What Is Virtual Product Placement?

Media and entertainment giants Amazon and NBCUniversal have recently unveiled virtual product placement (VPP) ads during the recently concluded 2022 IAB NewFronts. This bold move is set to reinvent how companies and their audiences perceive and interact with brands.

What is VPP, and how can it potentially benefit brands? This is a comprehensive guide to virtual product placement to help you reinvigorate your marketing strategy.


What Is Virtual Product Placement? 


What Is Virtual Product Placement?

You’ve seen it many times before. You’re watching a movie and see the lead actor listening to beats while the camera zooms in on a clearly labeled pair of headphones. Or you’re watching your favorite TV show and see an actress enjoying a can of Coke.

A Brief History of Product Placement

The practice dates as far back as the 19th century when a Lever Brothers product was featured in a Lumière Brothers film. Since then, it has grown to encompass different aspects of modern entertainment and media.

You’ve seen examples of product placement in countless movies, TV shows, and music videos. It’s a strategy that’s been used time and again to subtly introduce certain brands, and it clearly works. It drives sales, promotes brand awareness, and opens up opportunities to attract new customers all without being too in-your-face. 

In the 1982 Spielberg hit, E.T. The Extra-Terrestrial, the protagonist Elliott used Reese’s Pieces to lure E.T. to his home. The brief product placement helped triple Reese’s sales within just two weeks of E.T.’s release. 

Since then, product placement has helped numerous brands, such as FedEx (Cast Away), Lego (The Lego Movie), and Aston Martin (James Bond), in a number of different ways like expanding their reach, boosting sales, and gaining huge fan bases. Here are some more TV shows and films that used product placements:

  • The Office
  • Seinfeld
  • Sex and the City
  • Friends
  • Stranger Things
  • Top Gun
  • The Italian Job
  • Jerry Maguire 

The Rise of Virtual Product Placement

Product placement is a huge industry. In 2021 alone, global spending for product placements grew by approximately 14% percent compared to 2020, reaching a whopping $23 billion. And it’s expected to become bigger in the coming years. However, as technologies continue to evolve and consumer expectations periodically shift, this “traditional” way of advertising products has become a bit outdated. 

The advent of streaming platforms enabled consumers to have a more optimized viewing experience. No longer do they have to sit through scheduled programming and experience disruptive conventional ads. Streaming services have enabled viewers to forgo conventional ads, but the problem is, how can companies generate revenue if people are no longer looking at traditional ads?

As streaming services and subscription video-on-demand (SVOD) platforms grow in popularity, companies and marketers are driven to find new ways to place their products in front of an audience and give opportunities for remonetization.

Enter the virtual product placement. VPP enables brands to incorporate their products into movies or shows during the post-processing phase. Traditional product placement entails months of planning to enable seamless product integration. On the other hand, VPP is flexible and enables brands to better curate ad experiences and experiment with newer ways to advertise their products. 

The Benefits of VPP

VPP lets companies see a show’s final cut and, from there, determine where their product can be integrated, all without disrupting the show’s flow. Additionally, it lets brands integrate new ads to a show in the future, essentially allowing them to remonetize that particular content. Also, it gives more room for brands to reconsider placing products that are unavailable or discontinued. 

Advanced technology, such as AI and machine learning, have allowed companies to find out which shows can be potential hits. Taking things a step further, companies can use this data, alongside consumer behavior insights, to strategically place products depending on a viewer’s habit or preferences. 

So where can VPPs appear? Practically anywhere within a show. For example, Nestlé can place virtually place ads for Nespresso in a scene in Riverdale or Breaking Bad. Here’s another example to better illustrate the potential of VPPs. Say you love coffee and are frequently searching for coffee or coffee-related products on Amazon. If you’re using Prime Video, then it’s possible that you’ll encounter contextual ads and start seeing product placements for Nespresso or Starbucks on one of your favorite TV shows. 

Entertainment and VPP

In Amazon’s case, it introduced the VPP ad format to select Prime Video and Freevee series. The VPP ads can appear in a show’s background or foreground, and they can also appear as dynamic in-program ads. 

While Amazon’s VPP tool is still in its beta phase, it will allow brands to strategically insert ads into select shows during the post-production process. NBCU’s Peacock streaming platform is also looking into VPPs through its “In-Scene Ads,” which will allow advertisers to integrate their ads within a show’s relevant scenes during post-production.

Virtual product placement is proving to be a valuable addition to a brand’s marketing arsenal. Brands that have tested it have seen a significant increase in both brand favorability and purchase intent. VPP campaigns can benefit both brands and their audiences because it helps the latter enjoy content without disruptions, while the former can incorporate their products in new places and better reach their target audience. It provides a faster and more convenient way to integrate ads within a program, and it can also be used to measure a campaign’s effectiveness. 

So where does VPP fit into the streaming platform model? For ad-supported streaming models, virtual product placements can offer new ways for brands to more precisely target and reach their audiences while allowing them to continue driving ad revenue. 


Product Placement and Influencer Marketing

How can VPP potentially alter the state of influencer marketing as we know it? Technological developments have greatly democratized how people consume and create content. Traditional media no longer has total control over advertising and promotion methods. 

