In a small business sense, product placement often means putting your logo on others' marketing materials – getting them to post your logo on their website, or on a brochure, or a business card. But the question here is — does that really help your small business to gain more recognition and, bottom-line, to get clients?
I think the answer can really depend on the type of company you're trying to align yours with. Does it make sense for your logo to appear on their materials? Is your product or service related to theirs in a way that a potential client would see the buying connection?
Also, what is the deal that the other business owner is trying to strike with you? Do they want to put your logo on their website out of the goodness of their heart, or do they want you to pay an advertising fee? If they do want a fee paid, then look carefully at their traffic statistics and visitor types, so make sure the price they want to charge will offer you a good return on investment.
If they want you to sponsor their print run of marketing materials in exchange for putting your logo on the back corner of a brochure, really examine whether the design would show off your logo, and whether people would even be likely to notice your logo at all. If they do notice it, they'd still have to look at it long enough to react and then do some research on your offerings – it may not be worth the cost.
So, the short version of this is, if you're offered a logo placement deal, look at:
– Cost to your business
– Level of exposure you'd get (how many people would see it)
– The type of client who would see the other marketing materials (are they even a good potential client for you?)
– Whether the other business is a good "buying connection" for your business (when someone purchases their products/services, would they even be looking for yours any more?)
Then weigh these factors to see if placing your logo on the materials would make sense.