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UPPSALA UNIVERSITY Magister Thesis 30 ECTS Department of Business Studies January 2008 Business Administration and Economics Programme Insert Your Logo Here A Comparative Study of the Television Spot and Product Placement in Terms of Attention, Control and Credibility in Finland Authors Thesis Supervisor Heta Mattila 850807-1167 Nils Kinch Ida Teeriaho 850209-T005

Abstract The aim of this thesis is to study how television spot and product placement compare in terms of gaining the target audience s attention, having control over the marketing message and creating credibility for a product or a brand. The context of the study is Finnish television from advertisers point of view. Three major theories used are: AIDA, Generic Communications Process and Two-Step Communications. Twelve hypotheses are built based on the theories, the main hypothesis being: Although a marketing message sent through product placement gains the target audience s attention better and creates higher credibility for a product or a brand than a television spot, advertisers are keener on sending the marketing message through a television spot than through product placement because they have more control over the message in a television spot and because it historically has a more stable legal position. Five experts on the field were interviewed to test the hypotheses. In general, the hypotheses were supported. Keywords Product Placement, Television Spot, Attention, Control, Credibility, AIDA, Generic Communications Process, Two-Step Communications 2

Table of Contents 1 INTRODUCTION...5 1.1 PROBLEM STATEMENT...5 1.2 AIM...7 1.3 DISPOSITION...7 2 ABOUT THE SUBJECT AND THE SOURCES...9 2.1 CHOICE OF SUBJECT...9 2.2 LITERARY SOURCE CRITICISM...10 2.2.1 Choices for the Chapter Definitions and General Comparison...11 2.2.2 Choices for the Chapter Attention, Control and Credibility...13 3 INSTITUTIONAL CIRCUMSTANCES...15 3.1 LAWS AND REGULATIONS...15 3.1.1 Television Spot...15 3.1.2 Product Placement...15 3.2 TO SUM UP...17 4 DEFINITIONS AND GENERAL COMPARISON...18 4.1 TELEVISION SPOT AND PRODUCT PLACEMENT IN MARKETING MIX AND PROMOTION MIX...18 4.2 DEFINITIONS...19 4.2.1 Advertising...19 4.2.2 Public Relations...20 4.3 PROS AND CONS...22 4.3.1 Television Spot...22 4.3.2 Product Placement...22 4.4 TO SUM UP...24 5 ATTENTION, CONTROL AND CREDIBILITY...25 5.1 AIDA...25 5.2 ATTENTION AND CONTROL WITH GENERIC COMMUNICATIONS PROCESS...27 5.2.1 Gaining Attention despite the Noise the Television Spot and Product Placement Face...28 5.2.2 Control Over the Message...30 5.3 CREDIBILITY WITH TWO-STEP COMMUNICATIONS...32 5.4 TO SUM UP...35 5.5 HYPOTHESES...36 6 INTERVIEWS...38 6.1 CHOICE OF METHOD IN INTERVIEWS...38 6.2 CHOICE OF INTERVIEWEES...40 6.3 INTERVIEWS...42 6.3.1 Pirjo Tiainen, MTV...42 6.3.2 Ritva Hanski-Pitkäkoski, Association of Finnish Advertisers...43 6.3.3 Milla Bruneau, Metronome Film & Television...44 6.3.4 Teija Soininen, Dagmar...45 6.3.5 Mikko Aitkoski, OMD Finland...46 7 RESULTS AND ANALYSIS...48 7.1 ATTENTION...48 7.1.1 The Importance of Gaining Attention...48 7.1.2 The Noise the Television Spot and Product Placement Face...48 7.1.3 Summary...51 7.2 CONTROL...51 7.2.1 The Amount of Control...51 3

7.2.2 Different Ways of Measuring...54 7.2.3 Institutional Circumstances...56 7.2.4 Summary...58 7.3 CREDIBILITY...58 7.3.1 Using Opinion Leaders and Opinion Formers to Create Credibility...58 7.3.2 Using Stories to Create Credibility...60 7.3.3 The Awareness of Whether the Marketing Message Has Been Paid For or Not...60 7.3.4 Summary...62 7.4 TO SUM UP...63 8 CONCLUSIONS...64 9 FURTHER RESEARCH...67 REFERENCES...68 PRINTED REFERENCES...68 INTERNET REFERENCES...70 INTERVIEW REFERENCES...71 APPENDICES...72 4

