Mouzon,+C.+Final+Report

Mouzon, C

Proximity a next generation connection

Proximity Research Report

Cell Phones and Mayo: Product Placement Generating Revenue

//How Product Placement in Music Videos can reach Generation Y//

By Carl Mouzon

Spring 2010

Table of Contents Executive Summary 1 Introduction: 2 The Influence of Music in Culture Paying is Optional 2 Failing Advertising Agencies 3 Product Place Case Study: 3 Lady Gaga’s “Telephone” Recommendations 4 Attachment 1: 5 New York Time Article Attachment 2: 8 AdvertisingAge.com Article References 10

Executive Summary: Music has had a way of influencing society in numerous ways. The music industry has been able to generate millions over the years from its ability to reach masses across the world. Illegal downloading is making the business model that the music industry had depended on for decades obsolete. Illegal downloading of media makes up 95% of all downloading online. The industry has little choice over the next decade; either make it difficult to download media or find another business model to generate profit. With the invention of the DVR, a television recording device, users now have the ability to fast forward past advertisements to get to their entertainment. Advertising agencies are “grasping at straws” in order to survive in an age where information can easily be sought out by the consumer and words online can generate profit as effectively as a 30-45 second commercial.

Product placement has shown to be effective in reaching targeted audiences. Since the music industry is unable to sell its own product to consumers, it should embrace its ability to reach mass audiences and sell products from other companies.

Introduction: The Influence of Music in Culture

Music has had a way of influencing society, in numerous ways. Music is a powerful tool because of its ability to travel far and wide and reach masses in other parts of the world. Technology has made it easier for music to be mass produced and downloaded within an instant online.

The music industry has been able to generate millions over the years from its ability to reach masses across the world. The industry has been able to profit greatly from selling copies of music for years, however this business model is failing. Illegal downloading is making the business model that the music industry had depended on for decades obsolete. Illegal downloading accounts for majority of downloading online. The industry has little choice over the next decade; either make it difficult to download media or find another business model to generate profit.

Product placement is an effective tool that could replace profit loss from illegal downloading. The Music industry has something that other businesses want in an age where the advertisement is dying- the ears of the consumer.

Paying is Optional

Illegal downloading of media makes up 95% of all downloading online (//The Economist//, 2009). While iTunes, Rhapsody, Amazon, and Pandora have been able to profit in some form from selling digital media, when it is compared to the amount that users are getting for free, it is insignificant. Illegal downloading is hard to curtail in countries where there are numerous internet providers unrestricted by the government. In European nations, national governments have ruled in favor of the music industry. They have been able to lessen illegal downloading with measures used to fine offenders and strip away their internet access for a time (Billboard.com, 2010). However, in places like the U.S. such restrictions have yet to be put in place, and while there are laws that restrict illegal downloading and piracy, offenders are hardly ever prosecuted in the courts.

With little prohibition, users are able to download most of their media from online with little consequence besides computer viruses. Gen Yers may choose to give back to artists by purchasing their work, but it is an option that is left up to them and not the producer as to whether they can have the media or not.

Failing Advertising Agencies

According to Post Advertising.com, "Advertising is dead" and the business model of the Advertising market has been grossly affected by new technology. With the invention of the DVR, a television recording device, users now have the ability to fast forward past advertisements to get to their entertainment. Internet ads can easily be closed and the only time users see them is when they are forced to. If the only way advertising can get to its target market is by forcing them to view their product, the marketplace for advertisement must be shrinking (Post Advertising, 2010). Advertising agencies are “grasping at straws” in order to survive in an age where information can easily be sought out by the consumer and words online in a document can generate profit as effectively as a 30-45 second commercial. Adwords is a profitable measure of advertising that links products to search engines and plugs them into content that are read by the user. This subtle form of advertising is proving to be highly effective: the market for Adwords is believed to be worth $28-billion dollars. (Figaro Digital, 2010). Figure 1 : Example of Google Adwords Source: RankGo.com (http://www.rankgo.com/eng/images/google_adwords.gif) Product Placement Case Study: Lady Gaga's "Telephone" Music Video

