Ads Up!
Sound-and-motion advertising is
transforming the cinema industry.
by Ryan Stern
Something
approximating a gold rush has taken hold of motion picture
exhibition.
It’s a movement fostered in part by the many high-profile
bankruptcies that swept over the industry five years ago,
and fostered also by the explosive growth in the number of
consumers who can now use a TiVo digital video recorder to “zap
away” the commercials breaking up their favorite TV
shows.
2003 marks the flashpoint. That
year saw the launch of a fleet of new companies – companies with names like
Screen Ads International, Digital Talking Screen Media and
Cinema Screen Media – that went on to deploy networks
of inexpensive digital projectors, all illuminating U.S.
cinema screens with sound-and-motion advertisements.
The first, and by far the biggest,
of the 2003 start-ups was Regal CineMedia (RCM), which within
two years of launch
had installed pre-show advertising on more than 6,000 U.S.
screens operated by parent Regal Entertainment Group.
RCM became an even bigger deal
on March 29, when it announced it would merge with AMC Entertainment’s
slightly smaller 20-year-old National Cinema Network (NCN).
The result was
a behemoth, National CineMedia, which today services more
than 11,000 North American screens with sound-and-motion
(SAM) ads. Only Screenvision is bigger, providing SAMs to
14,500 screens.
The bottom line? In two short
years, according to the Cinema Advertising Council, revenue
from North American on-screen
advertising increased some 64 percent, from $259 million
in 2002 to an estimated $425 million in 2004.
Growth of an Industry
In Europe, sound-and-motion onscreen advertising in cinemas
has been around nearly as long as the movie projector.
SAMs only “became a real industry” in the United
States, according to Screenvision CEO Matthew Kearney,
in 2000, when Screenvision was acquired by the veteran
British cinema advertising company Carlton.
Carlton’s arrival in America coincided with some of
the most challenging economic turmoil ever to plague stateside
exhibition. At least 13 of the nation’s chains – among
them giants Regal, United Artists, Edwards, Loews and Carmike – were
either entering or exiting bankruptcies.
“The bankruptcies were a rude awakening
for a lot of people,” says
National CineMedia sales president Cliff Marks. “They
came to realize that the exhibition industry needs to find
new ways to make money.
“If exhibition relies solely on their
splits with distribution to pay the bills, they’re not going to be in business
for a very long time. Just as the cable business in the ‘80s
realized that there needed to be another revenue source [affiliate
fees], theatre exhibitors realized the same thing – we
have to have another source of revenue to pay the bills.
“Nobody here is stupid enough to think
that we’re in
the advertising business first. We understand that the primary
function of our facilities is to show feature films, and
to entertain people with movies. But we have to be smart,
we have to be creative, to create new revenue streams – or
we’re going to die.”
The key, agree most industry insiders, is
to create an entertaining mix of advertising and what some
refer to as “promotainment,” or “infotainment” These
quasi-ads can be anything from branded music videos to “making
of” mini-documentaries that take audiences behind the
scenes of movies or TV shows.
While exhibitors are “not naïve enough to think
that anybody comes to the movie theatre to see our pre-show,” says
Marks, “we do believe it is a good service to provide
to moviegoers who have paid to be entertained and are sitting
there waiting for their film.”
TiVo vs.
The Captive Audience
Advertisers are growing very keen to run their spots in cinemas,
and for good reason. According to a recent Arbitron study,
ads in the cinema are five to 12 times more memorable than
ads on TV. The study surmises that “people remember
them for longer and they recall more features within the
ad.”
The study also observes the attentiveness
of the movie crowd, citing that “consumers aren’t
subject to distractions they face at home such as the telephone,
remote-control devices
or simply performing household activities away from broadcast
media during commercial breaks.”
| Glossary
big
d (adj.) type of high-end digital projection
equipment on which the major studios allow their
features to be exhibited
little d (adj.)
type of lower-end digital projection equipment
on which many cinemas now typically exhibit
pre-show advertising
SAMs (n.)
sound-and-motion ads delivered to cinema screens
via celluloid rolling stock or digital projection
|
TV ad revenue did increase 12 percent last
year, but “that
was only because of the election and the Olympics,” according
to Bruce Camburn, sales director at Digital Talking Screen
Media, a subsidiary of Goodrich Theatres. On all 273 Goodrich
screens, DTSM provides a digital pre-show prior to an estimated
five to 10 minutes of rolling-stock ads. 2005, says Camburn, “will
really tell the story of what’s happening with television
with TiVo and personal recorders and things like that.”
“The reason that national advertisers
aren’t doing more
advertising in cinema is they were used to television, and
buying television [time], says Drena Rogers, director of
strategic marketing at Kodak Digital Cinema. “With
the invention of TiVo, people are not watching commercials
anymore. I have TiVo and I record everything and zip right
through them.”
“Cinema advertising works extremely well
as part of an overall ad campaign,” Bob Brouillette, a longtime NCN sales
exec, told Film Journal International late last year. “Combining
cinema ads with print, radio and television is probably the
most effective way for an advertiser to run a campaign. We
often recommend that our partners break a campaign in the
theatre, then follow it up with ads in other mediums.”
