The Worth of Product Placement in Successful Films: An Event Study Analysis

Abstract

As a result of the diminishing effectiveness of broadcast advertising, firms are increasingly turning to product placements in films and television to promote their products. A growing stream of product placement research has conducted surveys of consumer and practitioner views on the practice and experiments to gauge product placement's impact on brand awareness, attitudes, and purchase intent. However, there is no evidence of whether firms’ investments in film product placements are worthwhile. The event study of 126 product placements in successful films during 2002 reveals a mean cumulative abnormal return of .89% during the film's opening, indicating that product placement in a successful film is associated with positive movements in firm stock prices. Cross-sectional analysis of the returns offers new insight into how product, film, and execution factors influence the placement's worth. The authors find that placement abnormal returns are enhanced by tie-in advertising and brand equity but are inhibited by audience absorption, critical acclaim, and violent film content. Placement modality, character associations, and blatancy also significantly affect the placement's value.

Investigating the Effects of Non-Branded Foods Placed in Cartoons on Children’s Food Choices through Type of Food, Modality and Age

“…The effectiveness of the food placement strategy is affected not only by the type of food but also by the execution factors, which are considered in the literature as variables involved in the effectiveness of product placement [39]. These factors refer to information about how products appear, including modality, level of plot connection [11,40], frequency of product appearance [10], level of character-product interaction [26], and others.…”

Creating shareholder value via collaborative innovation: the role of industry and resource alignment in knowledge exploration

“…The use of abnormal stock returns as the dependent variable to estimate a collaboration's future performance underlies the common assumptions that investors are rational and that they maximize expected utility. However, the application of event study methodology cannot fully capture investors' mindsets, which actually drive returns (Bayus et al, ; Wiles and Danielova, ). This article adopts event study methodology to determine the ex‐ante performance of collaborative innovations.…”

The effectiveness of movie trailer advertising

“…Research has shown that forecasts of movie demand can be reasonably accurate in a very early pre-release stage, and that new information can influence traders' beliefs about the movie's future performance, resulting in stock price adjustments (Foutz and Jank 2010). Information that affects the movie's stock price includes announcements about the star cast (Elberse 2007) and product placements (Wiles and Danielova 2009;Lee et al 2011).…”

“…We chose a two-day event window comprising the day of the trailer announcement (the day of the event) and the following day. This event window is within the conventionally accepted length (MacKinlay 1997), especially in the context of the motion picture industry (Wiles and Danielova 2009). A short period (2 days) was considered appropriate given that we could pinpoint the exact day of the trailer release on the HSX website, and because of the high frequency of confounding announcements that occur in the movie industry (e.g., release of follow-up trailers or of additional marketing material).…”