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Movies & the media
Distributors continue to throw money at
marketing but hold conservative on where to toss the cash.
By Stephen Galloway
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1000512483
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1000512483
More coverage: Studio spending: Distributors continue to throw big money at marketing How they did it: In-depth on the marketing for four recent, and divergent, releasesd Logging on: The Internet makes a great first (and 3 billionth) impression They're with the brand: Films and corporate partners make for mutually beneficial bedfellows On the fringe: Getting to those elusive syndie viewers Key Art Awards: Complete coverage of the annual marketing awards program. |
Do you purchase several spreads in the Sunday New York Times for $100,000-plus apiece? Or do you spread the wealth over a host of prominent billboards, each costing $10,000 and up per month?
Such are the daily decisions facing studio marketing presidents. The problem: They can't limit themselves to just one choice -- they have to buy whole swaths of different media in order to spread the word about their product amid an increasingly competitive environment.
And they are doing so more and more: According to Nielsen Monitor-Plus data, overall spending on advertising by the studios and major independents rose to nearly $3.3 billion last year, more than $200 million more than the previous year. More precisely, total spending in 2003 was $3,297.3 million, compared with $3,087.2 million in '02 and $2,606.1 in '01. And that figure rises even higher when the growing spending on Latino networks is included.
The choices are costly and complex, and Hollywood's reaction seems to be that when in doubt, stick with the tried and true. A case in point: Spending on magazine advertising totaled 0.7% ($24.2 million) of all media buys in 2003; it totaled 0.7% ($23.1 million) in '02 and 0.8% ($21.3 million) in '03. Similarly, newspaper ads accounted for 19.2% of the total spent in 2003, compared with 18.7% in '02 and 18% in '01.
In no arena did spending (taken as a percentage of the whole pie) shift by more than 1%-3%. Even network television, which rose to 37.6% of the total spent in 2003 (compared with 36.5% in '02), was merely leveling out to its '01 proportions, when it constituted 39% of overall spending.
Studio executives are unanimous in expressing alarm at these numbers.
"The spiral is just out of control, and it's just the studios trying to prove who's got the bigger (penis)," Sony Pictures Classics co-president Tom Bernard says. "If one guys spends X amount of dollars on his giant summer blockbuster on 7,000 screens, someone else thinks, We're going to spend more. The more people spend, the more it forces a competitor to spend because they have to scream just as loud. And the media outlets who receive this money are just unscrupulous in their rates."
Agrees Universal president of marketing Adam Fogelson: "The number of films that are being released in a given year and on any given weekend, combined with the intensely competitive nature of the industry, have led to these increases. It's going to require a great deal of discipline, cooperation and collaboration amongst studios, filmmakers and talent to responsibly address the numbers."
There are reasons why it will take a commitment from talent and others, not only marketing executives, he adds.
"Everything we do in this business is pretty public: Everyone sees everyone else's TV campaign, everyone sees everyone else's newspaper ads, and if you are seeing five TV spots for a competitor for every one of yours, on an emotional level alone, that is a very difficult and complicated issue," Fogelson says.
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2003
Movie-ad spending
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Network TV
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$1,239.2 (37.6%) |
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Newspapers
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$634.0 (19.2%) |
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Cable TV
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$609.2 (18.5%) |
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Spot TV
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$592.7 (18.0%) |
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Syndicated TV
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$120.5 (3.7%) |
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Radio
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$45.5 (1.4%) |
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Outdoor
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$32.0 (1.0%) |
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Magazines
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$24.2 (0.7%) |
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2003 Total
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$3.3 billion |
| Figures in $ million, movie-ad spending by major distributors in 2003. Source: Nielsen Monitor-Plus | |
Today, marketing is more costly and complex than ever before, and it probably will become even more so as a key staple of the filmgoing audience -- young males -- flees primetime network television for other sources of entertainment, making it much more difficult to reach via traditional marketing methods. That is one reason why marketing executives are attempting a range of new methods to target audiences; grass-roots campaigns, ATM ads, supermarket commercials and special screenings are only a few of the means with which they are experimenting.
No new forum has become as popular and significant as the Internet, which has become pivotal for youth-oriented potential summer blockbusters such as Sony's "Spider-Man 2" and Fox's "The Day After Tomorrow."
Most executives estimate that studios now spend 1%-3% of their marketing budgets on developing Web sites and buying Internet advertising. At least one top executive expects to spend as much as 10% of the marketing budget for one summer release on the Internet.
