Product placement could be a source of sizeable financing. The best example is Die Another day (Die Another Day, dir. Lee Tamahori, 2002) which received between 120 and 160 millions dollars from the associated brands in royalties and publicity support during the movie launch.
The cost of a movie is more and more expensive (competitors, investments, actors, team, postproduction, etc.), thus, product placement contracts can contribute at the financing of projects.
Contracts are not always paid. In partnership contracts, companies provide products required for a movie in exchange of the placement. This process reduces the cost of production. Sometimes the exchange is added by a promotion support during the launch of the movie. Sometimes, directors only ask for an authorization to introduce a product in their movies in order to make it credible, as a Chanel shop in Anastasia to illustrate a scene inParis. (Anastasia, dir. Don Bluth & Gary Goldman, 1997)
Product placement is an effective communication method, as during a projection the audience drops its “anti-advertisement attitude”. It is accepted by the audience when the presence of products and brands is tolerable and well-justified. Product placement helps to target a part of the audience. If the target is refined, the audience will be more involved and its attention will be more important. The objective of a brand is different and determined upon the type of movie.
Brands appreciate to be placed in movie based in the past, it states their long existence. They also appreciate to be placed in movie based in the future. It reinforces their current position and shows that the brand notoriety remains in the future. Moreover it helps the audience to understand that the movie is an anticipation movie based in the future. Introducing a product or brand already existing in the current time helps the credibility of a movie.
It is not possible to give a real estimation of the prices, but if we consider the visual placement with a cost of x$, then the oral placement has a cost of 2x$, and the hands on placement has a cost of 3x$.
A list of main factors determining the cost of a placement could be: popularity of the brand, identification of the brand (perception on screen), budget of the movie, type of movie, credits (producer, actors, director), product exchange, importance of the placement (space on screen), localisation of the placement, integration in the plot, contact with the main actors, exclusiveness for the brand, recurrent placements, type of distribution, communication campaign and contract of placement.
The majority of the big production companies has a marketing budget equivalent or superior to the production budget. The promotion tie-ins are contracts allowing brands to make a reference to movies in which they appear or not. It could be a special menu in McDonald’s or Burger King with toys dragged out from a movie. By those promotional actions, the brands participate or take charge of the marketing budget. The tie-ins help to increase the impact of both the movie and the brand communication.