News

Movie Marketing Spend Up, Not Down in ‘06

By Robert Marich
    MARCH, 2007 -- A common refrain from news reports about 2006 industry stats is that the U.S. average marketing spend per major studio film dipped 4.4%, according to data from the major studio trade group the MPAA. Total U.S. marketing expenses for major studio amounted to $34.5 million big film, down from $36.1 million in 2005.
    While that decrease may correct on an average basis, drilling deeper indicates is that aggregate film marketing spending probably increased.
    Overlooked is that that more films were released theatrically in 2006 at 607 titles, up from 549 releases in 2005, or 11% higher. Unfortunately, the MPAA does not identify how many of those 607 total titles are classified as major studio releases, but it’s probably under one third. In past years, the number of total releases (major films, studio’s specialty independent arms and true indies) hovered around 500, so the 2006 volume represents growth into new territory.
    The marketing spending at specialty distribution entities owned by the majors – such as Disney’s Miramax, Fox Searchlight and Sony Pictures’ Screen Gems – leaped 13% to $17.2 million, from $15.2 million in 2005, according to the MPAA. Again, there’s no information on number of films incorporated into that average.
    According to “Marketing to Moviegoers: The Handbook,” U.S. distributors spend over $3.5 billion annually to buy advertisements in the U.S. to support theatrical releases—everything from TV air time on to space in magazines. In contrast, MPAA figures cover buying advertising, but are broader by also including ad creation costs, cost of promotional trailers and the like.
    When examining film data, it’s always important to define it properly because data is often mislabeled or inappropriate comparisons are made. Always consider geography – is Canada included or not? The MPAA data excludes Canada and overseas. Also, does data on marketing expenses cover the myriad of non-ad-spend expenses – such as the cost of making in-theater trailers – or just ad spend, which is the biggest single component?
    The MPAA data indicates U.S. box office rose 5.5% in 2006 to $9.488 billion, versus $8.991 billion in 2005. Even admissions – unit ticket sales – rose, edging up 3.3% to 1.458 billion, versus 1.403 billion in 2005. The difference in percentage rates is due to impact of average ticket price, which rose 2.2% to $6.55. (The MPAA put global box office at $25.8 billion, an 11% increase form $23.3 billion in 2005).
    “Marketing to Moviegoers: A Handbook” notes that media fragmentation – cable TV networks siphoning broadcast TV audiences and the Internet cutting into newspaper turf – means that it is increasingly difficult to mount mass market ad campaigns as inexpensively as the past. “Media is becoming more niche oriented, which is an advantage to films with narrow appeal because more options are available for advertising to demographically concentrated audiences,” says the book.

 

U.S. CINEMA STATS AT A GLANCE (2006)

 

CATEGORY                         DATA                        % CHANGE ‘05

 
Revenue                                  $9.488 bil.       +5.5%
Tickets Sold                            1.458 bil.         +3.3%
Avg. Ticket                             $6.55               +2.2%
Releases                                  607                  +11%
Avg. Prod. Cost/Majors          $65.8 mil.        +3.4%
Avg. Mktg Cost/Majors          $34.5 mil.        -4.4%
Avg. Film Cost/Majors*         $100.3 mil.      -0.6%

 

*Avg Film Costs for Major Studio Release Includes Production and All U.S. Marketing Expenses. Production and Marketing Components Are Above This Line.

 

Source: Motion Picture Assn. of America (MPAA)

http://www.mpaa.org/researchStatistics.asp