1 Introduction In this chapter, the problem statement is presented. In addition, the aim of the thesis is presented and the disposition is discussed. 1.1 Problem Statement Believe me, if you jam advertising down their throats and pack their eyes and ears with it, you will build up a resentment that will in time damn your business. (Carl Laemmle, president of Universal Studios in 1931 in Lehu 2007, p. 17) Has this threat been realised? As of the beginning of October 2007, all of the advertising space on Finland s biggest commercial television channels was sold out until the end of the year (Jauhiainen 2007, p. 3). Advertisers seem still to prefer the television spot and have very strong faith in it. Several authors, however, declare the television spot dead. Instead of television spots, they suggest new and innovative ways of marketing to get through all the media noise that competes for the consumers attention. As competition gets harder and harder and customers more and more demanding, finding new solutions to marketing is not an alternative to be considered, it is a prerequisite for survival (Kotler et al. 2002, p. 391). One such solution according to the authors is product placement. The viewers of a program or a film can relatively precisely be targeted thus making it easy to craft appropriate marketing messages. Products and brands can be written in to the script of a television show to capture the target group s attention and to penetrate through the competing and surrounding noise. As the amount and innovativeness of competitors grow, the audience is subject to thousands of marketing messages every day trying to reach their attention (Jaffe 2005, p. 12). They have no other option but to filter away a good amount of these making it even more essential for the advertiser to manage to penetrate all this noise. In addition to similar marketing messages competing of the receiver s attention, new technologies and 5

innovations also demand their concentration. The Internet, downloading, streaming, Digital Video Recorder (DVR), zapping, digital television and DVDs are all examples of such new technologies. Why do advertisers still prefer the television spot to product placement even if the television spot is declared dead? One reason might be that product placement is considered hard to control when it comes to the message reaching the viewer as it is intended to. The amount of actors involved in the process is smaller when it comes to the television spot than with product placement. The audience is also growing ever more critical of the marketing message credibility is more important than visibility (Smith & Taylor 2002, p. 75-6). The receiver has to truly believe in the message for a desire for it to be born. There are many well-known examples of product placement but the list that Lehu (2007, p. 106-1) presents in his book Branded entertainment is startling: T he Microsoft Xbox is played exclusively in Two and a Half Men. People eat Oreo cookies and use their American Express Cards in Friends. Nokia mobile phones are often present in the series Alias, as are the imposing Hummer vehicles in CSI: Miami, M&M vending machines in The West Wing, ipods and Levi s jeans in The Office, Samsung flat screens in Dark Angel and The District. Mitel communications solutions are used in Boston Legal and ER. Burger King is integrated into Arrested Development, Philips and Sprint are partners of 24, the Financial Times is must-have reading material in Ally McBeal, Tic-Tac sweets help the lawyers of the Donnell, Young, Dole & Frutt firm relax in The Practise, Campbell s Soup is cited in 7 th Heaven, the T-Mobile operator takes care of communications in Veronica Mars, and Buick cars are praised by Eva Longoria in Desperate Housewives. Six Feet Under prefers the Toyota Prius and Prison Break Yaris or Rav-4, while a Chrysler 300C was promoted in an episode of ER. The NCIS agents work on Dell computers, whereas Carrie Bradshaw uses an Apple laptop in Sex and the City. This is not forgetting Tropicana, Nissan, Cadillac, Ford, Dunkin Donuts, Motorola, Hermès, FedEx, Toblerone, Coca-Cola, Pony, Philips and even Rémy Martin, Stolichnaya and Marlboro in The Sopranos. (Ibid.) One of the classic examples of a successful television spot, on the other hand, is the Apple commercial that aired during a Super Bowl commercial break in 1984. Because the commercial was shown only once, it created an air of exclusivity. People wanted to see it again but were not able to do so during a regular commercial break. As a result, the spot received considerable amounts of free airtime as news channels showed it. The last frame of the spot displayed the Apple logo that is still used 20 years later. Over 70,000 Macs were sold within 100 days and a cult status was created for the commercial. (Hughes 2005, p. 97; B to B 2004, p. 42.) Another well-known television spot campaign is mobile 6

