Some Thoughts About
On-Screen Advertising
Whenever
the nature of a business evolves, the changes engender
public scrutiny. Changes in the movie theatre business
produce particularly intense debate because we operate
in a high-profile environment. The relatively recent
advent of on-screen rolling-stock advertising for products
and services other than future motion pictures has produced
just such a debate. I consider this scrutiny healthy.
Some NATO members, believing that
screen advertising has the potential to substantially
increase revenues
without losing customers, have aggressively implemented
new advertising programs. Other NATO members, believing
that screen advertising will hurt business in the long
run, have maintained a policy against such advertising.
This is the beauty of a competitive industry. These
different philosophies produce different operating policies
that
in turn offer the patrons choices. Only long-term profitability
analysis will tell us which path was better.
Exhibitors should monitor the facts
closely as the debate progresses. There are roughly 35,000
movie screens
in
the United States. Approximately 24,000 of them now
show ads. Screen advertising currently constitutes
a $300
million business, and looks to grow another 30 percent
in calendar year 2003.
This is the beauty of a competitive industry. These
different philosophies produce different operating
policies that in turn offer the patrons choices. Only
long-term profitability analysis will tell us which
path was better. |
Why do advertisers consider movie
screens an attractive medium? First, ads in the theatre
seem to work better
(from the advertiser’s perspective) than ads in
the home, for the same reasons that movies work better
in the theatre – big screens, great sound, captive
audiences and no distractions. Recall levels for cinema
advertising vastly exceed those for television commercials.
The A.C. Nielsen company estimates that 80 percent of
theatre patrons can remember the subject of an on-screen
ad – roughly five times more than can recall
television spots.
Yet the power of the medium also produces
more intense customer reactions. Theatre patrons have
created
online petition drives to protest screen advertising,
and
some have called for boycotts – of the theatres that
show ads as well as the companies who advertise their
products in theatres. In a highly publicized – albeit
frivolous – lawsuit, some patrons in Chicago
sued two NATO members for running screen ads
after advertised
movie show times.
Do these protests represent widespread
patron unrest, or simply a small vocal minority? And
will patrons
become more or less opposed to screen advertising
with the passage
of time? Exhibitors must watch closely as the
answers to those questions evolve.
Currently, according to Arbitron,
66 pecent of theatre patrons “do not mind the advertising they put on
before the movie starts.” Younger patrons accepted
advertising at much higher rates than their older counterparts.
Among teens, 76 percent don’t mind ads. But among
those 55 years of age and older, only 59 percent don’t
mind the advertising. For the pro-commercial
exhibitors, this data suggests that a strong
majority of patrons
will accept the new phenomenon of screen
advertising. For the anti-commercial exhibitors,
this data also reflects
that a substantial minority of patrons (roughly
one third) does object.
For those exhibitors who chose to
accept screen advertising, I have made three suggestions
in the past: Keep the
ads short, keep them few and keep them
entertaining.
Theatre
patrons in Europe seem to tolerate cinema
ads
more easily than do Americans. In Germany,
cinemas routinely
run
20 minutes of commercials or more. I doubt
Americans will react the same way Germans
do, at least
in the short term. Make certain the commercials
Americans
see in moviehouses
are not the same ones they’ve already
seen at home.
NATO will serve as a forum
to discuss and
debate the issues. Exhibitors will make
their own
decisions about
their own operating philosophies. And
in the end, as always, competition is healthy! 
