The news: Amazon and NBCUniversal introduced advertising innovations for their streaming services at Monday’s IAB NewFronts.
The impact: While Amazon didn't 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.
Zoom out: Product placement has been a fixture of television advertising since its debut, but digital and streaming TV is rethinking the concept.
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. That’s 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.
Will it work? In-scene ads, shown on billboards in the background, are not particularly obtrusive. But marketers may find it difficult to engage customers if the brand is only shown in a brief period.
Tread carefully: While "product placement has the potential to explode," says Beth Fossen, assistant professor of marketing at Indiana University, marketers must tread carefully and not be too overt. That’s because viewers are averse to "persuasion knowledge," when they become overtly aware someone is trying to sell them something. If VPPs become less subtle, they have the potential to disrupt the viewing experience and even backfire.
What it means: The flexibility afforded by dynamic product placements is vast; as this technology proliferates and expands, expect more brands to experiment within this space to break through the cluttered advertising landscape.