operator DNA s Elämä on (Life is) in Finland the catch phrase of the commercial is still, several years later, in everyday use especially by the youth. And who could forget Coca- Cola s yearly Christmas commercials with Santa Claus, dressed in red and white, which nowadays represents the best-known image of Father Christmas in the Western world? The introduction of a new European Union directive known as Television without Frontiers in all the European Union member states by the end of 2008 has made the phenomenon product placement an especially hot topic. The directive liberates the use of product placement while protecting the audience the viewers are required to be informed if a program contains product placement. All of these above mentioned facts and changes that are going on raise questions. Why are traditional television spots still so popular? Are they still effective? Is product placement a better way to capture the audience s attention? How can the advertiser be successful in penetrating the noise? How can they control the process of the marketing message reaching the receiver? Are advertisers wary of using product placement? If so, why? Do the television spot and product placement offer the same amount of credibility for a product or a brand? What are the positive and negative sides of television spot and product placement? Which is a better marketing channel for advertisers, the television spot or product placement? How do the institutional circumstances affect the Finnish advertisers? 1.2 Aim The aim of this thesis is to study how the television spot and product placement in television compare in terms of gaining the target audience s attention, having control over the marketing message and creating credibility for a product or a brand. The context of the study is Finnish television from advertisers point of view. 1.3 Disposition 1 Introduction In this chapter, the problem statement is presented. In addition, the aim of the thesis is discussed and the disposition is presented. 2 About the Subject and the Sources In this chapter, the choice of subject is explained. Also, literature is presented, as well as source criticism. 7

3 Institutional Circumstances In this chapter, laws and regulations in the European Union and in Finland are described partly to create a general picture of the situation that advertisers are acting in and partly because there is a change in action. A new directive that all European Union countries will adopt by the end of 2009 will change the conditions for product placement in television programs. 4 Definitions and General Comparison In this chapter, different theories that define and set frames for the television spot and product placement are described. Marketing Mix and Promotion Mix as well as the definitions of different concepts were chosen to show where television spot and product placement fit in and how they differ. Also, pros and cons are discussed to give a general picture of both the television spot and product placement. 5 Attention, Control and Credibility In this chapter, the theories that study these three dimensions toward the television spot and product placement are investigated. Attention refers to noticing and paying attention to the marketing message. Control refers to how much control the sender has on the marketing message. Credibility refers to how credible the marketing message is experienced by the receiver. These three theories are the main theories of the thesis and the base for the hypotheses. 6 Interviews In this chapter, the methodology of the empirical study is explained. The interviews are presented briefly. 7 Results and Analysis In this chapter, the interview results are studied and analyzed with the help of the theories and the hypotheses. 8 Conclusions In this chapter, conclusions are drawn on the basis of the theories, the interviews and the analysis. 9 Further Research In this chapter, suggestions on further research on the subject are presented. 8

2 About the Subject and the Sources Insert Your Logo Here In this chapter, the choice of subject is explained. Also, literature is presented, as well as source criticism. Three methodology books have been used as references when writing this thesis: Att utreda, forska och rapportera by Eriksson and Wiedersheim-Paul, Forskningsmetodik by Holme and Solvang and Uppsatshandboken by Strömquist. 2.1 Choice of Subject We have long been interested in product placement. The idea for us to investigate product placement was born when we were watching television together. What especially caught our eye was the coverage that Absolute Vodka received in the television show Sex and the City. In the show, one of the supporting characters is a model for the vodka brand and the story in a few episodes of the show revolves partly around his rise to stardom. One of the ads that he features in is a huge billboard on Times Square, showing the model naked with an Absolut Vodka bottle strategically placed with the text Absolut Hunk written on the ad. This particular example was only one of many that made us want to know just how product placement works. Gradually we started noticing product placement everywhere. Was all of this paid for? Did other people notice the product placements as well? Another reason for why we chose to compare traditional television marketing with just product placement is that advertisers usually take the money for product placement from television advertising budget (Lehu 2007, p. 33-4). We were interested to know what the situation in Finland was. According to many authors, the television spot is dead and product placement is one alternative for advertisers to consider. We wanted to investigate how advertisers in Finland felt about this. The main purpose of both the television spot and product placement is commonly considered to be the creating of awareness for a product or a brand. As such, these different concepts can justifiably be compared. As we both study marketing, we wanted to use our knowledge of this area, and to consider the television spot and product placement from the advertisers point of view as opposed to, for example, the television channels, production companies or consumers point of view. It was, in fact, our original intent to concentrate on the television channels 9