Music artist Lady Gaga newest music video is an ironic display of product placement. The artist displays over twelve different brands of products over a six-minute span. This excessiveness of product placement is unclear; it is unknown if the artist is commenting on popular cultures push to sell products or if the products are actually a part of the music videos background. Figure 2 : Miracle Whip (Source: [] ) What is clear is the exposure of certain products did help business. Since the video aired in March 2010, Plentyofish.com, an online dating service, has seen a 15% increase in visitors. With other brands, it may be too early to tell in the year how their sales may be affected (Hampp & York, 2010). Figure 3 Virgin Mobile (Source: [] ) Blogger Aymar Jean Christian did note that the companies featured in “Telephone” infers much about what companies should be using product placement: “The brands most prominently featured in the video are the ones who have to work the hardest to stay hip: it’s HP not Apple, Virgin Mobile not AT&T. It’s the brands people my age don’t use, have become skeptical of, or find too old-sounding: Wonder Bread, Polaroid, Miracle Whip, Chevy.” (Christian, 2010). Recommendations Product placement has shown to be effective in reaching targeted audiences. Music is able to influence culture and is readily available due to technology, legal and illegal. The advertising market is unable to generate profit the same as before just as the music industry. Since the music industry is unable to sell its own product to consumers, it should embrace its ability to reach mass audiences and sell products from other companies. This could be an effective measure to replicate profit that will be loss to illegal downloading. Companies and the advertising market are in a similar loss from the advancement of technology. The music industry should exploit this loss and form alliances with companies and advertising agencies to generate profit.

