Brands had expected reduced profits due to recession

The recession was expected to reduce the amount of dollars Madison Avenue’s brands doled out on branded entertainment deals.

But a new report released by PQ Media today reveals that spending on everything from paid product placements to event sponsorships declined just 1.3% to nearly $25 billion last year. Worldwide, spending slipped just 0.8% to almost $55 billion.

It was the first time branded entertainment showed any sign of a decline, after four consecutive years of double-digit growth and 35 years of consistent growth, according to the PQ Media Global Branded Entertainment Marketing Forecast. Firm is one of the few that attempts to put a value on branded entertainment pacts — deals in which consumer brands turn to entertainment as a way to rise above the clutter of traditional advertising to appeal to buyers.

With the economy showing signs of rebounding, PQ Media expects spending on such deals to grow 5.3% in the U.S. this year.

“The cascade of new media platforms and technologies have led to significant changes in consumer media use, which has forced brands to rethink long-held beliefs about effective strategies to reach target audiences,” said Patrick Quinn, CEO of PQ Media. “The availability of content through the internet, mobile devices and social networks, the difficulty of reaching more elusive target consumers, and the transformation of personal communications due to these developments have made it more important than ever for brands to invest in strategies to engage target consumers in captive locations for extended periods of time through the power of emotional connections.”

Broken down, event sponsorship and marketing declined 1.1% in 2009 to $21 billion. Product placement deals, covering TV, film, the internet, videogames and other media, decreased 2.8% to $3.6 billion. Figure does not include the value of non-paid placements.

Study cites such examples as Coca-Cola’s sponsorship of the Winter Olympics, where it touted its environmental messaging, and Lady Gaga’s nearly ten-minute musicvid for “Telephone,” which includes 10 product placements and was viewed more than 4 million times in its first 24 hours on YouTube.

The figures still signal that branded entertainment in the U.S. was less effected by the recession than traditional advertising, which was off by 14%, PQ Media said.

The U.S. remains the largest market for branded entertainment deals, accounting for 45% of total spending in 2009, and is expected to continue to dominate through 2014. But China is expected to be the fastest growing territory, up 19% through 2014.

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