strategies when it comes to product placement but preliminary interviews showed that television channels have little knowledge of product placement. We, thereafter, took the decision to change the viewpoint to advertisers, making the thesis more interesting while also providing television channels with the information. The three dimensions of attention, control and credibility were chosen to be studied because while preparing for the writing of the thesis, these three struck us as the most important factors when it comes to differences between the television spot and product placement. These three dimensions are especially interesting for advertisers with regard to how the marketing message can successfully reach the receiver. We chose to use the theories of Marketing Mix (Kotler et al. 2002, p 97, 626), Promotion Mix (Pickton & Broderick 2005, p. 543), AIDA (Strong 1925, p. 76; Pickton & Broderick 2005, p. 86, 89, 298, 600), Generic Communications Process (Kaijansinkko 2003, p. 12; Smith & Taylor 2002, p. 73-4; Pickton Broderick 2005, p. 6-7) and Two-Step Communications (Smith & Taylor 2002, p. 75) because these appeared highly relevant when we were looking for information at the beginning of the writing process. We have chosen to investigate television spots and product placement in the context of Finnish television. As both of us have grown up in Finland, it is logical for us to use the knowledge that we already have of this market. Product placement is a relatively new phenomenon in Finland. The Finnish mobile phone manufacturer Nokia has used product placement for a long time and is often used as a textbook example of product placement in international literature. It is our opinion that Finland can be used as an example of a European Union country when it comes to the new directive that is discussed. It should be pointed out, however, that research on this area should be done in each country separately to gain more accurate results. 2.2 Literary Source Criticism Sources were mainly found from the US, as product placement is a relatively new phenomenon in Finland. A larger amount of Finnish sources would have been preferable, especially regarding academic sources. 10

For the theories used, the actuality of the sources has been secured through using, for the most part, sources that have been published in the recent few years. Two sources older than fifty years were used to understand the original theories. However, revised, new versions of thesis theories were used in the actual thesis. A few sources older than five years were used but then the age of them was taken into consideration and the information was used carefully. In the thesis, the main theories all have several sources to secure that they were not based merely on the opinion of the author(s) of one particular source. What should be noted is that some of the literacy sources were clearly partial towards their own agenda. Life After the 30-Second Spot by Jaffe was, for example, strongly biased against the television spot. This has been taken into consideration when using the sources in question. Some of the theories sources that refer to the original version of the theory are the same. For this reason, the original theory has been looked up and studied. To ensure the authenticity of the sources, Internet encyclopaedias have not been used as sources, merely as help tools to find reliable sources. Search engines such as Google have also only been used to locate reliable sources. Mainly academic publications have been used as sources for articles. Search engines that have been used to find sources for the thesis have all been found through Uppsala university s library resources: Libris, DISA, Business Source Premier and AffärsData. When articles from magazines or newspapers have been used, the articles have been found in well known, respected and in politically independent publications such as Helsingin Sanomat, Dagens Nyheter or The New York Times. 2.2.1 Choices for the Chapter Definitions and General Comparison The following are primary sources for this chapter: Kotler, Armstrong, Saunders and Wong (2002): Principles of Marketing; Pickton & Broderick (2005): Integrated Marketing Communications; Kaijansinkko (2003): Product Placement in Integrated Marketing Communications Strategy; Jobber & Fahy (2003): Foundations of Marketing; Jaffe (2005): Life After the 30-Second Spot: Energize Your Brand with a Bold Mix of Alternatives to Traditional Advertising; Balasubramanian (1994): Beyond Advertising and Publicity: Hybrid Messages and Public Policy Issues (Journal of Advertising) and Bornander, Heed and Ramstedt s (2007) Kommer produktplacering att ersätta traditionell 11

