Product Placement Comes Closer Into Focus, Part II

Two news items caught my eye today as they relate to our ongoing coverage of interactive product placement in various entertainment media.

First, Sony has announced a deal that will bring in-game ads to PlayStation 3 games. It will work with IGA worldwide, a New York-based outfit that specializes in video game product placement. Video game sales were way up last month, and engagement levels are relatively high and repetitive, signaling an opportunity for marketers that can integrate ads in a way that’s complimentary to game play. Microsoft is interested in this direction as part of its development of ad placement in online venues other than search.

Second, YouTube announced new capability to append various notes and pop-up messages within its videos. This will let video producers better tell stories and also provide context against which to index video for better searchability and ad placement. But for the purposes of this post, it gets closer to being able to integrate commercial messages within the videos themselves. The closest we’ve come to this is overlays and inline video ads — both experimented with by YouTube to somewhat unfavorable reception.

This ironically comes the day after YouTube’s “monetization chief” resigned. Meanwhile, Google chief Eric Schmidt has been speaking out about the need to better monetize the vast reaches of viral video throughout the network. Others have also speculated on YouTube’s current revenues (mostly home page ads) versus potential.

The interesting part is that the site had 4.4 billion video streams in March, according to comScore, accounting for 38 percent of the 11.5 billion overall online video streams. This means video streams surpassed the monthly searches done on core search engines (10.8 billion, according to comScore). These searches account for about 36 percent of the $24 billion U.S. online ad revenue pie (TKG Global Search Forecast), while total online video advertising is only $775 million (eMarketer).

The challenge, alluded to above, is finding an ad format that isn’t intrusive. Pre-roll is the prevalent format and has been met with resounding distaste, prompting development around less obtrusive formats. There are also quality inventory shortages in some cases. This underscores one of the benefits of merchant video that is served up in a local search context: There is no need for an accompanying ad because the video itself — while serving a user-centric purpose — is the ad.

The addressable inventory is meanwhile limited only by the millions of local listings out there, and local searches done (if you consider search engine distribution). These factors join many other benefits that will be explored in further depth very soon.

_________

Update: Steve Ballmer preaches to the Washington Post about about interactive product placement in the context of IPTV, among other things (without throwing anything). See video.

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