July 31st, 2001

Coming Soon: More Ads Tailored to Your Tastes; Movie Theaters Now Match Ads to Targeted Demographic

By Pamela Paul
American Demographics

Welcome to the new movie pre-show. First up, those ubiquitous trivia slides, accompanied by an "in-theater radio" audio track. Then, there’s that strangely outdated in-house promo for popcorn, soda and audience silence. Next, viewers are treated to a host of spots for everything from sneakers to sitcoms. When the lights finally dim, an ever-lengthening barrage of trailers fills the screen. By the time the movie starts 20 minutes later, the audience is often restless and annoyed.

But lately the catcalls and hisses are dying down as audiences acquiesce to the reality of in-theater advertising. They are wise to do so, because on-screen ads are only the beginning of today’s exhibitor advertising boom. In addition to an influx of on-screen commercials, there’s more advertising on movie tickets, popcorn bags and soda cups; sponsorship opportunities for meetings and special events; promotions in lobby displays, interactive kiosks and on TV screens; as well as ads on theater chain Web sites. In 1992, advertisers spent around $ 40 million on movie theater ads. Today, cinema advertising is estimated to be a $ 200 million industry, growing at an annual rate of 20 percent, according to National Cinema Network (NCN), a theater advertising services provider. In a new twist, many theaters now offer sophisticated ways to match ads to target demographic groups. As a result, a perfume ad can run before a Meg Ryan romance, while an SUV promo can appear before a family film.

Movie advertising is thriving precisely because the exhibitor industry is in such a sorry state. Over the past year and a half, seven major theater chains, including Loews, United Artists and Silver Cinemas, have filed for bankruptcy. The industry brought much of the problem upon itself, with a spate of expansion at the same time that sales of tickets were dropping—though recently sales have bounced back. A correction to multiplex mania is kicking in, though it’s far from solving the industry’s problems. The number of screens has fallen slightly—to 36,264 in 2000 from 37,185 in 1999, according to the National Association of Theatre Owners—and is expected to drop to about 30,000 by year’s end. But cutting back on cinemas isn’t enough to ensure profitability. "It’s no secret how the exhibitor industry is doing," says Suzie Grieco, executive director of marketing for NCN. "With theaters looking for new revenue streams, and now that advertising in theaters has become more accepted by audiences, theaters are much more open to new opportunities for advertisers."

Adam Poulter, president and CEO of Screenvision Cinema Network, a leading provider of theater advertising services, finds two things happening in terms of theater advertising: volume and value. "First, the availability of theaters accepting on-screen advertising has increased radically. And second, the theaters where that expansion is occurring are in major metropolitan areas like New York and Chicago—ones with very attractive demographics."

The benefits of advertising in theaters are obvious. Inside, the auditoriums feature large, sometimes wall-to-wall, screens equipped with the most advanced technology, and outside, lobbies provide cavernous, well-lit spaces ideal for oversized displays. Theaters are frequently located in malls, so point of purchase is immediately within consumers’ grasp—no need to get into their cars to follow up on an advertised product. Cinema Advertising, a New Jersey-based theater advertising company, found that 73 percent of moviegoers combine movies with dining out, and over 69 percent mix it with shopping. According to Kevin Romano, president of Mahwah, N.J.-based Pro Motion Slides Inc., that’s why local businesses benefit from pre-show trivia ads. Not only do such ads create awareness of a nearby business but they make moviegoers think of it as part of the local community.

But the advantages of theater media extend beyond the basics of location. According to Mediamark Research Inc., moviegoers are affluent and educated: their average household income is $ 65,279; 89 percent are high school graduates and 31 percent are college graduates. Seventy-nine percent have incomes over $ 30,000 and 67 percent are homeowners. Cinema Advertising found that more than one-third have leased or purchased a car in the last year.