tv-reklam? In addition, some other sources have been used but to such a small degree that they are not discussed here. Principles of Marketing by Kotler et al. is a textbook for university students. Philip Kotler is a distinguished professor of International Marketing at Northwestern University. He has published several books and articles that are considered cornerstones of the marketing literature. Pickton & Broderick s Integrated Marketing Communications is a textbook for university students at different levels. David Pickton is Head of the Marketing Department at De Montfort University and Amanda Broderick is Senior Lecturer in Marketing and Head of Research in the Marketing Group at Aston Business School. The book describes the process, the planning and the different areas of integrated marketing communications. As textbooks usually do, it bases on the use of practical examples as well as several articles that are published in acknowledged academic journals and well-known books. Kaijansinkko s Master s Thesis Product Placement in Integrated Marketing Communications Strategy (2003) from Lappeenranta University of Technology in Finland presents the existing theories for integrated marketing communications and product placement. The thesis presents a wide collection of theories and bases on an extensive list of credible sources. It can, in our opinion, be considered credible. Foundations of Marketing by Jobber & Fahy (2003) is a textbook for marketing students with an aim of being concise and returning to the core foundations of marketing. It can, as a textbook, be compared to that of Kotler et al. (Principles of Marketing) it is sometimes used in its place in undergraduate marketing courses. David Jobber is Professor of Marketing and Head of the Marketing Group at the University of Bradford School of Management and John Fahy is Professor of Marketing at the University of Limerick. The book Life After the 30-Second Spot: Energize Your Brand with a Bold Mix of Alternatives to Traditional Advertising (2005) by Jaffe is deeply emotionally charged. Joseph Jaffe has a long career in marketing, he is president of crayon, and has worked with companies such as The Coca-Cola Company, American Airlines and Motorola. Jaffe is very strongly of the opinion that the television spot is dead and should not be used in the Promotion Mix anymore. The content of the book bases strongly on Jaffe s own opinions 12

and is, in effect, highly biased. However, he is an experienced marketing professional and his opinions have, therefore, credibility. Beyond Advertising and Publicity: Hybrid Messages and Public Policy Issues (1994) by Balasubramanian was published in a renowned publication Journal of Advertising. Siva K. Balasubramanian is Associate Professor of Marketing, College of Business and Administration, Southern Illinois University at Carbondale. Balasubramanian s article deals with a growing genre of marketing communication hybrid messages that creatively combine key advantages inherent in advertising and publicity messages. Even though the article is relatively old, as it is published in 1994, we wanted to use it as a source because it is very well known and often referred to in other articles and books. Bornander, Heed and Ramstedt s Bachelor s Thesis (2007) Kommer produktplacering att ersätta traditionell tv-reklam? (Will Product Placement Replace the Traditional Television Commercial?) describes product placement and television advertising from a media consultant s point of view. It bases on several sources mainly academic articles, as well as qualitative interviews with media consultants. Bornander et al. was chosen as a source because the bachelor s thesis handles similar questions as this thesis and is written in Sweden a close neighbour of Finland which makes it useful for our purposes. 2.2.2 Choices for the Chapter Attention, Control and Credibility The following literature is used in this chapter: the already described Pickton & Broderick (2005): Integrated Marketing Communications; Shannon & Weaver (1949): The Mathematical Theory of Communication; Smith & Taylor (2002): Marketing Communications and Lehu (2007): Branded entertainment: Product Placement & Brand Strategy in the Entertainment Business. Once again, several other sources have been used but to such a small degree and only to support and complement the main sources that they are not discussed here. Shannon & Taylor s book The Mathematical Theory of Communication (1949) describes different mathematical models for communication. Claude E. Shannon was a research mathematician at the Bell telephone laboratories and Donner professor of science at the Massachusetts institute of technology. Warren Weaver was a director of the division of natural sciences at the Rockefeller Institute, and was science consultant, trustee, and vice 13

president at the Sloan-Kettering Institute for Cancer Research. The book is widely regarded as a classic for communication studies but was originally intended for social scientists and for language students. Smith & Taylor s textbook Marketing Communications An Integrated Approach (2002) was first published in 1993 and is an international best seller. P. R. Smith is a known marketing author and a CEO of Multimedia Marketing.com. Jonathan Taylor lectures in Marketing at the University of North London and is chairman of Visionpoint. The book aims to give light to the aspect that marketing communications are becoming ever more integrated and creates a framework on the subject. It bases on academic sources and practical examples. Branded entertainment: Product Placement & Brand Strategy in the Entertainment Business by Lehu (2007) is newly published and examines a phenomenon that is relatively new in Europe product placement. Jean-Marc Lehu is Associate Marketing Professor at Panthéon Sorbonne University. He is also a consultant in marketing and communications. The book is formed as a kind of textbook it is a collection of real-life examples of product placement and aims to give practical suggestions on how to use product placement. It bases on different well-known academic articles as well as other sources. 14