That is staggering when one considers that the studios all but ignored the Internet before Artisan's hugely successful 1999 feature "The Blair Witch Project." And many executives expect the Internet's value will only increase during the next two to three years, especially as inroads in broadband make homes more accessible for the type of high-quality trailers that are a movie's best asset.
"It's very hard to know what this will become, but the Internet is growing in usage -- and so is the quality of the images we are able to convey," says Pamela Levine, co-president of domestic theatrical marketing at Fox.
As more money is spent on the Internet, though, executives are wondering where less money will be spent.
"If the Internet is expanding, then what part of the pie is shrinking?" MGM president of worldwide marketing Peter Adee asks. "That is something we wrestle with all the time. The real problem is, nothing is shrinking so far."
Expenditure is actually expanding in other areas, especially Latino media and TV networks like Telemundo. The total spending on Latino TV networks was $68.8 million in 2003, according to Nielsen estimates, which is more than twice the amount spent on outdoor advertising (billboards, posters) and roughly as much as was spent on magazines and radio combined.
"Hispanic moviegoers have 'over-indexed' as a moviegoing audience," Levine says, referring to the fact that Latinos represent a higher percentage of moviegoers than their percentage within the overall population might indicate. "They are heavy moviegoers and tend to go in families or in larger groups, so they are very important on almost every movie. What we know about them is, they want to see big 'event' movies and comedies, and it is silly to only target them for movies that have some inherent Hispanic appeal."
Latinos are only one example of an increasingly fragmented audience that is forcing studios to spend even more as they try to draw them into their net. But it is not only such fragmentation that is leading studios to spend more. As in the housing market, there has been an inflation in advertising costs that dwarfs inflation nationwide.
"Sometimes people forget that the television networks are in business like any other business," Sony president of domestic marketing Geoffrey Ammer says. "The networks can go up in the double digits every year, whether the market is hot or not. Salaries go up, overhead goes up, the cost of shooting goes up and so does the cost of advertising -- and not just the networks, but cable, syndication, everything."
Adds Ammer: "With a certain network you might say, 'I am going to spend the good majority of my money with you,' and get only a 10% increase versus the 17% or 19% that the network would otherwise ask. But whether it is 5% or 10% or 17%, we still have to pay more."
Amid a corporate environment that is pressuring executives like himself to put a cap on spending, Ammer says marketing departments often have to accept that they must simply expect fewer ratings points for the same spend -- or search elsewhere.
"That's when you start to think outside the box," he says. "That's what we did with (the April release of) 'Hellboy,' where we made a deal and printed 500,000 copies of a DVD with behind-the-scenes stuff and footage and interviews and put some of our trailers on it and gave it away at Best Buy to a half-million customers for free."
At a cost of about 50 cents per DVD, that proved financially advantageous -- because the studio predicted that the DVD was likely to be picked up by those interested in that genre of film.
Sony did similar outside-the-box thinking for "Spider-Man 2," running a 2-1/2-minute trailer during NBC's "The Apprentice" that provided the network with a special attraction and gave the studio a lengthy commercial for a fraction of its usual price.
Still, Ammer admits, these are special events and rare occasions. "We are in the business all year-round; we are every day thinking of new ways to get our message out," he says. "But you still have to have the proper buys in media. You have to get the movie into the right environment."
Perhaps because of that, Hollywood has remained remarkably consistent as to where it has spent its marketing dollars during the past few years. Indeed, the Nielsen numbers show that Hollywood continues to use traditional media -- network television, radio, magazines, outdoor, syndication, cable and spot TV -- as it has done before. One of the striking things about 2003's numbers is how little they veer from traditional patterns of spending, no matter how much lip service marketing executives pay to the need for change.
"There is no doubt that following a formula that may have worked two or three or 20 years ago is not going to serve anybody," Fogelson says. Still, he adds, "There is a whole great conversation going on about where the audience is, and I don't think anyone has the perfect answer right now."
Finding that audience is costlier than ever before. Consider this: According to one buyer, a full-page ad in USA Today's weekend edition costs about $500,000, an ad in Time or Sports Illustrated can run $250,000, and an ad in Entertainment Weekly or Vanity Fair can cost $100,000 or more.
