Movies & the media: 2006 theatrical marketing
Once again, studios prove that when it comes to movie marketing, they're all spend -- and no thrift.Hollywood can breathe a sigh of relief.
In an era when spiraling marketing costs have become the bane of all the major studios, Nielsen Monitor-Plus data suggests that for the first time in several years, the studios have managed to rein in the amount they spend on advertising -- or at least on "media buys," the segment of their marketing budgets that goes toward the purchase of advertising on television, billboards, etc., as opposed to the costs for labor and free publicity.
The total spend for the major studios in 2006 was estimated at a little more than $3.5 billion -- $3.541 billion, to be precise. That is just a whisker higher than the $3.5 billion spent in 2005 and the $3.3 billion spent in 2004. But most insiders believe the news might be even better than it seems, not just because of inflation but because the studios have been releasing a larger number of films than in the past. That means they are spending notably less on a per-film basis.
"The total number of films released with significant media budgets has gone up," Universal Pictures marketing president Adam Fogelson says. "There is no doubt in my mind that there are more wide releases every weekend now than there were five years ago, by a lot."
Nielsen's estimates concur with numbers released by the Motion Picture Association of America. At ShoWest this year, Dan Glickman, chairman and CEO of the MPAA, said that the average amount of money studios spent on marketing individual movies in 2006 stood at $34.5 million, fractionally lower than the previous year. (The studio's production cost for the same movie was $65.8 million. The MPAA numbers, however, did not include additional spending on production and advertising by nonstudio sources, like the hedge funds that have invested in whole slates of movies.)
Most marketing executives say they did not spend significantly more on media buys this year than in years past.
"Studios are spending an amount consistent with the rate of inflation in the media world," says Gerry Rich, worldwide marketing president at Paramount Pictures. "The largest component of a (prints and advertising) spend by far is the media buy, but the cost of that has not gone up significantly in the last couple of years -- only 1%-3% on average."
He adds, "We are mindful of the fact that the studios are cost-conscious, and we want to spend money on the elements that drive boxoffice."
The studio that drove boxoffice the most, Sony, also spent the most on media buys -- an estimated $694.7 million in 2006, up from $550.6 million in 2005.
Warner Bros. came in second, with expenses of $621.2 million, a significant jump for the company, which spent $529.0 million in 2005. Up next was Universal in third, with expenses of $531.0 million -- compared with $559.6 million in 2005. Fox followed at No. 4, with $520.7 million, up from $486.4 million in 2005. Buena Vista came in at No. 5, with an outlay of $481.5 million, compared with $368.2 million the preceding year -- but that number also included media buys for its subsidiary, Miramax Films, which previously was broken out as a separate studio. (In 2005, Miramax spent $189.1 million.)
Paramount also saw its numbers inflated thanks to the addition of DreamWorks' releases. The combined companies' expenditures stood at $420.5 million, compared with $371.1 million for Paramount and $207.7 million for DreamWorks in 2005. They were followed by New Line ($175.2 million vs. $175.8 million), the only studio besides Universal to spend less than in 2005.
MGM, transitioning to its new life under the leadership of Harry Sloan and Rick Sands, upped its spending from $53 million to $96.8 million, still the lowest figure among the majors but reflective of the studio's relative dearth of major releases.
While the studios often spent the bulk of their money on their biggest and most successful releases, the correlation between boxoffice performance and media buys was not an exact science. Buena Vista's "Cars" led in terms of marketing costs, with media buys of $51.8 million, several million dollars ahead of its nearest rivals, Warners' "Happy Feet" and Sony's "Casino Royale," with media buys of $44.4 million and $43.9 million, respectively.
Warners spent almost as much on two underperformers, the belly-flop "Poseidon," which tabulated $43.3 million in media buys, and the spindly "Blood Diamond," which tallied $41.7 million in media buys.
Among the best bargains in terms of cost versus boxoffice was the already cited "Pirates."
"We were certainly in a great position with 'Pirates,' where we knew that it was a beloved first movie," says Jim Gallagher, president domestic marketing, Buena Vista Pictures. "We had to give people enough to make them feel they were dying to see the film, without giving them so much that they felt they had already seen it. We tried to be responsible in our spend and only do things that would take us from the high level we were at already to a higher level, so we did a lot of 15-second spots to make sure we were getting out there with the title and the idea. We wanted to make sure everybody knew we were back."