3 Institutional Circumstances In this chapter, laws and regulations in the European Union and in Finland are described partly to create a general picture of the situation that advertisers are acting in and partly because there is a change in action. A new directive that all European Union countries will adopt by the end of 2009 will change the conditions for product placement in television programs. 3.1 Laws and Regulations Laws and regulations in the European Union and in Finland affect the television spot and product placement because they set the framework for how they can be used. 3.1.1 Television Spot In the Act on Television and Radio Operations in the Finnish laws, it is stated: Television and radio advertising shall be readily recognizable as advertising and teleshopping as teleshopping. They shall be kept separate from other parts of the programme service by optical or acoustic means. (Act on Television and Radio Operations (744/1998; amendments up to 1251/2006 included) section 21) Advertising and teleshopping spots shall be inserted between programmes in television programme service. [ ] The transmission of feature films and films made for television as well as of other audiovisual works, provided their scheduled duration is more than 45 minutes, may be interrupted once for each period of 45 minutes. A further interruption shall be allowed if their scheduled duration is at least 20 minutes longer than two or more complete periods of 45 minutes. (Ibid. section 22) There are also strict limitations on, for example, advertisements of alcohol and tobacco products (Ibid. section 24) as well as discriminatory advertisement (Ibid. section 23). Also, minors are protected by prohibitions against moral or physical detriment toward them (Ibid. section 25). The proportion of advertising spots and teleshopping spots within an hour is not allowed to exceed 12 minutes (Ibid. section 29). 3.1.2 Product Placement Directive of the European Union and of the Council Amending Council Directive 89/552/EEC (1) coordinates certain broadcasting activities. Also, product placement is 15

defined more clearly than before and the directive gives new regulations for that phenomenon (Directive of the European Union and of the Council Amending Council Directive 89/552/EEC (1) article 3f). According to article 3f, paragraph 1: Product placement shall be prohibited. However, paragraph 2 states that: product placement shall be admissible, unless a Member State decides otherwise, in cinematographic works, films and series made for audiovisual media services, sports programmes and light entertainment programmes; or cases where there is no payment but only provision of certain goods or services for free such as production props and prizes, with a view to their inclusion in a programme. Nonetheless, product placement should not directly encourage the purchase or rental of goods or services, in particular by making special promotional references to those goods or services (Directive of the European Union and of the Council Amending Council Directive 89/552/EEC (1) article 3f:2b). Furthermore, viewers must be informed of the existence of product placement there has to be clear information of the program containing product placement in the beginning of the program (Ibid. article 3f:2c). Children s programs should not include product placement (Ibid. article 3f:2), and the product placement of tobacco products or cigarettes and medicinal products available only on prescription are also prohibited (Ibid. article 3f:3). Surreptitious product placement is still prohibited (Ibid. (45)). Product placement should not affect editorial independence (Ibid. article 3f:2a). The reasoning behind the new directive is: Given the increased possibilities for viewers to avoid advertising through use of new technologies such as digital personal recorders and increased choice of channels, detailed regulation with regard to the insertion of spot advertising with the aim of protecting viewers is no longer justified. This directive [ ] gives flexibility to broadcasters with regard to its insertion where this does not unduly impede the integrity of programmes. (Ibid. (42)) This directive does not increase the amount of advertising. The limit of 12 minutes per hour remains applicable (Ibid. (44)). Finnish law has historically prohibited product placement altogether. The Finnish Consumer Agency recognizes the changes in law that are about to happen but are 16

preserving the established principles, such as the distinction of advertisements, even in the future as a central pillar of marketing (Kuluttajavirasto 2006). According to several articles, the new directive makes the rules more clear and enables the use of product placement (Finska Notisbyrån 2007; Hufvudstadsbladet 2007; Carp 2007). 3.2 To Sum Up The television spot is a well-established and clearly defined institution in Finnish television. It is a marketing channel that advertisers know how to use. Product placement, on the other hand, is relatively unused in Finland. It has historically been prohibited and has therefore not often been used. The laws and regulations have been unclear, and this surely is a reason why advertisers have been wary of it. As the changes in the law are executed, we believe that the status of product placement will become more established. It will, most likely, become a notable alternative to the television spot. 17