Those are only approximate numbers, and they vary from buyer to buyer. Still, a source adds, the numbers are enough to induce vertigo. "Billboards can cost up to $50,000 for the big ones with great awareness," he says. "Radio campaigns can average from $800,000-$2.5 million for a film, depending on how much one believes in their usefulness. And NBC's Thursday night shows can go for upward of $600,000." (NBC scored a $2 million payoff for 30 seconds during its "Friends" finale May 6.)
Another top executive says: "Prices are going up with successful shows like 'The Apprentice' or 'American Idol.' If you want that broad audience, it's expensive and can run you anything from $500,000-$700,000 for a 30-second spot, depending on if you are buying it upfront or from someone else who's selling it."
Network television remains the greatest source of all spending. In 2003, some $1,308 million (when spending on Latino networks is added) was spent, compared to $1,128.3 million in '02 and $1,016.5 in '01 ('01 and '02 figures do not include Latino-network spending). But every marketing chief says this remains essential in terms of both reaching a wide audience and getting an audience in for a movie's crucial opening weekend.
"With wide releases, you're reliant on electronic media, and almost all of it is television," Miramax chief operating officer Rick Sands says. "Television is the way you close your deal in today's world. You have your trailers, your publicity (free advertising constituting articles written in papers, televised interviews with stars, etc.), your promotional activities. You build it all up, but at the end of the day, the frequency and reach of the TV spots is ultimately what drives people to wide-release movies. Trailers create awareness, but it's really your last two weeks when you are buying TV advertising. That's what drives them into the theaters."
Cable advertising, Sands says, can have a similar impact, but it is much more carefully targeted to specific audiences. It is cable's ability to hone in on a particular audience segment that has made it increasingly popular with marketing executives. Hence, it is on a generally upward curve, going from 15% of the total spend in 2001 ($390.5 million) to 18.7% in '02 ($578 million) to 18.5% in '03 ($609.2 million).
Some executives believe that Nielsen's numbers fail to reflect exactly how important cable has become.
"The numbers you are throwing at me are not what I see from my end," Adee says. "I believe cable is actually growing much more. Overall, the networks are waning in their ratings, while cable seems to be getting stronger."
Because of this, and because of the relatively few network shows that can guarantee a big, wide audience, Adee says, cable is appealing more and more; he expects the numbers for 2004 will further reflect that.
"Cable is a very effective way to laser-target your audience," Sands agrees. "The moviegoing audience that watches television is very fragmented, and the way to hit specific demos is through the various cable outlets."
Buying spot television (that is, individual local markets as opposed to nationwide runs) is another way of targeting audiences that continues to appeal, though executives are veering fractionally more toward national buys: In 2003, spot TV made up 18.0% of the total ($592.7 million) versus 18.7% in '02 ($577.5 million) and 19.2% in '01 ($499.2 million).
That downward direction is a mistake, believes Russell Schwartz, president of domestic marketing at New Line.
"Regional buying is always a more efficient tool," he says, "and we (at New Line) tend to buy less on the networks than the other studios because we like to concentrate much more on the local level. We are very strong on publicity efforts locally, radio efforts and so on. We tend to view spot TV as better than blanketing the country."
Remaining fairly flat was radio advertising -- accounting for $45.5 million (1.4%) in 2003, compared with $43.6 million in '02 (1.4%) and $39.5 million in '01 (1.5%). Much of that may be connected to the limited expenditure of the art house chains or specialty divisions, which tend to opt for radio more than wide releases -- in part, a necessity given their reduced budgets.
Still, radio has its defenders for broad-based releases, too. "Radio in the summertime is great, especially for younger-audience movies," Ammer says, "because kids are at the beach or in their cars listening to the radio a lot. It's also a great vehicle for closing your campaign, (especially) the last three days (before a film opens), when you don't need to get them aware, and you just have to drive home the message that gets them in the theaters that week."
By contrast, newspapers have remained steady, even though their prime importance as a source for screening times has been somewhat supplanted by the Internet.
"Newspapers are starting to have some diminishing effect," Ammer notes. "We have done some research that tells us that there is a good percentage of people now using the Internet as a source for finding the location of a movie, and so there is less reliance on a newspaper."
So why are the studios not spending any less on them?
Here, according to Fogelson, is where matters beyond merely reaching the right audience can come into play, especially when it comes to advertising in two of the nation's most prominent and expensive newspapers: the Los Angeles Times and the New York Times.