Another bargain was the Ben Stiller comedy "Night at the Museum," on which Fox spent a frugal $34.4 million. But Fox had less good news with "Eragon," its family fantasy and a movie it had hoped would lead to a new franchise. The studio's $36.3 million in media buys didn't help the picture become a blockbuster. Even more disappointing was Paramount's "Failure to Launch," which lived up to its title despite studio backing to the tune of $37.3 million.
In all, the majors spent about one-quarter of their media budgets on their top 25 releases, or just under $1 billion. None of the indies could compete with the studios in terms of outlay.
Among the indies, the Weinstein Co. -- whose fizzling releases led to an outpouring of hostile media commentary this spring -- led the way with a breathtaking $172.7 million in media buys, followed by Lionsgate, which reflected its increasing boxoffice dominance with a $102.4 million spend.
Fox Searchlight and Focus followed with $71.2 million and $71.4 million, respectively, a clear indication of just how expensive it has become to release even independent-oriented movies.
"For an independent picture, usually the amount spent on marketing is much more than the advance (paid for the film itself)," Picturehouse president Bob Berney says. "Our biggest cost (buying media) is increasing all the time. It inhibits you from buying a film where you can't think of a way to reach a broader audience."
Finding a way to reach that audience has been a major preoccupation for all marketers as old media have jostled for attention with new media. Perhaps surprisingly, the majors have continued to invest heavily in old media.
While spending on network television and in newspapers continues to erode, it has not been replaced by a quantum leap toward the Internet.
Eight years after "The Blair Witch Project's" radical Internet campaign drew awe-struck gasps from marketing executives, they have stuck to spending relatively little on the Web, which accounted for less than $100 million or just 2.7% of their total spend. True, this was up from the previous year's 1.5%, but that was down from the year before, when the studios spent 2.1% on the Internet.
"It is about finding the right mix," Rich says. "I don't think there is a playbook that is germane to all films at all times. We are trying to be much more impactful with the new media -- and that means going well beyond banner advertising. We are really intent to secure as much content integration as possible, and that is the difference between editorial and paid ads."
He adds: "There is more and more clutter online. Because (the Internet) is still in its infancy, companies and Web sites have gone through many evolutions, and we are all trying to determine the best way to engage with the consumer. We don't have the same history with online as with traditional media, so there has been a lot of experimentation."
Nielsen's numbers also might disguise some online expenditure when it includes package deals done with newspapers for both print and Web.
"A lot of the online stuff is still listed as newspaper (spend)," Berney explains. "Most papers are running combination specials with their own site and the paper, so there could be some blurring."
Nielsen's numbers are somewhat at variance with the MPAA's statistics, released this year, which indicate that the majors have boosted Internet spending to 3.7% of their total.
"Online is playing a greater role," says 20th Century Fox's Pamela Levine, co-president of domestic theatrical marketing. "That is largely tied to the role that MySpace has had in several of our most successful campaigns, like for 'X-Men: The Last Stand' and 'The Devil Wears Prada.' It has proved to be a great platform for us."
With "X-Men," she says, "We did the first ever home page 'skin,' where everything other than the couple of little boxes where you sign in was 'X-Men' character art. But the challenge is always to find innovative ways to break through with your message. Now everybody 'skins' the MySpace home page. What is new quickly becomes one of the old tools."
Despite such activities, Levine acknowledges, "I am kind of surprised" that online spending has not gone up more. "The most interesting thing is, you haven't seen this long-predicted shift away from television. Television advertising clearly remains our most effective tool for building awareness and closing the sale."
The Big Breakdown
With Internet spending toward the bottom of studio priorities, network television thus remained at the top -- though trending ever downward.
In 2006, the studios spent $1.13 billion on network commercials, or 32.0% of their total for media buys. As a percentage, that was notably down from the 33.8% spent in 2005 and the 35.9% spent in 2004.
Even with colossal hits like Fox's "American Idol," studio executives say they are being lured by other media.
"People are growing more comfortable using marginal dollars elsewhere," Fogelson says. "That is in no shape or form a suggestion that good network programming is any less effective than in the past. But some of the dollars that would have fallen into network a few years ago might now be falling into something else."
Advertising experts who have voiced doubts about the long-term future of commercials -- the bread and butter of broadcast television -- and who believe that TiVo will kill its ad-supported basis might have to rethink their position after another Nielsen study released this year indicated that audiences were still watching commercials despite TiVo's growing penetration of households.
Keeping eyeballs on the TV when a show originally airs means networks have had to come up with event programming, a strategy Russell Schwartz, president of domestic marketing at New Line Cinema, says is exorbitantly expensive.
