Cinema advertising advantage: Council reports growth and continued innovation
Sept 22, 2009
-By Andreas Fuchs
“One of the most exciting things [about] the cinema is that the growth curve continues, despite the fact that the media economy has really hit the skids,” attests Dave Kupiec on behalf of the Cinema Advertising Council (CAC). “We’ve been very pleased.”
When we conduct our annual state-of-the-industry conversation with the reigning chairman and president of that trade association, better business is something that we have come to expect. And indeed, since the CAC first began tracking ad revenue in and from movie theatres back in 2002, the average annual growth rate has been a remarkable 21.5% (for details, please refer to our table). Coming in at 208% higher than six years ago, 2008 is no exception to that rule of success.
Even better, the economically challenged immediate 2009 past and present have not been hurting as they have other media. “There are more deals being written than there were a year ago, but for smaller amounts of money.” In other words, “it takes a few more deals for the same level of revenue,” Kupiec assures. “I see that as a very positive sign because that means more and more advertisers are interested in our medium as their overall budgets have been slashed. They don’t have as much money to put in.”
According to the independently collected 2008 report, total cinema-advertising industry revenues of CAC members, who account for more than 82% of U.S. movie screens, grew by 5.8% over 2007. Kupiec further notes that “was higher than for any other medium, even higher growth than the Internet experienced… When times are tough and dollars are tough, advertisers are spending less and thinking even more carefully about where they are spending their budgets. They have clearly turned to the cinema medium and said, ‘OK, this is a place to get big impact and to have people really remember and pay attention to my message.’”
Among the top cinema-advertising categories looking for that big bang were Associations & Causes, Automotive, Broadcast & Cable Television, Consumer Electronics, Consumer Packaged Goods/Health & Beauty, Credit Cards, Fashion, Military, Movie Studios, Retail, Telecommunications and Wireless. Activity increased across a wider range of new groups as well, including Retail, Electronics, Leisure/Tourism and Financial Institutions. “Reinforcement means a lot more when the economy is down,” Kupiec feels. “It’s always easier to be up when everybody is up.”
Another strong sign is the latest quarter’s 11.6% increase from $74.8 to $83.5 million in revenue at National Cinema Media (NCM), where Kupiec is the executive VP of sales and marketing. “We were up double-digit numbers for the second quarter 2009 over 2008,” he reports, changing his hat for a moment and citing independent press reports. “There are only two other media companies among those that are tracked that showed growth… One was Google and the other was Discovery, both of which were single-digit. Again, there you have cinema bucking the trend in a very, very down time. That’s good.”
The reasons are partly that the industry still has inventory that is not fully sold out, while key flights during major moviegoing months are booked well in advance. “Secondly, the awareness level of advertisers has grown tremendously over the past three, four years,” Kupiec reviews. “While television is still the Big Kahuna and gets the lion’s share of the budget by far,” he has noticed, “there is a replacement strategy going on with some of our clients looking for other sight, sound and motion vehicles to either make up some of the audience they have lost with television or they feel that they are not reaching as effectively as they used to.” Examples, he says, include digital out-of-home networks at fitness centers, convenience stores and gas stations, though none show quite the same power as at the cinema.
In fact, a recent study conducted by Integrated Media Measurement on behalf of the CAC demonstrated that “combining television and cinema in an ad campaign more than doubled the consumer conversion rate as compared to television alone.” While that also doubles “the lift and extending incremental reach,” advertisers are “targeting key demographics including ad-avoiders” at the same time. “These are the results media agencies and their clients crave,” Kupiec asserts. “We just didn’t want to talk about recall and awareness alone—we know [cinema] has all the properties of the 40-foot screen and great sound along with an engaged audience to do so—but were specifically looking to prove ROI movement.”
What about the cravings of those attentive moviegoers? Are they finally accepting advertising in a pre-show? “We still conduct an annual study,” he confirms. “However, it is no longer about resistance because it has been all but eliminated. It’s more to gauge how we have gone from a neutral reaction to our various pre-shows to a decidedly positive one. Consumers have gone from not liking advertising on a very small level, to a passive and neutral response, to what is now very positive. While the much older moviegoers are generally the last holdout, who prefer not to have any advertising in movie theatres…the vast majority of people across all age groups say they’d much prefer to have an entertaining pre-show with content and ads while they’re waiting for the movie to start. Now, our research is all about how to make the entertainment better and better.”
In addition to establishing the high-quality digital network, which he calls “the major innovation,” Kupiec says the industry is “working closely with advertisers and content partners to make sure that we are really telling an engaging story at the cinema in a way it is meant to be used.”
With that kept top-of-mind by the creatives in this industry, in addition to continued innovation in theatre lobbies—Kupiec mentions holograms, interactive kiosks and 3D displays in addition to “the old standbys” of posters, standees and popcorn bags—Film Journal International has no doubt that we will again be talking about growth with the CAC in next year’s edition.
Editor’s note: Dave Kupiec will be participating in a panel discussion at “Advertising Week 2009,” hosted by USA Today and taking place Sept. 25 at 4 p.m. the Nokia Theatre in New York City. The session is titled “Hollywood: The Crossroads of Advertising and Movie Marketing.” For more information, visit www.advertisingweek.com.
U.S. Cinema Advertising Revenue
Year CAC Member Revenue % Growth
2002 $185,800,000
2003 $273,000,000 47%
2004 $367,456,000 35%
2005 $394,830,000 7%
2006 $455,661,000 15%
2007 $539,946,000 18.5%
2008 $571,421,000 5.8%
Source: CAC
On-screen revenues accounted for over 90% of total cinema-advertising revenues, with the balance going to off-screen sources such as audio programming, sampling, special events, concession- and lobby-based promotions. Additionally, approximately 76.53% is from national or regional advertisers (versus 23.47% from local sales).
In 2008, CAC members accounted for more than 82% of 38,794 U.S. movie screens. In an effort to provide data that is as accurate as possible, the CAC no longer estimates revenue for non-members or for beverage-category advertising (www.cinemadcouncil.org).
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