Advertisers, says Rogers, are “going to take dollars
that are allocated to marketing and promotions and re-allocate
them out to different areas. And the theatre and cinema is
a perfect opportunity.”
Leaders of the ‘Ad’ Pack
When Screenvision was founded in the mid-1970s, it dealt
almost exclusively in slide advertising, shown in cinemas
via carousel projectors. In those days, it offered sound-and-motion
advertising only “on a sporadic basis,” says
Kearney. As the century wore on, celluloid SAMs became
a bigger part of Screenvision’s business, and in
2001 the company even pioneered digital SAMs via inexpensive “little-d” projectors
situated in “a couple hundred” Loews Cineplex
auditoria.
Though that early digital program was discontinued
after about 18 months, Screenvision recently announced plans
to
roll out some 5,000 new high-definition digital pre-show
projectors by the end of 2006, of which 80 are already up
and running.
In February 2003 Regal CineMedia launched “The 2wenty” – a
digitally-projected 20-minute block of national commercial
spots, local ads, “promotainment” segments, trivia,
and DVD and TV promotions – as “an alternative
to pre-trailer slideshows.” As RCM prepared for its
March merger with AMC’s National Cinema Network, it
was already exhibiting “The 2wenty” at more than
5,000 Regal screens. Another 700 Regal auditoria never utilized “The
2wenty,” but do show SAMs via conventional celluloid
projectors. RCM’s new partner, NCN, was founded in
1985 but only began utilizing digital projection last year.
Some 8,200 of the 11,200 screens exhibiting
National CineMedia’s
SAMs currently get those ads via digital projectors.
The ‘Big-D’ Factor
An X-factor on the cinema-advertising horizon is “big-d” digital
cinema, which utilizes projectors that closely approximate
the look of 35mm celluloid. The major film distributors allow “digital
prints” of their releases only on these high-end (roughly
$80,000) “big-d” projection systems; never on
the far-less-expensive (roughly $10,000) “little-d” projection
systems typically used today for cinema advertising.
At the end of 2004, only 93 of the 36,652
U.S. public screens utilized “big-d” digital projection, but many
expect the “big-d” screen count to grow dramatically,
and soon.
If, by the time you read this, the major studios’ Digital
Cinema Initiative hasn’t already issued definitive “big-d” technical
specifications, they are almost certain to do so within a
matter of weeks. In addition, several major Hollywood studios
are reportedly negotiating with financial institutions to
implement a plan that would install thousands of “big-d” projectors
in the nation’s cinemas. Such a plan would likely save
the studios billions of dollars in distribution costs.
If a cinema gets superior “big-d” projectors,
its “little-d” ad projectors will likely go into
mothballs. Advertisers, says Screenvision’s Kearney,
will inevitably prefer their digital ads be projected with
the high-end equipment.
“At the moment we’re focused on
phase one, which is 5,000 [little-d] screens,” says
Kearney. “Our
main concern at the end of phase one is, ‘What happens
if feature-film digital projectors are launched?’ We
don’t want to invest in many more low-end ones because
they could become rapidly redundant. So what we’ll
do is review the situation in a year’s time and decide
whether or not to roll out more low-end projectors or help
subsidize high-end feature projectors.”
Digital Advantage
Twenty-eight months ago, digitally-projected pre-show ads
were virtually non-existent in American cinemas. By the
end of next year, close to half the nation’s auditoria
are expected to exhibit pre-show ads via “little-d” digital
projection systems that cost about $10,000 per screen.
“I will tell you, boldly project, that
in the next five years, every major movie exhibitor will
have some type of digital
projection, for either the pre-show or for feature film,” says
NCM’s Marks. “Clearly the pre-show. Perhaps even
feature film.”
What does a digital pre-show have that a celluloid
pre-show lacks?
“There are many benefits,” says Marks. “The quality
of the picture and the sound is excellent. Other benefits
for the marketers include the ability to reduce costs on
film production, reduce content deadlines versus film production.
The ability to copy, split and change copy weekly. All kinds
of benefits.”
“The economy of the scale occurs when
advertising reaches a certain volume – because these [digital] installations
are expensive,” says Kearney. “If we’d
only had a small amount of advertising to put up, it’s
cheaper to do it via carousel slides or [celluloid] rolling
stock. Once you get to a certain level of interest, it becomes
cheaper to do it through digital. It would be prohibitively
expensive to do [a celluloid] ad one week, and then have
the advertiser of the same brand change the ad the following
week. If he was doing prints. So it’s just become economically
sensible to start thinking about it in the bigger markets
[…] to throw those carousel projectors away, install
the digital projector and use that projector for both the
local advertising and national advertising.”
RCM has mostly kept the lifespan of its ads to about four
weeks, and Lauren Leff, an RCM public relations exec, points
out that a benefit of a digital system is it allows greater
flexibility in refreshing content. “Generally our flights
are four weeks. But we have many advertising partners and
entertainment partners that switch mid-flight as well. We
work with our advertisers and content partners to meet their
needs. That’s the beauty of having a digital system
is that it’s very easy to rotate content.”
