Cashing In: E.T. Led the Way

While product placements may seem more noticeable in movies nowadays, the president of the product placement trade association insists that there hasn’t been a marked increase. “What happens is people who learn about product placement become more aware of it,” says Dean Ayers, president of entertainment marketing at Anheuser-Busch Inc., and president of the Entertainment Resources and Marketing Assn.

“E.T.: The Extra-Terrestrial” (in which the lovable alien is enticed to come out of hiding with Reese’s Pieces) is generally credited with giving birth to the modern product placement industry. Sales of the candies shot up after the movie.

The practice has existed, however, at least since the 1930s. Although it wasn’t illegal, it died out in the early 1960s, after the infamous payola scandals (in which record companies paid radio deejays to play their artists’ records). Everyone became careful after the scandal about accepting payments, Ayers says.

By 1990, every major studio had its own product placement department. In 1991, the industry formed its own trade association, which Ayers says exists “to promote the profession and to ensure that it has a high standard of ethics.”

The organization, which includes companies, agencies that place products and the movie studios, has grown from 20 members to 80 today.

Though it is an estimated $50-million-a-year industry, Ayers says only 10% of placements are purchased outright by the companies. The rest are done in exchange for services.

Payment for the placements is often only a fraction of the cost of a single 30-second commercial on a hit TV show (although a company may provide $1 million or more in products or services or spend many millions in cross-promotional efforts). A spokeswoman for Yahoo said Disney received no remuneration for its highly visible ad in “Inspector Gadget.” The filmmakers decided a Yahoo reference would add a fun, hip element to the movie and so added it for nothing, said Nancy White, Yahoo’s senior marketing manager. “So much is based on relationships in Hollywood,” she explained.*