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Upside in Global Market for Product Placement

Global paid product placement grew 37.2 percent to $3.36 billion in 2006 and is forecast to grow 30.3 percent to $4.38 billion in 2007, driven by relaxed European regulations, emerging Asian markets and shifting American models, according to research released today by PQ Media.

While the United States remains the largest global market for product placement, accounting for two-thirds of spending, growth will decelerate over the next four years, although remaining in the double-digits.

Meanwhile, growth in the European and Asian placement markets will accelerate going forward, as legal restraints are loosened and global brand marketers move to capitalize on emerging opportunities in these regions, according to the PQ Media analysis.

Key drivers of global product placement growth in 2007 and beyond include the relaxation of rules governing paid television placements in European countries through the “Television without Frontiers” directive, particularly in the United Kingdom, Spain and Italy; the evolution and growth of product placement markets in Asia, especially in China, India and Australia; and the continuing transition from non-paid to paid placement models in the Americas, primarily in the United States, Mexico and Brazil.

“"As a new media order has emerged in recent years, our research indicates that we are entering an era of alternative advertising and marketing strategies,"” said Patrick Quinn, President/CEO, PQ Media. "“Brand marketers are seeking to better engage consumers with emotional connections and media companies are searching for new revenue streams as traditional advertising methods suffer from negative perceptions. As a result, product placement has emerged from a novel marketing tactic just a few years ago to a key marketing strategy worldwide.”"

TV placements remain the dominant choice of brand marketers, accounting for 71.4 percent of global spending in 2006 at $2.40 billion, with projected growth of 33.9 percent in 2007. Film placements comprised 26.4 percent, or $885.1 million, of global spending in 2006 with forecast growth of 20.5 percent this year, driven by more cross-promotional packages linking movie placements to ad spots, websites and point-of-purchase displays, as well as virtual embedding for local targeting.

While placements in other media account for only 2 percent of total spending, growth will exceed 30 percent over the next several years due to increased demand for video game and online placements aimed at the elusive 18- to 34-year-old demographic.

The Americas will remain the largest and fastest-growing region for paid product placement in 2007, with projected spend of $3.79 billion and growth of 31.2 percent, followed by Asia and Europe. The United States will remain the largest market for product placement in 2007 with spending of $2.90 billion, followed by Brazil, Mexico, Australia, and Japan. China will be the fastest-growing product placement market in 2007 with spending growth of 34.5 percent, trailed by the U.S., Italy, India and Canada.

Although the share of non-paid placements, including barter and added-value arrangements, is declining, these types of placements are still used often throughout the world. To determine the value of non-paid placements, PQ Media employed the iTVX Q-Ratio, the most widely used product placement valuation tool.

The overall value of the global product placement market, including the exposure value of non-paid placements, grew 24.2 percent to $7.76 billion in 2006 and is projected to increase 20.3 percent to $9.33 billion in 2007, according to the PQ Media "Global Product Placement Forecast Series 2006-2010: Country-by-Country Analysis."

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