On Nov. 18, Daily Variety published an article on the results of a study on movie theater advertising by market research firm InsightExpress. The study indicated pre-show ads have had a dampening effect on box office. In this response, Kurt Hall, co-CEO of Regal Entertainment Group, and Cliff Marks, CEO of Regal CineMedia and president of marketing and sales for Regal CineMedia, offer a different perspective.Daily Variety‘s story on pre-show ads in movie theaters raised serious misconceptions about cinema advertising. While we don’t doubt that there are people who dislike commercials prior to movies, the assertion that people dislike cinema advertising enough to reduce their moviegoing is not in any way supported by the research cited in the article; or by any other industry facts and figures currently available. Before one attempts to draw a correlation between cinema advertising and box office returns, it’s helpful to compare attendance figures from exhibitors who do present advertising and those who don’t. Our examination of box office revenue figures per screen of our competitors — encompassing those who present both more and less advertising than we do at Regal Entertainment Group — does not show any correlation between movie attendance and the amount of ads featured. Our research also indicates audiences have reacted favorably to the improvements made by various circuits’ introductions of new digital pre-shows over the last couple of years. Regal Entertainment Group theaters currently show approximately the same amount of advertising today that was shown in previous years. What has changed is our pre-show format. We’ve made a significant investment in our Digital Content Network, enabling us to replace repetitive and antiquated slides with digital technology showing commercials in a highly entertaining and engaging environment. Research by King Brown & Partners has shown us that approximately 75% of our customers are either neutral or positive about our pre-show, called “The 2wenty,” even with the advertising it contains. Certain moviegoers may be frustrated by the lack of what we like to call a “MIGA” (Make It Go Away) device, inherent in every other ad medium. Movie audiences have less flexibility to skip the commercials, and that places a huge burden on exhibitors to create compelling pre-shows that don’t overload patrons with pure advertising or cut too much into the movie time itself. At Regal, we’ve addressed these concerns by dedicating a significant portion of “The 2wenty” to entertaining programming. We also have designed it to end at or about the designated showtime, giving our patrons the option to arrive in time to view only the film trailers and feature film if they wish. There’s a huge methodology error in the InsightExpress study that served as the basis for Daily Variety‘s Nov. 18 article. The survey sample was significantly skewed, with 68% of respondents in the 35-plus age group. It did not include anybody younger than 18. Given that only 35% of movie audiences overall are 35-plus and 30% are below 18, the conclusion that this survey reflects all moviegoers’ opinion of cinema advertising is highly questionable. In fact, a 2003 Arbitron study of more than 2,000 people found that almost 70% of those surveyed approved of in-theater commercials. In the end, asking consumers if they like ads in movie theaters is like asking people if they’d like to earn less money next year; the answer is fairly predictable. All one needs to do is look at the widely publicized TiVo data to know that given a choice, most people choose not to view commercials. TV, radio, print and Internet companies all have confronted the same challenges that cinema now faces in the U.S. (although cinema advertising has long been accepted in other countries). The solution for those mediums, as for ours, is to create compelling content. People don’t object to advertising so much as they object to bad advertising. Just three years ago, many exhibitors endured difficult financial times and emerged from Chapter 11. If exhibition is to remain healthy, if it’s to continue building new, higher-quality, stadium-seating theaters and upgrading older facilities and ensuring movies are one of the best values in out-of-home entertainment, then alternative revenue sources like cinema advertising are necessary. Movie attendance is a complicated issue that our industry often attempts to oversimplify. There are many variables at work including the film slate and product mix, timing of releases and DVD windows. We’d all like an easy answer to the age-old question of exactly what causes box office sales fluctuations. Trying to pin a decline on a single factor, like cinema advertising, is quite simply inaccurate.
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