The effect of product placements on the evaluation of movies

Abstract

Purpose When advertising is provided in the form of product placements – the inclusion of branded products within media programming – it can increase or decrease the consumer’s utility. This paper aims to investigate the relationship between product placements and the evaluation of media programming by consumers. The authors hypothesize that consumers do not necessarily consider them as traditional advertising because placements of real brands can enhance realism even if placements sometimes interrupt consumption experience. Thus, the authors believe the relationship between product placements and consumer evaluation is overall positive. However, too many product placements in a single program may reverse this relationship. In addition, the relationship might differ based on the nature of programming, such as art versus entertainment films. Design/methodology/approach Empirical analyses were conducted on 134 movies released between 2000 and 2007 using a generalized method of moments instrumental variable approach. Findings The estimation results from product placement data on 134 movies released between 2000 and 2007 show that product placements have a significant positive effect on consumer ratings, but when used in excess, the effect becomes negative. In addition, a significant interaction exists between the nature of the film (mainstream vs independent) and the number of placements, such that consumers of independent films are much less likely to view product placements positively. Originality/value This research is the first empirical paper that demonstrates the effect of product placements on the evaluation of the media using secondary data.