Valuing branded entertainment

Branded entertainment deals in film and television shifted into high gear in 2004, with increasing amounts of money moving from traditional advertising to product integration, but one nagging question remains largely unanswered: what's it all worth? There is still no set pricing or valuation standard to guide advertisers and content providers in the deal-making process.

Sensing an opportunity in the advertisers' dilemma, at least a dozen companies are racing to find the magic measurement formula they hope will become the gold standard adopted by both Hollywood and Madison Avenue. But with so many variables at play in every placement and no agreement in the industry as to what factors need to be measured or what type of cost-per-thousand formula on which to base valuation, some question whether a standard valuation model will ever emerge.

And with confusion prevailing over whether advertisers even really want a standardized measurement tool, and brands insisting that only they can determine what an integration is worth to their companies, those that do believe a measurement standard eventually will be adopted by the industry still think it is years away.

"As time goes on, different approaches will be found to be more effective than others and out of that will emerge some kind of basic pricing structure, but it's not going to be something that happens for several years," said David Poltrack, executive vp research and planning at CBS.

Ranging from little-known startups to industry leaders in the fields of television ratings, media research, sports sponsorship, advertising and product integration, companies trying to evaluate, price or value product integration deals include iTVX in an alliance with the Deutsch Advertising Agency; Nielsen Media Research, Nielsen Entertainment, IAG Research, Brand Advisors, NextMedium, Delivery Agent, Propaganda Entertainment Marketing, Joyce Julius & Associates, Image Impact, IEG and Millward Brown. They all are hoping their measurement formulas will become as vital to the product placement pricing structure as Nielsen Media Research's local and national television ratings have become to determining the price of a 30-second spot.

While their methodologies vary tremendously, many of the companies factor into their measurement systems a cost-per-thousand, or CPM, based on the price of a 30-second spot, sports sponsorship rates or average rates across all media; TV ratings or projected audience size; the duration of the placement, and various characteristics of the integration. Some of the attributes being tracked are whether the brand plays a central role in the story line, whether the lead actors interact with the product, whether the brand is mentioned in the dialogue and whether the product appears in the foreground or background.

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