Spending on branded entertainment grew 14.7% year over year, to an all-time high of $22.3 billion in 2007, nearly doubling in size over the last five years as brand marketers shift budgets from traditional advertising to alternative marketing strategies, according to a PQ Media report.

No longer confined to just TV and film, branded entertainment marketing represented approximately 8 cents of every marketing services dollar spent in 2007, PQ Media said.

Branded entertainment marketing is projected to continue to expand - despite slowing overall economic growth. PQ Media forecasts 13.9% growth for branded entertainment in 2008, reaching $25.41 billion.

That growth will be due to brand marketers’ seeking strategies and media that engage youth and influential demographics, provide return-on-investment metrics and an influx of record political campaign spending on alternative media in a contentious election year, according to the PQ Media “Branded Entertainment Marketing Forecast: 2008-2012.”

Branded entertainment marketing refers to strategies that integrate products into entertainment venues that typically provide high engagement and interactivity. It includes three major segments: event sponsorship and marketing; product placement; and advergaming and webisodes.

Branded entertainment is expected to grow at a double-digit pace in 2008; according to the forecast, that growth will be driven by…

• Nearly $9 billion in event marketing spend.
• Robust product placement spending, particularly on reality programming, at $3.5 billion, up nearly 25%
• Growth in webisodes of 46%, as major networks begin to produce full-length online episodes in an effort to tap the coveted youth market

The outlook for branded entertainment marketing through 2012 is for double-digit growth overall, despite slower economic expansion in the period. The sector is projected to grow at a 12.8% CAGR from 2007 to 2012, exceeding $40 billion by the end of the forecast period.

Key 2007 trends affecting each segment of branded entertainment, according to the report:

• Spending on event sponsorship and marketing, the largest segment of branded entertainment, rose 12.2% to $19.18 billion in 2007. This segment attracts new customers by using face-to-face engagement, which is lacking in many traditional advertising and marketing strategies.
• Paid product placement spending grew 33.7%, to $2.90 billion, in 2007; the segment’s compound annual growth rate (CAGR) was 40.8% from 2002 to 2007. “Higher DVR penetration, combined with increased TV program product integration, helped drive paid product placement spending,” said PQ Media President & CEO Patrick Quinn.
• Spending on advergaming and webisodes increased 34.8%, to $217.0 million, in 2007, fueled by efforts among marketers to reach the 18-34-year-old demographic, which is watching less television and spending more time on the internet playing videogames and downloading videos.
• Advergaming and webisodes, the smallest branded entertainment segment, is the fastest growing, climbing at a 51.7% CAGR from 2002 to 2007.

“Even without an economic slowdown, there are strong secular trends driving investment from traditional advertising media to alternative marketing strategies,” said Patrick Quinn, President & CEO of PQ Media.

“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. And these trends have led to increased investment in alternative marketing tactics.”

About the study: The Branded Entertainment Marketing Forecast 2008-2012 is part of PQ Media’s Alternative Media Research Series. A summary of the report, along with methodology, is available for download.