One of the highest-costing shows, "Idol," is now asking $700,000-$900,000 for a 30-second commercial and, insiders say, as much as $1.2 million for the finale. Another hit show, ABC's "Desperate Housewives," costs $600,000-$800,000 for 30 seconds with an original episode.
Outside network television, syndication buys declined, accounting for $72.4 million or 2% of the total (compared with 3% and 4% for the two previous years).
"There is far less creative flexibility with syndication," Fogelson says. The reason, he says, is that "television spots that are going to run in syndication have substantially advanced ship dates over either network or cable. In syndication, if I am going to run a spot next Monday, I have to send it this Monday. With network, I can ship a spot today and have it on the air tomorrow. And with the amount of competition in the marketplace, it is certainly helpful to be able to adjust and refine your message as quickly as possible."
In contrast to syndication, cable television continued an upward trend, accounting for almost $851.9 million and 24.1% of studios' ad money in 2006. That was up from 23% of the total studio spend in 2005 and 20.6% in 2004.
"When you have shows like (FX Network's) 'Nip/Tuck' or the breakthrough shows on Bravo or Fox News, the cable ratings are in a different world than they used to be," Levine says. "They're still much less than network, but you have to pay attention to the audience they reach. There are also some unique things going on in cable. For example, if you have a movie that deals with food, you can go to the Food Network. There is a unique opportunity to target in a very specific way."
Precise targeting helps explain why spot TV (television purchased on a market-by-market basis rather than nationally) also was up, accounting for $648.7 million and 18.3% of the total in 2006, compared with 15.9% in 2005 and 14.5% in 2004.
"There is probably more of a focus these days on a targeting," Levine says. "Network has the lion's share because delivering a broad message is critical; but local allows you to target to different types of customers."
As an example, she cites Fox's 2005 Johnny Cash biopic "Walk the Line." "We had creative messages that went across as wide a spectrum as a 20-year-old old rock 'n' roll fan who idolized Johnny Cash to a 45-year-old woman in Tennessee who was a country fan," Levine says. "You want to deliver different messages to them, which spot and cable are very effective ways of doing."
Spot and cable both have another advantage over blanket national buys: Their cheaper cost allows the studios to purchase enough commercials to have far more frequent airings.
"There are traditional media theories about how many times you need to reach people," Levine says. "The most traditional way to look at television buying is that you look at both reach and frequency -- reach being how wide you are reaching, and frequency being how many times you are hitting them (the audience). On something like 'Night at the Museum,' where we were trying to reach virtually everyone, you want tremendous breadth, but you also want to be hitting people frequently enough to break through. If that were a very targeted campaign, you'd be looking at much less reach but greater frequency to penetrate one core group."
Some studio marketers veer more strongly toward spot buys than others. "I keep thinking we want to do more spot than we do," Schwartz says. "Spot allows you to target a market more; it allows you to put more emphasis on a specific market if your film plays better there. That is good for any movie that is not a 'four-quadrant' movie -- like an urban movie, where there are markets you want to target more."
But he adds, "Once you reach 20-22 markets, it becomes cost-ineffective because the amount of money it costs to buy those top 20 markets would be the equivalent of what a network ad would cost, which would cover all 240 markets."
More precise than spot TV is print advertising, usually aimed at an older and more affluent audience. But newspapers continue to lose studio advertising dollars. Although the studios still spent almost half a billion dollars on newspapers, as a percentage of the whole this continued a sharp slide, hitting 13.5% compared with 15.4% in 2005 and 17.9% in 2004.
"Even in our arena, (the specialty market) is diminishing," says Nancy Utley, COO at Fox Searchlight Pictures. "More and more, people want the breaking news when it happens, and they get it online. Even in our neck of the woods, we have started deviating from newspapers to online."
While there are often package deals, she says, "Most papers charge you separately, so it isn't like you buy a page and you get something online free."
Recent figures put out by the newspapers present an even bleaker picture than Nielsen's numbers. While many saw their online advertising revenue rise, in February ad revenue was down 14% for USA Today compared with a year ago. Ad revenue declined 7.5% at the New York Times Co. and 5% at the Tribune Co. The Wall Street Journal saw an ad decline of 10%.
Nor has newspaper advertising become much cheaper.
"For the top papers, it is up in the $500-$700 per column inch," Berney says, "which means that a full-page ad is $20,000-$30,000 for the big ones like the Los Angeles Times and New York Times. A lot of times, the indies don't do full pages or color, but more and more you feel you have got to go bigger and stand out. With 'Pan's Labyrinth,' we went with full-page, color ads and in the New York Times at about $20,000-$25,000 for a page."
