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Release: Exclusive PQ Media Research: Branded Entertainment Market Defies Slowing Economy, Expands 14.7% to $22.3 bil. in 2007

Strong Growth Continues in ’08, Albeit at a Slower Rate, Driven by Product Placement, Event Sponsorship/Marketing, and Advergaming/Webisodes

STAMFORD, CT., February 12, 2008 – Spending on branded entertainment marketing grew 14.7% to an all-time high of $22.3 billion in 2007, nearly doubling in size over the last five years as brand marketers continue to shift budgets from traditional advertising to alternative marketing strategies, according to research released today by PQ Media, the leading provider of alternative media econometrics.

Branded entertainment marketing is projected to expand another 13.9% in 2008 to $25.41 billion, despite slowing overall economic growth owing to brand marketers seeking strategies and media that engage youth and influential demographics, provide return-on-investment metrics and an influx of record political campaign spending on alternative media in this contentious election year, according to the PQ Media Branded Entertainment Marketing Forecast: 2008-2012

“Even without an economic slowdown, there are strong secular trends driving investment from traditional advertising media to alternative marketing strategies,” said Patrick Quinn, President & CEO of PQ Media. “Americans are spending more time outside their homes, online at work, communicating via wireless devices and multitasking with various media, which has created a generation of elusive consumers for brand marketers to try to reach. And these trends have led to increased investment in alternative marketing tactics.”

Branded entertainment refers to marketing strategies that integrate products into entertainment venues that typically provide high engagement and interactivity. Branded entertainment marketing includes three major segments: event sponsorship and marketing; product placement; and advergaming and webisodes. No longer confined to just TV and film, branded entertainment marketing represented approximately 8 cents of every marketing services dollar spent in 2007, according to PQ Media.

Key trends impacting each segment of branded entertainment include:

  • Spending on event sponsorship and marketing, the largest segment of branded entertainment, rose 12.2% to $19.18 billion in 2007, as companies invested in marketing campaigns designed to create powerful and lasting brand impressions and experiences among consumers. Event sponsorship and event marketing attract new customers by using face-to-face engagement, which is lacking in many traditional advertising and marketing strategies;
  • Paid product placement spending grew 33.7% to $2.90 billion in 2007, and at a compound annual growth rate (CAGR) of 40.8% from 2002 to 2007. “Higher DVR penetration combined with increased TV program product integration helped drive paid product placement spending,” Quinn said.
  • Spending on advergaming and webisodes increased 34.8% to $217.0 million in 2007, fueled by efforts among marketers to reach the elusive 18- to 34-year-old demographic, which is watching less television and spending more time on the internet playing videogames and downloading videos. Advergaming and webisodes, while the smallest branded entertainment segment, is the fastest growing, climbing at a 51.7% CAGR from 2002 to 2007.

While remaining strong, branded entertainment spending growth is projected to decelerate slightly in 2009 due to decelerating economic growth, maturing markets and the absence of cyclical spending infusions, such as political campaigns. Branded entertainment is expected to grow at a double-digit pace in 2008, driven by nearly $9 billion in event marketing spend, robust product placement spending, particularly on reality programming, at $3.5 billion, up nearly 25%, and growth in webisodes of 46%, as major networks begin to produce full-length online episodes in an effort to tap the coveted youth market.

The outlook for branded entertainment marketing through 2012 is for double-digit growth overall, despite slower economic expansion in the period. The sector is projected to grow at a 12.8% CAGR from 2007 to 2012, exceeding $40 billion.

About PQ Media
PQ Media is the leading provider of custom media econometrics and the pioneer of alternative media research. PQ Media partners with private-equity firm Veronis Suhler Stevenson on the renowned VSS Communications Industry Forecast, the media industry’s annual benchmark for spending, usage and trends data. The Branded Entertainment Marketing Forecast 2008-2012 is part of PQ Media’s Alternative Media Research Series, the first source to define, size and forecast emerging markets such as word-of-mouth marketing, product placement, consumer- generated media and digital out-of-home advertising, among others.

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