Has Apple Fallen Out of Favor in the World of Product Placements?

By Sterling Wong  FEB 08, 2013 9:00 AM

The company's products used to dominate the big screen, but its presence has diminished.

 


Last summer, during a protracted legal battle with bitter rival Samsung (PINK:SSNLF), the world learned a lot about how Apple (NASDAQ:AAPL) has been able to enjoy free publicity over the years, thanks to carefully placed product placements in Hollywood movies.
 
According to testimony by Phil Schiller, Apple’s global chief of marketing, the Cupertino, California-based company never pays for its products to be used by Hollywood stars in movies and television, but it does “have a person who helps provide products to people that want to do that.”
 
"Apple won't pay to have their products featured, but they are more than willing to hand out an endless amount of computers, iPads, and iPhones," elaborated Gavin Polone, producer of HBO's Curb Your Enthusiasm,  in a conversation with Daily Tech. "It's kind of a graft situation."
 
Whoever Apple hired to promote its merchandise for product placement usage must have received large bonuses because Apple has all but invaded the big screen in the past decade. According to a study by Brandchannel, Apple-branded products showed up in over one-third of all US box office-topping films between 2001 and 2011, which was more than what McDonald’s (NYSE:MCD), Pepsi (NYSE:PEP), and Sony VAIO (NYSE:SNE) could muster up. In 2011’s Mission: Impossible – Ghost Protocol, Apple products got more than five minutes of screen time, which marketing firm Front Row Analytics calculated was worth more than $23 million.
The iPhone used in Mission:Impossible - Ghost Protocol (Source: cultofmac.com)

The free publicity Apple enjoys helps the company keep advertising costs down. Apple spends just $1 billion per year on advertising, much less than Samsung ($2.6 billion) or Microsoft (NASDAQ:MSFT) ($1.6 billion). It also allows the company to reap the intangible benefits of being associated with the glamorous Hollywood film industry.
 
“With the iPhone often being an aspirational product (or status symbol) in foreign markets, its use at the center of cinema only heightens its perception as a premium device,” explained Eric Bleeker of financial commentary website The Motley Fool.
 
However, just as Apple’s dominance in the smartphone market seems to have peaked, so has the tech giant’s hold on Hollywood, it seems. Brandchannel found that for the first nine months of 2012, Apple only appeared in 17% of top-grossing films, compared to 43% in 2011. This is also Apple’s lowest appearance rate since 2004, when the brand’s products showed up in merely 11% of top films.
 
“When Apple's coolness sags in the minds of filmmakers, so does the number of placements, and there's no evidence of Apple throwing money around to reverse that trend,” said Engadget blogger Sharif Sakr regarding the reduced celluloid presence of Apple products.
 
To be fair to Apple, it’s not the only company whose coolness has dipped in Hollywood. Rivals like Sony have also become stricter with product placements in its own studio’s films. In the past, Apple products could still find their way into Sony-produced movies. In 2012, however, movies like 21 Jump Street and The Vow not only promoted Sony VAIO computers, they also did not feature Apple products, Brandchannel noted.
 
To make up for the reduced free publicity on the big screen, Apple seems to have switched its focus toward getting its products onto TV programs instead. For example, while watching the new Netflix (NASDAQ:NFLX) original series House of Cards, Engadget's Sakr noticed an extreme case of Apple product placement.

Nine Apple devices in a shot of Netflix's House of Cards. (Source: Engadget)
In one shot, taken at the 31 minutes and 42 seconds mark in episode six, nine Apple devices -- including five iPhones and four iPads -- can be seen in a scene between just two people.
 
After speaking to insiders who worked on the show, Sakr learned that Apple did not pay for the impressive product placement. Instead, what the company did was merely to provide tens of thousands of dollars worth of free merchandise to the show, and the production team decided to feature the iPhones and iPads to thank Apple for its gift. As for why so many Apple products were used in that one shot, sources involved explained that those devices were what happened to be available on set for a scene requiring the characters to monitor multiple police feeds.
 
Meanwhile, Microsoft has had to pay to get its Surface tablet featured on TV shows like NCIS: Los Angeles, Hawaii Five-O, Elementary, and Arrow. In exchange for coughing up the dough, Microsoft saw the Surface tablet showcased prominently in the foreground in each of the above shows, although the effectiveness of the placement is debatable because it is less than subtle.
 
As for competitors like Sony and Microsoft, they can only hope that their paid placements will kick-start a virtuous cycle where -- after being perceived as cool after being seen on TV and movies -- their devices will appear desirable to producers, who will then choose to feature them on their shows even without a fee.
 
Until then, perhaps it is premature to declare Apple’s reign of the product placement arena over, considering that Apple did not have to pay a cent to get nine devices featured in just one shot of House of Cards.

Also see:

Riding the Korean Wave: How K-Pop Stars Have Helped Lift Samsung to the Top in Asia

What's Apple Really Worth? Investor's Stress Test Offers and Answer


Twitter: @sterlingwong
No positions in stocks mentioned.

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