Product Placement Comes Closer Into Focus: Part III

Television is becoming more and more interactive, bringing us closer to a day when we’ll have pull-based content and ad delivery. IPTV promises a lot here, by virtue of its IP-based architecture. But there are lots of other factors that need to coalesce before we get there, including ad delivery, advertiser adoption and Madison Avenue wrapping its collective brain around this concept.

Some television networks, such as Turner Entertainment, are meanwhile starting to toy with the idea of adding contextual advertising to television programming. But so far this falls short of the potential we’ll see with IPTV and product placement.

TiVo and Amazon pushed this whole concept further yesterday. Building on an existing partnership, they will provide viewers with a “product purchase” option that will take users to an Amazon module where they can buy products seen in a given show (think books on “Oprah” or kitchen appliances in cooking shows).

This is all great, but it’s just one piece of the puzzle. Television shows, networks and advertisers will have to get on board to create a worthwhile amount of inventory so that some sort of “buy now” option is prompted at appropriate times. There will be interface issues too: Should a button pop up at contextually relevant times, or will it be more in the hands of the user to drill down to a separate menu to see what products are available from a given show (and how long are these options available after a program is viewed)?

Once this is all worked out, there will be lots of ways it can develop around local offline shopping. For certain types of products like electronics or home appliances, this is a great opportunity to provide promotions for local stores, or even inventory data and reserve features. Think of a national advertiser like Home Depot and the opportunity to drive offline power tool sales through product placement in home improvement shows.

There are lots of ways this could play out, but it could take a while before it reaches its true potential. TiVo is an appropriate company to get things moving, giving a growing installed base and the fact that it is helping to disintermediate the current push-based broadcast ad model. TiVo might accelerate the decline of the 30-second spot, in other words, but at least it has a(n arguably better) solution up its sleeve.