As anyone who has witnessed the proliferation of American Pie spin-offs can attest, moviegoers also tend to be young. NCN states that 26 percent are teenagers (12- to 20-years-old); and Mediamark Research shows that 31 percent are under age 30. The average age of adult (over 18) moviegoers is 39 and the median age is 38. Interestingly, the number of young attendees has dipped slightly in recent years, according to the Motion Picture Association of America (MPAA). Teens (12-17) accounted for 17 percent of the total yearly admissions in 1998 but only 14 percent in 2000. Viewers in the 40-plus age group accounted for 40 percent of the audience in 2000, up from 32 percent in 1990.

Moviegoers, unlike television audiences, can be reached across age groups, making this medium a very efficient buy. Movie fans in general are not habitual television viewers, and with the television market so fragmented, it’s hard to reach a broader audience. By contrast, theatergoers watch movies with all the decision makers present: husbands watch with wives, parents watch with children and friends see movies together.

In addition to the traditional benefit of reaching a broad demographic, audiences can now be targeted with increasing precision. Most theater chains today allow advertisers to target by theater and by MPAA rating within theaters. For example, a family-centric amusement park can choose to advertise only before G-rated features. Another advertiser can select hip urban theaters to introduce cutting-edge products and generate word of mouth. This spring, for example, Conde Nast’s Lucky magazine, targeted to fashion-conscious women in their 20s and 30s, created a campaign for key Los Angeles and New York theaters.

Screenvision Cinema Network, which services over 75 percent of the theater market, uses a demographic mapping and matching software program, Campaign Manager, that links an advertiser’s target to a theater’s core audience. While advertisers can’t buy a particular movie ("We sell audiences, not movies," CEO Poulter explains), they can use release schedules and theater demographics to match a cosmetics ad, for example, to a theater where the new Julia Roberts vehicle is likely to play.

Some theaters are taking demographic targeting even further. NCN is working on two new methods of targeting audiences in more sophisticated ways. Their new Digital Theater Distribution System (DTDS), currently being tested in New York and Los Angeles, allows advertisers to buy time for particular movies. For example, if you’re a fast-food partner with Star Wars, you’ll be able to buy time before all Star Wars screenings nationwide or at specific theaters. NCN is also acquiring a mapping demographic program that uses an MRI platform and combines the Claritas cluster system of targeting by zip code with Tactician, a geographical targeting software. Implemented in July, this software allows advertisers to select theaters for specific demographic groups. For example, this new software allows a Spanish-language magazine to advertise in theaters serving concentrated Hispanic populations.

Advertisers also have many more options within theater houses. The major outlet continues to be on-screen, which accounts for about 75 percent of all theater advertising. Rolling stock commercials—filmed commercials as opposed to still-shot billboards—restricted to less than 45 percent of all theaters only 18 months ago, have since expanded to 65 percent of all theaters. By the end of the year, penetration is expected to reach 75 percent, according to Screenvision. Such ads are not only more common—they’re getting longer. Loews screens added five minutes to its preshow promotions in 1996. In 1998, United Artists tacked on three minutes of ad time to its theaters.

The attraction is significant. For rolling stock commercials, Nielsen New Media Services estimates a recall of 80 percent. According to Cinema Advertising Network, ads in movie trivia programs yield a next day recall of 83 percent, 68 percent higher than television, print or radio. Nielsen estimates trivia card recall slightly lower at 62 percent, but still roughly three times the TV rate of 17 percent to 22 percent.

Yet there’s still an important downside to on-screen ads: audiences don’t necessarily want to watch them. As a consequence, some theaters, such as the Century Theaters chain, refuse to feature on-screen commercials at all. Savvy advertisers are beginning to take this reluctance into account with new creative strategies aimed at overcoming audience resistance. "When you’re creating an on-screen commercial, you have to treat the whole concept differently," Screenvision’s Poulter explains. "Theater ads need to be a lot less hard sell, and much more appealing. They need to be more creative and subtle, otherwise they can overwhelm."

In addition to expanded and improved on-screen advertising, many exhibitors consider the lobby a major growth area. NCN estimates that five years ago, about 1 percent of total cinema advertising revenue was generated from lobby promotions. Today, lobby marketing accounts for 10 percent of revenue, and is expected to grow to 30 percent in five years. A variety of interactive kiosks have sprung up, offering touch screens, e-commerce, register-to-win and other sweepstakes promotions, and interactive demonstrations. Kiosks can include pockets for brochures or product sampling. Such displays are particularly geared toward tech-savvy teenagers and young adults. NCN currently has 82 kiosks in 44 theaters among the top 20 markets, each sold to one advertiser per month.

