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NBC May Be the Place For Product Placement


Media buyers say that the pending marriage between General Electric's NBC and various Vivendi Universal entertainment assets would create tantalizing opportunities for the country's biggest marketers to place their products on some of TV's most popular shows.

The two companies announced Tuesday their intention to create a new entity that would be 80%-owned by GE. While the arrangement still could fall through, Madison Avenue is intrigued by the prospect of a larger NBC peacock. Marketers struggling with increased advertising clutter, audience fragmentation and the proliferation of ad-skipping devices such as TiVo say the new entity could spur more creative ways of reaching audiences.

"You could see an alliance like that take on new dimensions, not just buying spots and dots from cable and broadcast partners," says Bob Flood, an executive vice president and director of national electronic media for Publicis Groupe's Optimedia, a media-services firm that represents Bayerische Motoren Werke and New York Life, among others.

The partnership would create a formidable marketing vehicle. Media buyers would have one entity with which to negotiate when placing ads on the NBC broadcast operation, as well as cable networks including MSNBC, CNBC, USA, Sci Fi, Bravo and Trio. NBC also would control Universal Pictures, a movie studio, and Universal Television, which produces and develops television programming, such as the family of "Law & Order" shows -- a significant part of NBC's prime-time lineup. And for marketers eager to reach the Hispanic audience, NBC owns Spanish-language TV broadcaster Telemundo.

While media consolidation is always a hot topic, media buyers don't seem overly concerned about the potential clout of a new NBC behemoth. After all, they note, they already have to contend with AOL Time Warner, Walt Disney and Viacom. "I'm not sure it dramatically changes the landscape," says Tim Spengler, an executive vice president and director of national broadcast for Interpublic Group's Initiative, a media-services firm with clients including Home Depot and BellSouth.

There also is little fear on Madison Avenue that the teaming of these two entities might lead to higher media prices. "Other similar media combinations haven't impacted prices," says Debbie Myers, vice president of media services at Yum Brands' Taco Bell.

Of course, one reason Madison Avenue may be sanguine is that the deal promises the opportunity to weave products into the fabric of NBC's high-caliber programs. "Hopefully, NBC will be willing to offer advertisers early access to content in terms of offering marketers product placement," says Laura Caraccioli-Davis, vice president, director of Publicis's Starcom Entertainment. In 2001, Starcom used its buying power to integrate the Toys "R" Us brand into the "Good Morning America" show on Walt Disney's ABC.

Marketers are eager for more opportunities like "Pepsi Smash," a branded program on AOL Time Warner's WB, now that NBC and Vivendi Universal have reached a tentative deal.

Media buyers say that NBC has been slow to offer up such elaborate deals, and point out that Viacom -- owner of CBS, UPN, the Paramount movie studio and cable networks like MTV and Nickelodeon -- has been more aggressive because of its breadth of ownership. Others note that AOL's youth-focused WB network has been at the forefront of offering advertisers the ability to integrate their brands into TV shows.

Such ad deals are viewed as the next big development, as they keep open a pipeline to viewers prone to changing the channel, and help producers keep costs down. "I don't see going away from the 30-second spot in the foreseeable future, but I do think you'll add product integration on a case-by-case basis," says Randy Falco, group president of NBC Television Network.

Roy Salter, a managing principal of Brand Advisors, a Los Angeles firm that places valuations on brands that are integrated into content, says entertainment companies have gotten more adept at such marketing. Every element of a program's scenery -- from tables to the food placed on them -- is ripe with potential, he says.

Of course, not everyone is thrilled. "It's a good thing for the business of advertising, but not necessarily for the art of television," says Robert Thompson, director of the Center for the Study of Popular Television at Syracuse University. "You want the decision of what products are put in shows to be the writers' -- and not driven by advertisers."

Posted on aef.com: September 8, 2003

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