Brand spending grows nearly 15%

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NEW YORK -- Spending on branded entertainment, including event sponsorship and marketing, paid product placement, advergaming and webisodes, grew 14.7% to an all-time high of $22.3 billion in 2007, according to new research from PQ Media.

The Stamford, Conn.-based alternative media research firm said branded entertainment grew at a compound annual rate of 13.4% from 2002 to 2007 and is projected to expand another 13.9% to $25.41 billion in 2008, despite slowing overall economic growth and traditional advertising growth rates in the low single digits.

"Americans are spending more time outside their homes, online at work, communicating via wireless devices and multitasking with various media, which has created a generation of elusive consumers for brand marketers to try to reach," said Patrick Quinn, PQ Media president and CEO. "Alternative marketing spending is growing at multiples of traditional advertising and overall economic growth. There's real big money being moved out of broadcast television that with the writers strike may not be moved back." Record political campaign spending on alternative media is also expected to contribute to the strong growth this year.

In the report, titled "Branded Entertainment Marketing Forecast 2008-2012," PQ Media defines branded entertainment marketing as event sponsorship and marketing, paid product placement and advergaming and webisodes. Event sponsorship spending rose 12.2% to $19.18 billion in 2007, paid product placement grew 33.7% to $2.9 billion, and advergaming and webisode spending increased 34.8% to $217 million. While it's the smallest branded entertainment segment, advergaming and webisodes is the fastest growing, climbing at a 51.7% compound annual growth rate from 2002 to 2007.

The event sponsorship growth rate was up from 11.3% in 2006 and 11.1% in 2005, but paid product placement growth was down from 44.6% in 2006 and 48.7% in 2005. Webisodes and advergaming were down from 38.8% growth in 2006 and 48.7% in 2005. Total branded entertainment spending growth was up from 14.4% in 2006 and 13.9% in 2005.

Branded entertainment spending growth is expected to decelerate slightly in 2009 due to declining economic growth, maturing markets and the absence of cyclical spending infusions, such as political campaigns, PQ Media said.

The outlook for branded entertainment marketing through 2012 is for double digit growth overall despite slower economic expansion. The sector is expected to grow at a 12.8% compound annual growth rate from 2007 to 2012, exceeding $40 billion.
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