"You are talking about north of $100,000 for a double-truck ad in the Los Angeles Times or the New York Times," Fogelson says, "and they're growing more expensive and getting disproportionately larger than the rest of country."
But there are reasons for this, he continues. "A buy in the New York Times or L.A. Times has multiple strategic objectives. Certainly one is to make sure that consumers in the two largest markets for moviegoing are seeing the product. Second, by and large, the major entertainment press will be covered by that. Third, it would be entirely fair to say that the political issues (of) the talent and the studio are basically being addressed. It is infrequent that a studio head or a director is going to pick up papers other than the New York Times and L.A. Times, and you have to receive a phone call saying, 'Why does the competition's movie have a full-page ad, and we just have an ad in the corner?'"
If newspapers remain important, by contrast, executives say they are getting a weaker and weaker return from magazines, which remain a paltry part of their spending, as outlined previously.
"Magazines are probably going to stay low," Schwartz says. "They are a two-dimensional medium, and they are not really sale-closers. Magazines are awareness-builders, and they certainly have a great function for that. But in terms of the CPM (cost per thousand) that you are paying for a magazine ad, that money is better spent for a cable or TV commercial."
Outdoor advertising remains relatively steady at 1.0% ($32 million), versus 0.8% in '02 ($24.4 million) and 0.6% in '01 ($16.2 million). It is largely influenced by the kinds of releases that are out in any given year and whether they are appropriate for billboards and posters.
Executives seem split on how useful outdoor advertising is. "Outdoor is becoming even more important because you've got to get that message out there," Ammer says.
Not so, says Schwartz: "We don't believe they are very effective. (They are) more of an appeasement for talent. But certain movies like (2003's) 'Elf' lend themselves to outdoor. That was a big, fun, happy Christmas movie, and I don't think we had the same outdoor look on any location."
Most strikingly on a downward curve is syndication, which totaled 3.7% of spending in 2003 ($120.5 million), against 4.3% in '02 ($133.9 million) and 5.9% in '01 ($154.3 million) -- meaning that, as a percentage, spending is down by almost half from two years ago. Few executives offer a simple explanation, though all recognize that many syndicated shows are older-skewing at a time when movie audiences are increasingly youthful. (See related story at right.)
If these overall percentages indicate that studio marketing policies have not changed radically, a look at the individual studios presents a rather contradictory picture, where each studio's spending may be wildly up or down in any one area, largely depending on its particular blend of movies.
Only two studios spent less in 2003 than the year before: Warner Bros. Pictures (which spent $476.2 million in 2003, compared to $500.6 million in '02 and $459.2 million in '01) and DreamWorks ($116.4 million in 2003, compared to $169.2 million in '02 and $126.4 million in '01). The DreamWorks number may have been reflected at the boxoffice. The company had a disappointing year -- and studios rarely keep throwing money at films they perceive as losers.
Among the studios spending more, Miramax was most visibly up, having dropped its expenditures in the previous year. In 2003, it laid out $235.5 million, compared to $160.5 million in '02 and $230.9 million in '01. Much of Miramax's added budget might have gone to (the Christmas release) "Cold Mountain," on which marketing sources estimate the studio spent as much as $80 million.
Some of these studios' expenses reflect their different advertising philosophies. Sony upped its network spending to $251.4 million (compared to $220.4 million the previous year), while Miramax, with a roster of specialty releases, continued to avoid outdoor, spending effectively no money in that domain.
What none of the studios has figured out is simply how to spend less year in, year out. Nor are executives optimistic that they will, in the near future.
Many look with alarm at two developments: rulings on e-mail junk "spam" that will make it harder to use the Internet so effectively; and the growing effect of TiVo, which could rock TV advertising in a way never seen before.
"TiVo, which is only in 1.5 million homes, is going to cause a problem," Ammer admits. "Right now, in all the research, people will tell you that 75%-80% of them know about a movie from television. If 60 million or 80 million homes have TiVo, what are we going to do? We know that the shows you TiVo the most are the top-rated ones, and I don't know anyone who would TiVo a show and watch it with commercials."
For now, that remains a distant issue. More pressing is the sheer cost of doing business.
"It has become such a competitive marketplace, and you still really need to get people to see your film," Sands says. "If you look at tracking lately, people are making decisions about what to see later and later because there is so much choice. You need to reach them. And that's getting more and more expensive."
Published May 18, 2004