News

Dissecting $16 bil. Film Ad-spend Estimate

By Robert Marich
Blogging
   June 3, 2009 – eMarketer today published fascinating advertising figures for film distribution in a posting titled Hollywood Online Ad Spending, which deserves a look and my commentary.
   The look... eMarketer estimates total ad spending by "Hollywood" will be $16 billion this year. The researcher estimates 7.7% of that will go online.
   The commentary... In my estimation, the $16 billion is a few billion bucks too high. This figure is muddled because it’s not clear if it includes DVD and other non-theatrical marketing. Is it majors and independents, or just the majors (see link below for original article)?
   There’s no labeling if this is just media costs to buy time on TV or space in newspapers (and thus excluding cost of making trailers, expenses for research and cost of creating ads, which are not media costs).  Further, does it include overhead like the salaries of marketing executives? Their office space?
   Clearly, though, the $16 billion must a worldwide figure, though that’s not explicitly specified…roughly half of any spend would be for the USA/Canada domestic market. My own estimate for domestic market media costs for just theatrical -- using Nielsen Monitor-Plus as a basis -- would be under $5 billion—which excludes overhead, cost of creating ads, research and other non-advertising buying marketing expenses.
   Moving to the other factoid, the online 7.7% figure is a too low, again in my estimation. Marketing to Moviegoers calculates studios allocated about 10% of media spend to new digital media as of the start of the year. So we're not that far apart on that one.
   I’ve encountered consistently lower estimates elsewhere than mine that can be traced to the major studio MPAA trade group that has published lower figures (its online figure was 4.4% for 2007). However, the MPAA data is misinterpreted because it specifically includes non-media spend including research, creation of trailers and other non-advertising items. Subtract that out, and it is much higher than 4.4% in 2007.
   There is some muddle here too because in new media publicity is often intertwined with ad buys on the same website. For example, a website posting a movie clip as a promotion may have paid ads from the film’s distributor directing users to the clip, or movie ads as part of a promotion deal for the trailer.
   Who is right sometimes depends how the question is framed – narrow media spend or all inclusive marketing. Does the question include overhead? It all makes for lively discussion.
   For full text, click link below:
www.emarketer.com/Article.aspx
www.marketingmovies.net/chapters/chapter-3-paid-advertising/