4 Definitions and General Comparison In this chapter, different theories that define and set frames for the television spot and product placement are described. Marketing Mix and Promotion Mix as well as the definitions of different concepts were chosen to show where television spot and product placement fit in and how they differ. Also, pros and cons are discussed to give a general picture of both the television spot and product placement. 4.1 Television Spot and Product Placement in Marketing Mix and Promotion Mix Marketing Mix consists of 4-Ps product, price, place and promotion (Kotler et al. 2002, p. 97). Promotion can further be divided into sub-categories these are considered the Promotion Mix. Different authors recognize different numbers of categories but the following five are the most common: advertising, personal selling, sales promotions, public relations and direct marketing. (Kotler et al. 2002, p. 97, 626; Pickton & Broderick 2005, p. 543) (See figure 1) MARKETING MIX PRODUCT PRICE PROMOTION PLACE DIRECT MARKETING ADVERTISING PUBLIC RELATIONS PERSONAL SELLING SALES PROMOTIONS TELEVISION SPOT PRODUCT PLACEMENT Figure 1: Television Spot and Product Placement in Marketing Mix and Promotion Mix Kotler et al. 2002, p. 97, 626; Pickton & Broderick 2005, p. 543; Kaijansinkko 2003, p. 10 As can be seen in this figure, the television spot is placed under advertising and product placement under public relations. There are different opinions on which promotion tool product placement should be placed under. The promotional tools are, in fact, often 18

interdependent and it can be hard to draw lines between different types of tools. (Pickton & Broderick 2005, p. 543.) For example, product placement contains characteristics of advertising, public relations and publicity but cannot be placed under any of these categories alone. In this thesis, we have decided to define product placement as part of public relations because, in our opinion, that is the tool that has most in common with product placement. 4.2 Definitions 4.2.1 Advertising Kotler et al. (2002, p. 819) define advertising as any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. Crosier s (in Pickton & Broderick 2005, p. 594) definition of advertising is communication via recognisable advertisement placed in a definable advertising medium guaranteeing delivery of an unmodified message to a specified audience in return for an agreed rate for the space or time used. This is an interesting and important definition as it clearly states that product placement or publicity differs from advertising because the advertiser does not have clear control over the end result in these cases. 4.2.1.1 Television Spot Television spot is a traditional form of television advertising that is currently popular (Jauhiainen 2007, p. 3). The television spot is broadcast during a commercial break, in between programs or in the middle of a program. The commercial break, in turn, begins and ends with an announcement that the break is commencing or ending. Television networks sell the slots of the commercial breaks. (Bollapragada & Garbiras 2004, p. 337) The Directive of the European Parliament and of the Council Amending Council Directive 89/552/EEC article 1 (k) defines television advertising as follows television advertising means any form of announcement broadcast whether in return for payment or for similar consideration or broadcast for self-promotional purposes by a public or private undertaking or natural person in connection with a trade, business, craft or profession in 19

order to promote the supply of goods or services, including immovable property, rights and obligations, in return for payment. In this thesis, we define television spot as: a form of advertising in television by a public or private undertaking or natural person in connection with a trade, business, craft or profession in order to promote the supply of goods or services. It is a short commercial message that can last from a few seconds to a few minutes. 4.2.2 Public Relations Kotler et al. s (2002, p. 830) description of public relations is: Building good relations with the company s various publics by obtaining favourable publicity, building up a good corporate image, and handling or heading off unfavourable rumours, stories and events. Major PR tools include press relations, publicity, corporate communications, lobbying and counseling. 4.2.2.1 Product Placement Product placement is a relatively new phenomenon but many definitions of it can be found. One of the early ones is the following by Steortz: Product placement is inclusion of a brand name product, package, signage, or other trademark merchandise within a motion picture, television show or music video. (Immonen in Kaijansinkko 1998, p. 20) This definition is from 1987 and quite accurate for that time when product placement was only found in these media as opposed to today when it can also be found in, for example, books and computer games. In 1995 Vollmers defined product placement as intentional and compensated inclusion of a product or a service (product, package, logo, trademark, verbal mentioning or an advertisement of a product) in an entertainment production (Immonen in Kaijansinkko 1998, p. 20). Here, also the aspect of product placement as a paid channel among others is included, as well as the notion of it being used in whatever kind of entertainment production. It is one of the indirect marketing channels that can be used to reach the customer (Söderlund 1998, p. 74-5). The Directive of the European Parliament and of the Council Amending Council Directive 89/552/EEC article 1 (k) defines product placement as follows: product placement means any form of audiovisual commercial communication consisting of the inclusion of 20