The Merging of Commercials into Original Programming
By Chris Thomes and Kevin Lezak
Did you happen to see the January 1st Honda Crosstour ads running on NBC’s Chuck? It’s where the commercial break starts off like an episode, with Awesome, Ellie and Morgan on some kind of peaceful road trip that bizarrely turns into a cross promotion for NBC's Winter Olympics and the new Honda Crosstour automobile. Was it a part of the show? Was it a commercial? Or was it both?
Integrating ads into original programming is all the rage these days. While considered innovative, this kind of advertising has actually been around since the advent of television in the 1950s, and many programs were sponsored and tied to one specific sponsor, like the early "soap operas". We all remember Texaco Star Theater with Milton Berle (I don’t really remember that) or Lawrence Welk’s Tiny Bubble Dodge ads (I don’t remember those either). As advertisers began to shift to thirty-second commercials, the practice began to fade until the late 1990s. Today they have become the way for advertisers to let their messages come across in a "not so commercial" way, e.g. product placement or advertiser-funded programming that feels original and fresh.
According to Wikipedia, branded entertainment is "an entertainment-based vehicle that is funded by and complementary to a brand's marketing strategy. The purpose of a branded entertainment program is to give a brand the opportunity to communicate its image to its target audience in an original way, by creating positive links between the brand and the program.” But simply put, it’s still just a commercial. Advertising agencies don't view them as commercials, though. They view this new kind of content as creative programming and the agencies aren’t just ad "creatives” anymore. Now these guys are entertainment "producers” in the biz.
How did we get here? Well, originally ad agencies went to production companies to solely make TV commercials. It was a simple model. Non-broadcast "films” were called industrials. Specific vendors did those and they were done much cheaper often non-union and with less agency oversight. Then, the Internet changed the rules. Over the last five years, the agencies have concepted and produced non-broadcast ads, casting aside the industrial model in favor of something entirely different that lives online and has the potential to migrate anywhere. It has many names… webisodes, short form, content, web films, viral videos. In short, they are simply hybrid – part original programming, part commercial.
Original programming used to be blue-chip real estate on TV. Producers were reticent to integrate product placement into episodic programming for fear of cheapening the storylines. If products did appear, it was subtle.
As product placements began to gain traction about ten years ago, it mainly appeared in sports telecasts and reality programming. But lately, like the Chuck example demonstrates, it’s appearing in comedies and dramas. The process of this integration doesn’t always work, like in Trust Me, where the advertisers were actually worked into the storylines. It was organic, yes - but distracting.
Now it’s the stories, characters and dialogue being usurped. Jon Stewart may easily shill/snack on bags of Doritos on Comedy Central. Sarah Walker in Chuck might preach TurboTax during the show. And to the audience, it will be clear that the writers and producers are not advancing the storyline or creating an interesting moment, but paying the bills.
Would any of this happen if the economy were faring better, TV networks didn't have so much digital competition, and DVRs weren't showing up in a third of U.S. homes? That’s hard to tell. But networks are certainly not slowing down the trend. It’s now not uncommon to see cast members appearing in ads adjacent to their programs.
At some point, ads and shows might blur to the point that the notion of a "commercial break" becomes a thing of the past. And if hungry creative producers start taking the reins, this pseudo-programming might actually become compelling in its own right; consider the Ford music Video Challenge around American Idol, or the BMW micro film series, or Disney.com’s The Possibility Shop. Crazier things have happened. Most people forget that soap operas were once invented for advertisers.
Online, many entertainment companies like Yahoo, Disney, Warner Brothers, etc, are dabbling in the world of branded (sometimes called brand-funded) entertainment. Their goal is to evolve their old custom ad production models to include new video content. The hope is that their sales teams can monetize these new content offerings with some acceptable margin. It usually appears in the form of product placement within custom webisodes or interstitials, or thematically adjacent positioning of the client brand on banner advertisements surrounding the video content. A sponsored by or presented by callout is also common. And that’s just the beginning. In order to defray costs, online video content may have to be supplemented with other clever interactive components like printables, casual game integration and promotions like sweepstakes and user generated content contests.
The big question is "can ad deals subsidize the production costs of some, if not all of this new entertainment?” It’s a good question and no one really has the answer yet. As TV advertising slows and DVRs let audiences bypass commercial breaks, advertisers will continue to find new ways to reach audiences and engage them. Branded Entertainment seems sexy because it offers engagement similar to television but at reduced costs. Of course, that is exactly the rub. These projects have one fifth of the budget to deliver three times the amount of content. To eke out any margin and succeed in delivering the quantity of content demanded, the production process should be more reflective of indie film or episodic cable than TV commercials, and the rules should follow.
But the rules change slowly, if at all. Everyone applies the old broadcast model despite the obvious differences.
The problem is that almost every production is some kind of investment, either financial or by cashing in favors with crew or talent to meet the budgets. The margins are just very, very thin. On top of that, many union agreements prohibit most companies or even independents from producing under a certain cost per shoot day, unless it falls under new media or interactive agreements. When traditional media productions do happen under that cost it is in violation, but for the moment, a lot of people turn a blind eye because there is so little money.
It is a difficult situation. Commercials typically have millions in paid media behind them. These new hybrids do not. Commercial money is not making its way into these new deals so agencies end up developing high-volume deliverables with a low profit precedent. Which is a little insane for your bottom line, since producing these initiatives often requires the same or more effort than broadcast commercials. Still, they aren't going away. These projects are more prevalent than ever due to the recession. And if the content itself backfires because the audience feels sold out, everyone loses.
Maybe as the convergence of TV and new media creep closer, technology may solve the very problem it created. Until then the goal is to find a way to serve both masters while maintaining workable margins and still captivating the audience. Let’s hope that savvy producers can help crack that code.