However, not everyone thinks kiosks are the answer. "Most people who go to movie theaters, go there for the movies," Poulter says. "They want to buy their food and drink, watch the movie and then go. They don’t necessarily want to be playing on an interactive screen." He believes other types of in-lobby promotions can be extremely effective. A promotion with Unilever begun in March 2001 affixes Lever 2000 Moisturizing Wipes to popcorn bags, allowing audiences to try the product while an advertising message on-screen reinforces the concept.

"Our target first and foremost was the active mom with kids, who’s out and about in the mall, on the soccer field, at the movie theater," says James Pardes, associate brand manager for Unilever HPC. According to Pardes, not only did the program reach this target and a secondary market of active adults, the upscale skew of participating theaters also enabled the brand to reach a broad, desirable audience. In a post-sampling survey conducted by Screenvision, 50 percent of popcorn eaters said the Unilever sample made them consider purchasing the wipes and 83 percent agreed or strongly agreed that distributing free samples on popcorn bags is an effective way to advertise. Pardes says that usage and awareness numbers (82 percent were able to correctly identify the brand name after the movie) resulting from the program means Unilever will consider running the promotion again.

These successes lead some theater executives to predict that lobby revenue will continue to grow, particularly for integrated sampling programs. One of the hottest areas is automotive, where sales reps can offer audiences the opportunity to test-drive a car right outside the theater door. GM and Sony carried out a similar promotional strategy in 1997, with cars parked strategically in lobby displays and outside the theater.

Another approach to increase theater profitability is to rethink the movie theater concept altogether. In February, National Amusements Inc. and Cine-Bridge Ventures announced development of "The Bridge," a new type of multiplex theater with live entertainment, "technologically charged lounge areas" and "media pods." In May, location-based entertainment company GameWorks, a joint venture of Sega Enterprises and Glendale, Calif-based Vivendi Universal, announced a foray into the exhibitor business. Their first project, which will combine a multiplex with a restaurant, bars, interactive games and a bowling alley, is slated to open in Oklahoma City in late 2002. Although LeeAnne Stables, senior vice president of marketing for GameWorks, stresses that the advertising program won’t feature "slide after slide, trailer after trailer," she predicts the complex will offer a multitude of marketing opportunities.

The multiplex may be down, but movie theater complexity is going way, way up.

THE SHOW BEFORE THE SHOW

Movie theaters are screening commercials, along with previews, before the main attraction.

NUMBER OF COMMERCIAL CINEMA SCREENS THEATERS TIME

Regal Cinema 4,449 424 3 minutes

AMC Entertainment Inc. 2,736 197 2 minutes

Loews Cineplex Entertainment 2,726 359 3 minutes

Carmike Cinemas Inc. 2,445 350 3 minutes

Cinemark USA Inc. 2,227 192 3 minutes

United Artists Theatres 1,858 257 3 minutes

National Amusements 1,076 102 no limit

General Cinema Theatres 1,060 133 3 minutes

Hoyts Cinema Corp. 967 113 3 minutes

Century Theatres 700 75 no rolling stock ads

Edwards Theatres Circuit 690 59 no rolling stock ads

Source: National Association of Theatre Owners, individual cinema circuits

AH, ESCAPISM

Singletons visit the silver screen more frequently than marrieds do. FREQUENT OCCASIONAL INFREQUENT

(12X/YR +) (2-11X/YR) (LESS THAN 2X/YR) NEVER

Men 31% 32% 9% 28%

Women 24% 34% 12% 30%

Married 24% 34% 12% 30%

Single 32% 32% 10% 26%

Adults with children

under 18 28% 41% 12% 18%

Adults with teens (12-17) 30% 39% 10% 20%

Adults without children 26% 27% 10% 36%

Source: MPA Worldwide Market Research

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