We’ve seen how influencer marketing has made its way to social media and how it continues to affect consumers’ choices. It also heralded an era of more authentic campaigns and audience engagement, which led to better product recall and clickthrough rates. Still, the question remains, how can virtual product placement potentially affect influencer marketing?

As influencers continue to change their approach to marketing and make their way into virtual spaces like the metaverse, it’s not difficult to imagine them promoting or starring in in-show or in-game ads. We’ve yet to see the impact that this new ad format can have on influencer marketing. The wonderful thing about influencer marketing is it evolves with the times. We can expect influencers to leverage this new marketing tool to continue growing a brand’s reach, audience, engagement, and revenue. 


How Is Virtual Product Placement Revolutionizing the Way We See Content?

VPP is expected to revolutionize the way brands approach advertising. It could pave the way for a more viewer-centered, personalized way of showing ads, allowing brands to better leverage consumer behavior and data and show their audiences relevant, customized ads in a non-intrusive manner. 

As we’ve previously mentioned, VPPs offer flexibility by allowing brands to remove and swap ads within the same show. For example, viewers who watched Amazon’s Reacher series in February may have seen an ad for TurboTax. However, during subsequent viewings, they might have noticed that the ad was no longer there. 

Aside from Amazon and NBCU, Walmart’s Vudu streaming platform also introduced its shoppable ads for smart TVs. However, the media isn’t the first to introduce and utilize this new ad format. 

The gaming industry has already been using virtual product placement for dynamic in-game ads to drive revenue and engagement. Common examples of in-game advertising include display banners, playable ads, in-game billboards, and “offerwalls,” or in-game virtual walls that present various offers.

NBA 2K22’s The City showcased billboards featuring Nike and Puma. Another example is Obama’s 2008 election campaign, which was showcased in games like Guitar Hero III and Need for Speed Carbon

The Potential Challenges with Virtual Product Placement

  • Hyper-focused Ads

Virtual product placement isn’t yet an all-in-one solution. It’s innovative, yes, but it can also run the risk of creating hyper-focused ads or oversaturating a show with virtual ads, which can deter viewers. Companies like Apple are doubling down on limiting such ads, and consumers are becoming wary of hyper-targeted marketing. 

So how can virtual product placement circumvent this potential problem and help brands offer a more seamless, unobtrusive advertising and viewing experience? Well, what could be VPP’s weakness could also be seen as its strength. 

We don’t know yet if VPP will experience the same consumer pushback that traditional ads experienced. However, virtual product placement and related technologies can use consumer data to come up with more impactful and authentic campaigns that will resonate with a brand’s target group. Additionally, marketers should take care not to use VPPs willy-nilly and should instead be more discerning when it comes to when, where, and how they apply VPPs. 

  • Changing Iconic Content

Another challenge is using VPPs to change product placements in old shows. Can you imagine E.T. opting for jelly beans instead of the iconic Reese’s Pieces? Retroactive brand marketing is possible, and some ad agencies are already using VPPs to insert products into existing shows. 

However, in a CBC interview, Ryff founder and CEO Roy Taylor shares that toying with iconic content might not be such a good idea. There’s still some debate about whether or not iconic pieces of content should be updated with newer product placements, especially if these product placements are anachronistic. 

  • Intellectual Property Rights and Regulations

There’s also the issue with intellectual property rights. Can companies just change a show or piece of content? Also, will this entail brands adding product placement notices or logos indicating such practices to updated content? How will this new practice impact the authenticity and credibility of a campaign? 

There are a lot of questions that we don’t yet have answers to, given that virtual product placement is still stepping into the spotlight. There’s no denying that VPPs can change the advertising game, but marketers also need to take into account such key considerations when it comes to product placements. 


What’s in Store for Virtual Product Placements?

Is VPP just a hype, or will it become advertising’s next big thing? While this ad format is still fairly recent, it already paints a picture of what advertising could look like in the near future. We’ve yet to see its full potential, but VPP is slowly proving itself to be a valuable asset for brands and marketers. 

Frequently Asked Questions

What is virtual product placement?

Virtual product placement (VPP) is a new ad format that lets brands digitally incorporate ads into shows during the post-production process via CGI. It helps companies introduce curated ads during relevant scenes and gives them the opportunity to remonetize content by switching out ads in the future.

What companies are using it?

Companies like Amazon and NBCUniversal are currently introducing the VPP ad format to their respective streaming platforms. Video games are also using VPP to introduce ads into games for platforms like PlayStation and Xbox. 

How is it different from “traditional” product placement?

Traditional product placement often entailed advance planning for brands to seamlessly integrate their products into movies or shows. It’s also inflexible, and companies can’t easily alter the ads they’re showing even if the product itself is no longer available. Virtual product placement lets companies add their products at a much later stage using computer-generated imagery. This allows them to better identify a more relevant spot where their ads can appear. Moreover, VPPs offer flexibility, giving brands the opportunity to remove, update, or completely change an ad within a show according to their needs or goals.

What companies are offering VPP services?

There are already several companies that are offering virtual product placements for brands. These include:

  • SynthEyes by Andersson Technologies
  • TripleLift
  • Ryff
  • Kinetic Vision

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