How Hollywood sold out

Meet Hollywood's hottest new star - a major presence in Austin Powers: Goldmember, and soon to turn heads in the James Bond film Die Another Day. But those lingering camera shots on Mike Myers's "Shaguar" sports car are no accident - they are the result of intense negotiations between Jaguar and the studio to promote the luxury XK8 model on screen. And it's working: the film's box-office success has already proved a huge boost for Jaguar in the States, where last month sales were up 73 per cent year on year.

It's just the latest example of how product placement is shaping what you see on screen, and this summer the logos are proving harder than ever to ignore. From Head & Shoulders shampoo in Men in Black II to Guinness in Minority Report, brands are being written into the plot or used as props in exchange for marketing support or straight cash. In making Minority Report, Steven Spielberg recouped around a quarter of his £103 million budget through deals with 15 "partners" such as American Express, Gap and Bulgari, including one deal with Lexus cars worth a reported £3.25 million simply to put Tom Cruise in the driving seat. If you're there simply to enjoy the movie, it's proving impossible to avoid the sales pitches.

These deals are nothing new - back in 1951, Gordon's Gin starred alongside Humphrey Bogart in The African Queen - but in the past few years the practice has boomed. When Spielberg featured Reese's Pieces chocolate in ET 20 years ago, sales rose by two-thirds within three months. Since then, BMW has spent a reported £49 million to promote three James Bond movies in exchange for featuring its cars, and Mercedes-Benz put around £13 million behind Men in Black II. Only last week, Coors struck a deal with Miramax Films to feature its beer in 15 movies, starting next year with A View From the Top, starring Gwyneth Paltrow, and Duplex, with Drew Barrymore. The secret deal runs into tens, if not hundreds, of millions of dollars.

Mostly, though, products are simply lent to film-makers. The Big Film Group, a leading British product-placement agency, even runs a warehouse in Wellingborough, Northamptonshire, where production crews can choose from 900 branded products. "It's just like a cash-and-carry," says Graeme Atkinson, the agency's managing director - except that no payment is required. The company represents around 50 clients, including Motorola, Coors and Audi - you may have noticed the cars in About a Boy - and saves producers the trouble of buying in props.

"We'll have had products in most British films," says Atkinson - from Grolsch beer in Sliding Doors to Swan Stabilo pens in Bridget Jones's Diary. If a product features prominently, a contract might be drawn up offering "back-end support" - anything from beer for the launch party to a global ad campaign built around the movie. "It's a no-brainer for both sides," says Atkinson.

So how did Mike Myers come to drive his shagadelic Union-flagpainted Jaguar in Goldmember? That deal was set up last summer by Showcase International, a placement agency that works so closely with the car-makers that Brian Daly, its senior MD, has an office within Ford's Michigan HQ. "We'll get to see about 10 or 20 scripts a week, but we won't look at a film project until it's been 'green-lit', with guaranteed distribution and the right star. Money doesn't change hands, but often marketing value does. No major player in Hollywood wants a cheque - they want visibility," says Daly.

The exceptions include mobile phones and fast food, where intense competition can lead to bidding wars to feature products. "Let's say a studio wants to save $4 million [£2.6m] on the cost of the movie," Daly says. "They'll go to a mobilephone company and offer some screen presence, in return for, say, $30,000 [£19,000] and a promotion." That explains the current Nokia ads that mention Minority Report - even though the ads state that the phone doesn't feature in the film.

But aren't the products getting in the way of the story? Aren't we merely being forced to watch extended commercials?

Brian Daly says that heavyhanded placements do more harm than good. "The audience will come away feeling that it was M&Ms that abused them, rather than the production company." Or, for that matter, other movie stars from Jaguar to Head & Shoulders.