's businesses, including theme parks, motion pictures, TV, consumer products, online ventures, video games and music. The arrangement builds on an already existing multi-year deal in Japan between Toyota Motor Corp. and Universal Studios Japan.

The deal provides for Toyota to receive first-look opportunities for product placement and promotion in Universal-produced films, home video, and DVD releases. In addition, Toyota is allowed to use various Universal properties, including characters and film and music library products, in its advertising and sponsorship opportunities on Universal's channels overseas, as well as placement in interactive video games. At the end of 2002, Toyota was planning exclusive sponsorships of theme park ries and attractions based on films such as Back to the Future, Men in Black and Spider-man.

Not every placement situation is ideal, however. This was exemplified by the well-publicized incident involving the placement of Coca-Cola in Natural Born Killers, where the product was associated with "violent images of psychotic mass murders" (Turcotte, 1995). Other examples might be cited, as well.

Product placement also is not universal in that identifiable products do not appear in all Hollywood films. Yet, the practice is still common and seems to be growing. While it is possible that placements are a potential source of production funding for some films, it might be stressed again that product placement is probably more important as it contributes to the advertising and marketing of a film.

A specific process for product placement in Hollywood films has evolved over the years, involving the studios, corporations and advertisers, and product placement agencies.

The studios. At least one executive at each of the major studios is assigned to product placements. Some of the companies refer to this responsibility as "production resources," while others refer to it directly as "product placement." This department serves as an intermediary between the filmmakers and he corporate marketers or their agents. The studio executives who are dedicated to product placement frequently interact with film producers, prop masters, and other production people, as well as with executives from other studio departments, particularly those involving clearances and promotions.

The studio executive's first step is to read and analyze scripts for upcoming films that are scheduled to go into production and to prepare a breakdown of potential product placement opportunities. In addition, the production team (producer, director, prop master, set decorator, set designers, etc.) generally develop two lists of items needed for the film, which are then forwarded to the production resources department.

The first list includes items required to shoot the film, which may or may not involve specific brands. The second list includes additional items that the production team would like to have. The studio executive compares notes with the production team and then attempts to find the products and make the deals. The first call is frequently to the numerous product placement agencies that represent many of the corporations that have established an interest in this specialized method of promotion. The next calls are usually to the corporate marketers who have established offices specifically dedicated to serving their product placement or entertainment marketing needs.

The role of prop masters within the business of product placement has changed considerably over the years, as decisions made about what props are used are significant for potential placement deals. However, it is also important to point out that decisions about product placement are made not only by producers and other management personnel, but also by "above-the-line" talent, in other words, writers, directors, and the stars.

Talent agencies also are becoming involved with product placement deals. Not only are agencies aware of film projects from their conception, they represent writers who can add a product or company name to a script in the first draft and then sell that placement to corporate clients. In addition, directors represented by the agencies can be encouraged to feature the product prominently in the film.

Advertisers. Major consumer companies such as Anheuser-Busch, Ford, Kodak, AT&T and Coke(the "brands", as Variety calls them) have made a major commitment to product placement and other forms of entertainment marketing. AT&T, for instance, had 500 clear placements in 1993, while Ford had nearly 350 placements worldwide that same year.

Corporations sometimes arrange their own placements, thus following an "in house" model. Some corporations, particularly large consumer goods companies, operate entertainment marketing offices, usually based in LA, which deal directly with the studios. Deals are arranged individually or through long-term deals, as in the example of the Universal/Toyota arrangement discussed previously.

Advertisers also are becoming more directly involved in creating entertainment, or as Variety calls it, advertainment. Companies participating in such original, reality-based or scripted entertainment have included BMW, Chrysler, ford, General Motors, Home Depot, Nike, and Quicksilver, among others.

In fact, in late 2002, Universal Pictures formed a Brand Group that, among other things, would be involved in creating branded entertainment around the studio's films. One project was to produce a reality car-improvement show for a cable network like TLC that would be based on The Fast and the Furious sequel (2 Fast 2 Furious), which could be sponsored and paid for by auto repair chain Pep Boys.

Numerous problems emerge with such projects, which means that they can become stuck in development hell. While producers and studios are anxious to find co-financing partners for films, they are sometimes viewed as only interested in a brand’s money without a promotional partnership. Advertisers have their own impression of how the industry works and are often surprised at film costs. In addition, deals can become complicated with too many power players involved. As a Variety writer explains:

Film creatives behind projects don't want to be dictated to by a brand who wants more shots of its car's front grille or thinks the tires are too muddy. Then there are the egos. Although Hollywood's tenpercenteries have partnered up with Madison Avenue's ad agencies, a clash of egos on both coasts exists, creating a power struggle that focuses discussions more around clout than on creativity.

Meanwhile, some advertisers are sponsoring short films featuring their products shown on the Internet. Examples include BMW, Skyy Vodka, Ford, Chrysler, and Perrier.

Product placement agencies. Most of the corporations interested in product placement opportunities use a placement agency to deal with the studios. Companies may pay a fee of $7,500 to $100,000 per year, althought the average is around $24,000. Agencies usually ask for one to two-year contracts. Most of the successful product placement agencies today were started less than 15 years ago and many of them even more recently. The vast majority of agencies are located in the Los Angeles area.[...]

As an industry analyst observes: "The product placement agent doesn't represent people; he represents products: Mars bars for candy, Dr. Pepper for soda, Coors for beer, Ford for cars, and so forth" (Litwak, 1986). In other words, the product placement agent spends his time looking for suitable scripts and placements for products.

Placement agencies often offer more than product placement, however, with many offering a full array of entertainment marketing services, ranging from coordinated promotions with entertainment themes to seeking licensing opportunities with entertainment companies. One of the top agencies is actually a public relations firm that specializes in the entertainment business.

Agency executives work similarly to the studio executives in that they receive scripts, which they review for product placement and other entertainment marketing opportunities for their clients. They then contact the studios and their clients with these ideas. Next, they negotiate the deals on behalf of their clients. Finally, they present their clients with "visibility reports" which detail the results of their product placement efforts.

The advantages of using a product placement agent may seem obvious. As a product placement company boasts on its website: "They need you. You need them. We make it all happen" (PropStar Placements). Agents handle the negotiations for cash payments and/or promotional campaigns for products connected with a film. At the minimum, agents arrange for release forms for the product's use in a film. While including a product in a film without permission is not necessarily a violation of manufacturer's rights, written permission avoids a possible lawsuit.

Agents also can obtain samples or "freebies" that can be used as props or by the production company during a shoot, obviously lowering production costs. Other more costly items (such as cars, jewelry, etc.) can be loaned during a film's production.

ERMA. Product placement has grown so much that there is a trade organization to promote the business. The Entertainment Resources & Marketing Association (ERMA) was founded in 1991, with membership including the major film studios, production companies, product placement agencies, and corporate marketers. One of ERMA's executives explains:

We've encouraged people to come out of the closet about product placement. Whereas only five years ago people were hiding. They thought what they did was wrong and that the public was against it. They found out the public is actually for it. The production people are for it. The companies are for it. There is really only a very small segment of people who are opposed to product placement. (cited in Turcotte, 1995).

It's not clear who is referred to as that "very small segment of people", but it is clear that there is far more commercialization going on in Hollywood films these days.

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[Posted March 6, 2006]