RIO DE JANEIRO — Before the pic begins, moviegoers attending two of Cinemark’s digital screens in its plex in Shopping Patio Savassi, Minas Gerais state, view ads for a gym in the same mall; the fact a small business is advertising illustrates why the local exhibs’ revenue from sales of commercial time is significantly growing, despite an overall B.O. drop in Brazil this year.
Digital technology has sharply reduced the production cost of commercials, which previously had to be made on film or transferred from video to film.
Local businesses and small companies are increasingly advertising on the country’s approximately 100 screens with digital capability (out of the Brazil’s total 2,000 screens). The exhibs’ revenue from commercials rose 30% in the first quarter of 2005, relative to the same period last year, according to Andre Porto Alegre, general director of Promocine, the ad division of the Ribeiro Group, Brazil’s No. 2 exhib.
Porto Alegre estimates the upward trend will continue through the remaining quarters of 2005 and lead to an annual growth of 30%, over the same period in 2004, when total sector revenue amounted to about 100 million reais ($41.4 million).
In the meantime, Brazil’s total B.O. is decreasing, down 25% for the first half of the year from the same period last year.
“Digital technology allowed companies with smaller marketing budgets to afford such advertising investments,” says Marcelo Silveira, commercial director of Kinomaxx, the company that sells media space for exhibs Cinemark, United Cinemas Intl. (UCI) and Hoyts.
Silveira adds that, before digital, advertisers had to pay about $1,900 to transfer a 30-second commercial to film, a high cost to local businesses.
“The public reacts well to the commercials. We run a maximum of ten 30-second commercials before the movie trailers,” Porto Alegre says.