Digital also greatly facilitates the ability
to offer different SAMs with different movies. RCM’s “2wenty” preshow
for a G- or PG-rated feature would usually not utilize the
same mix preceding a PG-13 or R-rated feature, for example.
A digital system can also cut operational
costs by technologically verifying to an advertiser – sometimes down to the
second – when an ad played, how many times it played
and, exhibitor willing, how many people saw it. It eliminates
the need to hire people to verify that the ads are being
shown.
“We monitor our systems 24/7,” says Kodak’s Rogers. “We
take a ‘heartbeat’ every five seconds, and we
say, ‘is it running, is it out there, who’s on,
who’s off.’ We know when someone’s knocked
the projector, when they’ve turned it off accidentally.
We know because we get a red light/green light that says, ‘something’s
going on over here, you better take a proactive look at what’s
happening, rather than a reactive look’… if something
doesn’t show up, isn’t running, or not playing
we’ll call the theatre and say, ‘Did you guys
turn it off?,’ and they’ll say, ‘Oh, we
forgot to turn it on!’”
New Kids on the
Block
Kodak launched its digital pre-show system a few months after
Regal CineMedia, with content provided by partner Cinema
Screen Media. More than 800 screens currently carry “The
Kodak Digital Cinema Pre-show Solution.” Century
Theatres and Harkins Theatres now utilize the Kodak system
exclusively. Expecting Kodak/CSM to have a screen count
of 2,800 by March 2006, Rogers hopes ultimately to assemble
a network of around 15,000 screens. “That’s
a network I would love,” she says.
“What digital allows you to do is to
step out of what we call a space-based program into a time-based.
So now we can go
to the advertiser and say, look, maybe you don’t want
a 10-second ad, maybe you don’t want to pay for one.
Maybe you have seven seconds you want to pay for. I can accommodate
you. Or a gentleman that says, ‘Look, I don’t
want a 60-second spot, I want a 72-second spot.’ I
can accommodate him now. So it takes your 20 minutes and
starts to divide it, you know slice and dice it, according
to the needs of your advertiser. And it really is the best
way to do it.”
Florida-based Muvico Theatres has internalized
its on-screen advertising business via Screen Ads International
(SAI),
also launched in 2003.
SAI has now equipped every auditorium in the
233-screen Muvico chain with a digitally projected pre-show
that focuses mainly
on local advertising. “Production costs are dramatically
less when implementing spots in digital,” explains
SAI sales director Lee Stein. “We have elected to keep
[celluloid] rolling stock in the mix as well, so our advertisers
have an option to place in either program depending on their
particular needs.”
Michigan-based Goodrich Theatres, similarly,
has implemented its own digitally projected pre-show on all
of its 273 screens.
Having completed the equipment installations just over a
year ago, Camburn says Goodrich’s DTSM network is already
luring national advertisers that would not have otherwise
run an on-screen campaign.
“We couldn’t get those people before [digital]. Because
most of them didn’t want to do just a branding campaign.
Because that’s what slides are, branding, that’s
all it is. Now they can make offers … can match a television
campaign.” Camburn stresses that national advertisers
only account for about 5 or 10 percent of the DTSM pre-show. “But
we are getting looked at.”
Audience Approval
The sudden increase in sound-and-motion cinema advertising
has, of course, not gone unnoticed by the public at large.
Still unaccustomed to the kind of SAMs that have long subsidized
overseas exhibition, many American moviegoers have come
to question whether it is appropriate for cinema operators
to fill the time between features with big-screen commercials.
There is, however, evidence suggesting the media may be
exaggerating consumer displeasure.
Leff points to RCM studies demonstrating
that, “overwhelmingly,
patrons do expect something to be on the screen when they
arrive at the theatre early. They are more responsive, and
we’ve had a more positive response to our digital pre-show
than to the prior versions we’ve done in the past.
It’s getting very good response.”
A 2003 Kodak focus-group study revealed
that 88 percent of those surveyed found sound-and-motion
digital advertising
more enjoyable than slides. “So,” says Rogers, “right
out of the chute they’re saying, ‘Look, if you’re
going to show me slides, I’d rather see digital’.”
A Kodak study also found that audiences
are four times more likely to pay attention to an animated
slide than
a still
slide, and five times more likely to be entertained
by it, according to Rogers.
State lawmakers in Connecticut, Illinois,
New York and Oregon, as well as a New York City councilwoman,
have
proposed legislation
that would require exhibitors to publish movie start
times separately from the pre-show start times, or
face fines
for noncompliance. While many agree these measures
are unlikely
to become law, Kearney says advertisers would in
any
event likely have little problem with the publication
of separate
start times.
“We understand that [the patrons]
have come to see the feature film,” says Marks. “We
believe very strongly that the pre-show should be over
on or about designated showtime.
And when you come to a Regal theatre, or an AMC
theatre, I can assure you that if you come to an 8 o’clock
movie, the commercials will be over on or about 8 o’clock.
And we think that’s one of the reasons that
we’ve
gained such acceptance.” 