Attachment 1: New York Times Article September 2, 2009 = The Outlook Is Murky for Media Advertising = By [|ERIC PFANNER] PARIS — Matthieu Coppet has a word of hope for the world’s beleaguered media companies, reeling from the deepest advertising slump in memory. All signs point to a relatively robust recovery in ad spending, beginning next year, Mr. Coppet, an analyst at UBS, said in a recent report. His enthusiasm is far from universal. Gerhard Zeiler, chief executive of the RTL Group, the biggest commercial television broadcaster in Europe, reflects another view in the industry: the good times will not return anytime soon. “I simply don’t believe that we will see a quick recovery in advertising revenues,” he said in a speech over the weekend at a television industry conference in Edinburgh. “Nor do I think they will return to previous levels as fast and easily as some of us may think.” As these divergent opinions indicate, the outlook for the $500 billion global advertising market is unusually murky, after a first half of 2009 in which ad spending plunged by double-digit percentages in many developed countries. Many ad executives and analysts seem to agree that the worst is over. But there is little agreement on the strength, timing and distribution of any recovery. “It’s not a big rebound, but there are some interesting signs,” said Maurice Lévy, chief executive of one of the largest advertising companies, the Publicis Groupe. One reason for caution is that advertisers are waiting to commit their budgets; as a result, ad executives and media owners complain that they have little visibility about spending prospects, beyond a matter of days or weeks. This complicates some executives’ thinking as they wrestle with the question of whether to try to charge consumers more for access to their content, or to continue to rely on advertising for the bulk of revenue. Some analysts argue that traditional media will never regain ad spending lost during the [|recession], as advertisers shift to other outlets, like the Internet, cable and satellite television channels. “If the ad industry doesn’t pay every single bill anymore, then the consumer — directly or indirectly — will have to step up,” Mr. Zeiler said. Newspaper publishers, too, are talking about erecting so-called pay walls for their Web sites. The differing fortunes of media companies that are heavily dependent on advertising, on one hand, and those that rely more on consumer purchases, on the other, is reflected in earnings reports this week from two big European media companies, [|Bertelsmann] and Vivendi. On Monday, Bertelsmann, which owns a majority of RTL, reported a 30 percent drop in operating profit and a 6.5 percent decline in revenue for the first half of the year, citing sharp declines in advertising. On Tuesday, Vivendi, which is less dependent on advertising, reported a 1 percent rise in operating profit on a 17 percent increase in revenue. Consultants at PricewaterhouseCoopers say they think this gap between advertising and other forms of revenue will persist, adding that global ad spending will remain below 2008 levels four years from now. By contrast, spending on media and entertainment by consumers and businesses will rise to $812 billion in 2013, from $707 billion this year, the company says. But Mr. Coppet of UBS says some of the gloom is overdone. While global ad spending has fallen more steeply than expected this year, he has increased his outlook for next year, saying spending will rise 3.9 percent. In 2011, he added, growth will accelerate to 6.9 percent. Mr. Coppet is relatively sanguine about the prospects for recovery because, he said, much of the structural shift caused by the rise of digital technology has already occurred. Ad spending as a percentage of the overall economy is already at postwar lows in the United States, he said, suggesting that there is room for growth. “We expect the cyclical recovery to overwhelm the structural advertising decline for the next three years before softening,” he wrote. In ad agency executive suites, the outlook remains more subdued. [|Martin Sorrell], chief executive of the [|WPP Group] , said last week, as the company reported a big drop in earnings for the first half, that he saw few signs that improved sentiment about the economy was translating into higher spending by advertisers. “I think what’s happened is that people feel better about life, and so their heads and hearts are strong,” he said, “but that hasn’t extended, as we said at the end of the first quarter, to the checkbook or investment in branding.” Adam Smith, the top forecaster at WPP’s media buying division, GroupM, said there were a few exceptions to the general gloom. Spending in Germany has shown a slight uptick, he said, and big consumer product companies are putting money back into television advertising in China to take advantage of a buoyant economy there. But prospects in the United States and Britain remain particularly weak, Mr. Smith said. Over all, GroupM still predicts a 1.4 percent slide in global ad spending next year, on top of a 5.5 percent decline this year. At Publicis, Mr. Lévy said he saw some positive signals, enough to declare that the low point of the current ad recession probably came in June. July and August had month-to-month improvements, he said, and early indications for September show the trend continuing. The first year-on-year growth will probably not occur until next summer, Mr. Lévy said, but that should be good enough to propel an increase of 2 to 3 percent in global spending next year. Over the longer term, he dismissed the idea of a structural decline and predicted yearly gains in the “midsingle digits.” “It is a business that will continue to grow, and we will see advertisers spending more in the sector,” Mr. Lévy said. “But the fight for market share will be tougher.” In recent years, market share has largely been shifting from traditional media to the Internet, which Mr. Coppet says will garner 15.2 percent of global ad spending in 2011, up from 2.7 percent in 2001. Print media will continue to lose spending to the Internet and other media, he says, but another established medium, television, will actually gain. Major American television networks are counting on a cyclical rebound. Usually, they ask advertisers to commit to the vast majority of their advertising time in advance, but during the annual upfront selling season this summer, they reportedly held back substantial numbers of slots for the coming season. According to Advertising Age, that resulted in a decline in sales, from $7.8 billion to $8.1 billion, compared with $9.23 billion last year. The networks hope to recoup the shortfall by selling time at higher rates, on short notice, if and when the ad market recovers. Analysts’ forecasts of a rebound are bolstered by the fact that next year will include big marketing events like the quadrennial World Cup soccer tournament, the Winter Olympics and the midterm Congressional elections. For the moment, however, “no one can say today that all the lights are green and the recovery is already here,” Mr. Lévy said. Attachment 2: AdAge.com = How Miracle Whip, Plenty of Fish Tapped Lady Gaga's 'Telephone'  =

Singer's Manager Dishes on All Those Product-Placement Deals (and Lack Thereof) in the Nine-Minute Video
//By// Andrew Hampp and Emily Bryson York

