Gearheads: The Sterling Communications Blog

A Still-Tarnished Peacock in an Over-Advertised World

I blogged in April about NBC and its shameless use of product placement in its programming. As I write this now, it seems that things haven’t changed much at the “Peacock Station.” This comes at a time when NBC really should change its ways, considering the top entertainment story of 2010 was the Leno-O’Brien fiasco – a continuing publicity headache for the network.

NBC, however, refuses to change and, just recently, got called out yet again for its product placement in perhaps its most egregious and hilariously obvious gaffe to date. On fall episodes of its long-running soap opera series, “Days of Our Lives,” the actors, with no subtlety, have extolled the benefits of several products to one another and made sure the labels on each package were ready for their close-up. For example, in an otherwise serious scene, one actor takes out a bag of Chex Mix and explains that it’s “like a million different flavors in your mouth at the same time!” The good people of the internet have been criticizing the show and network for awkwardly pitching random products, crediting the comedian and actor Kristen Schaal (“Flight of the Conchords,” “Mad Men”) with first setting Twitter abuzz with news of the soap opera product placement.

ABC, CBS, and FOX have yet to adopt the "behavior placement" model. Yet. Until then, they are leaving it in the hands of traditional advertisers for commercial breaks between their programming. However, what led to NBC blurring the line between programming and advertising – DVR/TiVo – remains an obstacle for traditional commercials (not to mention the recent passing of the Congressional CALM Act, regulating TV commercial volume). As a result, the number of 15-second television commercials has jumped more than 70% in five years to nearly 5.5 million last year, according to Nielsen (and as extensively reported by the Associated Press). Previously, 15-second ads were mostly edited versions of 30-second or even Super Bowl-length spots, but that’s changing. Advertisers are finding that viewers are becoming more visual by nature and can still catch the images as they fast-forward on their DVRs or TiVo’s. So, it may not matter that viewers can’t hear the ads as loudly (thanks to the CALM Act) or that ads are shrinking in length — as long as viewers are visually picking up on each ad while fast-forwarding.

Mason's Folly?

Re-reading a recent NYT interview about Groupon's founder walking away from Google's $6B offer, I was struck by how much this situation reminds me of the Yahoo!/Microsoft melodrama we witnessed in early 2008. Andrew Mason, like Jerry Yang, walked away from the negotiating table and is being coy about it.

Before saying "no" to Google, Andrew, I hope you took a good hard look at how well Yahoo's go-it-alone decision has worked out, both for its shareholders ($16.72/share on Dec .23, 2010 vs. the $33/share offered by Microsoft in 2008) and for its employees. I'm sure you see yourself as more akin to Mark Zuckerberg than Jerry Yang; for your investors' and employees' sakes, I sincerely hope you're right.

Even so, I'm betting that Amazon's recent $183M investment in #2 LivingSocial is going to make your life much more interesting in 2011. After all, Tony Hsieh and Jeff Bezos know a thing or two about creating loyal customers in markets that have no barriers to entry.

Let the games begin!