For the mainstream studio divisions, print might be on the way out for good, especially when it comes to reaching a younger audience.
"Pre-Sunday and pre-Thursday ads have gone by the wayside because it is all about the Friday opening ads," Schwartz says. "We use television and online as awareness builders, and this becomes just about where the movie is playing, not pre-awareness."
The same factors that have led Hollywood to turn away from newspapers have also led it to shun magazines, though to a lesser degree. Magazine spending stood at $25.7 million or 0.7% of the total in 2006, compared with 0.9% in 2005 and 0.7% in 2004.
"I believe in magazines for editorial for movies," Utley says, "but they are very hard to afford for advertising movies, and they are quite rigid in their closing dates."
The cost of the top magazines can be prohibitive. A page in People and Time magazines costs $240,000-$250,000, and a full page in Parade is about $850,000 gross. (For reference, a full-color page in The Hollywood Reporter is about $14,000.)
"We did one advertisement for (2004's) 'The Notebook' with Parade," Schwartz says, "because we felt that was a perfect audience for this movie. But we haven't done it since because it was very pricey and it was very hard to quantify the return."
So, why not abandon magazines altogether? "There are some movies that lend themselves to magazines," he says. "Certainly for (the upcoming July release) 'Hairspray,' we are contemplating advertising in some of the teen magazines. And a lot of the magazines are now coming to us with promotional things, everything from screening programs to a contest or giveaway. They are trying to give us a little more value."
More value still might come from Spanish-language television, where network buys stood at $80.6 million, or 2.3% of the total (compared with 1.9% in 2005 and the same figure in 2004).
Spanish-language cable remained a blip at $2.6 million or 0.1% of the total -- a statistically negligible increase from the two previous years, when it equaled 0% of the total.
This, despite a report by Nielsen Monitor-Plus last month that indicated total spending for Spanish-language media jumped 14.4% from 2005, to $5.59 billion. Given the large Hispanic audience and its disproportionately high rate of movie attendance, one might expect the studios to spend more on these venues. Not so, Levine says.
"A lot of the Hispanic moviegoers are also watching English-language network, cable and spot television, so we are reaching them that way," she says. "There is also a real focus on them in terms of our field marketing measures, making sure you have a real publicity presence in Miami, New York, places where that audience is."
She adds, "The spend number is not reflective of a lack of emphasis on them; it reflects a question about whether the most effective way to reach them is in Spanish-language television."
One of the oldest media, radio remained relatively flat, with $65.2 million in buys, or 1.8% of the total, compared with 1.9% in 2005 and 1.5% in 2004.
Radio tends to be very film-specific, Schwartz says -- that is, it fits some movies well and not others. "We blow hot and cold on radio, but some films are perfect for it -- again, 'Hairspray' is the perfect radio movie because it's a musical."
But radio also has benefited from the shift to satellite -- hence, while traditional radio is down, satellite is up "because there are 12 million subscribers of satellite radio," Rich says. "It mirrors what happened in the cable world. Every new network caters to a different niche."
By contrast, the least niche-oriented of all media, outdoor (that is, billboards), showed a modest decrease to $88.2 million or 2.5%, compared with 2.7% in 2005. That itself was a big jump from the 1% of spending outdoor drew in 2004.
Like radio, outdoor often is driven by the particular film.
"The key art may not always lend itself to the outdoor medium," Rich says. "We used billboards effectively with 'Nacho Libre' because the color palette was so fresh and vibrant. We also used it a lot in Hispanic areas where the film had lot of appeal because of the subject matter."
But, he adds: "It is very hard to be as targeted outdoor. And you could also have art that goes completely ignored."
Ultimately, it is being ignored that the studios dread. And in a rapidly changing media landscape, it is the job of the marketing presidents to figure out how to avoid that. This is the question that looms throughout their thinking.
"More than anything, we are going to have to ask ourselves the question: Where are the marketing dollars best spent?" Rich says. "Now marketing goes beyond demography: We are looking at the media in a psychographic regard, based on lifestyle choices (rather than age and gender). If you were marketing films 15 years ago, you were looking at broad-reach mediums. But now, we are able to understand the consumer much more. We are able to dig much, much deeper and find other commonalities besides age and gender and race."
There is still a long way to go, he adds. "We need to go beyond demography and understand our consumer on all levels."
MORE MOVIE MARKETING COVERAGE
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2006 movie marketing profiles