//Published:// March 13, 2010 LOS ANGELES (AdAge.com) -- The most-talked about aspect of Lady Gaga's Beyonce co-starring, Jonas Akerlund-directed music video for "Telephone," which premiered Thursday night, was not the singer's flagrant partial nudity, girl-on-girl kissing or mass-murder sequence in a diner featuring Tyrese Gibson. It was the product placement. At least nine different brands make appearances in the nine-minute music video, from Gaga's own Heartbeats headphones to a "Beats Limited Edition" laptop, from HP Envy to "telephone" partner Virgin Mobile, and from Miracle Whip and Wonder Bread to Diet Coke. Almost instantly, the video lighted up the web with reactions from the likes of the Huffington Post, The Guardian, Jezebel, Rolling Stone and Interview Magazine, which gave a helpful rundown of all the brands -- including fashion and accessories -- that make appearances. But despite the cornucopia of products, only handfuls were paid placements, said Gaga's manager, Troy Carter, CEO of Coalition Media Group. Mr. Carter told Ad Age that several of the brands were Gaga's ideas and did not pay to be included. A scene in which Gaga curls her hair with Diet Coke cans was an homage to her mother, who used the exact same grooming technique in the '70s. Another sequence, in which Gaga poisons a whole diner full of patrons, is interspersed with footage of the singer making sandwiches with Wonder Bread and Miracle Whip. Mr. Carter said Gaga wanted to juxtapose the poison sequence with all-American brands, and suggested Wonder Bread for an unpaid placement. Miracle Whip, meanwhile, made a paid appearance to appear in the clip. A Miracle Whip spokeswoman confirmed the brand's paid integration, but didn't comment further. The product shots feature new Miracle Whip packaging, and seem the latest in a series of Gen-Y outreach maneuvers, including a new campaign promising "we will not tone it down." Featured throughout "Telephone" are shots of a Virgin Mobile cellphone, a nod given to the mobile sponsor of Gaga's Monster Ball tour, as well as a Polaroid camera and photo booth as part of Gaga's new role as the camera company's creative director. Several characters are also seen listening to music on Heartbeats by Gaga headphones from Interscope Music and surfing the internet on the "Beats" laptop from Hewlett Packard, all of which were unpaid extensions of Gaga's marketing partnerships. PlentyofFish.com, an online dating site, also makes a surprise appearance, the result of ongoing talks with Gaga's marketing team at Universal Music to find the right project. Plenty of Fish VP Kimberly Kaplan on Friday said the dating site got into the video through an ongoing partnership with Interscope Records. This just the second music-video integration for Plenty of Fish, which still does the bulk of its advertising online. She admitted the brand was "nervous" without creative input, but very pleased with the outcome. Plenty of Fish had seen a 15% increase in search by close of business Friday, but wasn't yet able to quantify an increase in traffic. If 'Thriller' were made today "We have a lot of fun with it now," Mr. Carter said of the "Telephone" video's product placement. "If Michael Jackson was making 'Thriller,' he would do this too. These million-dollar music videos have to have partners to be produced." Dyana Kass, who heads up pop music marketing at Universal Music Group, added, "We were trying to line up brands that were organic. There were natural pieces in there, like being in a kitchen, so those kind of scenes that just made sense for brands. But we always agree creatively, and get sign-off before we walk down the aisle." Mr. Carter would not comment on the nine-minute, Jonas Akerlund-directed video's budget, other than to say, "Lady Gaga plus Beyonce equals an expensive video." The video was shot across three days and took a month and a half to edit. Its premiere airing on E! News, after the network's 11 p.m. ET time slot, attracted 833,000 viewers, a 32% increase from the network's average performance in the time slot. Mr. Carter said E! was selected over MTV and other music networks because "we wanted a network partner that was going to show the video as it was intended to be shown. They gave us 20 minutes of real estate on their network ... and it was pretty much unedited." Online, music-video site Vevo bought a slot on the YouTube home page that referred users to the "Telephone" page on Vevo.com, which crashed the morning of the clip's premiere. The video broke all Vevo single-day traffic records and had already generated close to 4 million views on YouTube in less than 24 hours. As for the "To be continued..." message at the video's end? "Stay tuned," Mr. Carter teased.

References A. Hampp & E.B. York. (March, 2010.) //How Miracle Whip, Plenty of Fish Tapped Lady Gaga's Telephone//. Advertising Age. Retrieved April 6, 2010, from []. Singing a Different Tune. (2009, November 14.) //The Economist.// Retrieved April 6, 2010 from Lexis/Nexis Academic Database. En Breve. (2010, January 30.) Billbord.com. Retrieved April 6, 2010 from Lexis/Nexis Academic Database. = E. Pfanner. (2009, September). The Outlook Is Murky for Media Advertising. //The New York Times//. Retrieved Mary 13, 2010. []. = Figaro Digital. (2010). //The Power Struggle between Natural & Paid Search//. Retrieved May 13, 2010. []. Post Advertising (2010). //Advertisers Grasp at Straws//. Retrieved May 13, 2010. []. == Televisual (2010). //Lady Gaga’s ‘Telephone:’ Product Placement and Corporate Anxiety//. Retrieved May 13, 2010. __ http://blog.ajchristian.org/2010/03/15/counting-the-brands-product-placement-in-lady-gagas-telephone/. __==