Captive audiences

Exhibs' onscreen ad revs rise 21%

Consumers may roll their eyes at movie advertising, but exhibs continue to see dollar signs.

Movie theater revenues grew 21% last year to $528 million from $438 million in 2004, according to theater-advertising trade group the Cinema Advertising Council. It is the first time the figure has topped half a billion dollars.

And while in the past few years, lobby and so-called offscreen advertising actually grew faster than the onscreen kind, it was onscreen that saw the biggest jump last year. Onscreen advertising, the pre-movie commercials that typically generate more consumer resistance, jumped 21%, offscreen 18%.

The numbers are based on a report conducted by the consultancy Miller, Kaplan, Arase & Co. They are based on direct surveys of the approximately three-quarters of American theaters that belong to the CAC and on extrapolations for the rest. On their own, numbers at Cinema Advertising Council theaters rose 23% to $470 million.

The CAC said an increase in ad rates was not a significant factor in the revenue jump.

The numbers also do not include advertising revenue generated by trailers.

Ad revenue has increased by double-digit percentages since the CAC was formed in 2004 to track theater advertising. The Cinema Advertising Council declined to single out the industries behind the latest spike.

To those who say there’s a direct connection between the increase in ads and any decrease in box office, the 2005 ad numbers should come as little surprise — and buttress their argument. Last year brought the first box office decline in many years.

But CAC chief Robert Martin disagrees that there was a strong connection. “We feel advertising’s role in the sag in box office last fall has been somewhat exaggerated,” he said.

Martin also said that the movie ad industry is taking consumer concerns seriously. “There’s a great sensitivity on the part of the industry that we are part of the moviegoing experience,” he said. “There have been great strides made recently in the content.”

The group hands out awards for the most creative spots, last year giving a top prize to an ad for Chanel No. 5.

Ads have been the theater biz’s great Catch-22: They generate revenue at a time of uncertain box office, but ad increases also could spur box office revenues to decline.

Several exhibs also moved to offer more accurate starting times in response to a backlash from consumers who felt they were ambushed by ads.

The theater ad biz also must contend with a demographic paradox.

Generating box office depends to a great degree on getting young males into theaters — a goal that could lead exhibs to place less advertising around movies aimed at them. On the other hand, young males are precisely the audience advertisers crave.

The top advertisers have a decidedly younger skew, according to the Cinema Advertising Council; they include Nike, Microsoft Xbox and the U.S. Army.

But notable in that group were several accounts that also appeal to older demos, such as Wal-Mart and American Express.

Martin said the CAC also is seeing growth in local ads and said the growth of digital cinema will allow for more targeting and drive ad revenue in the category.

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