The Perils of Promotion: Pricey TV Campaigns, Fear of Change Shackles Movie Spending

In the year before his death, Steve Jobs told the audience at a digital conference that movie-makers were on the verge of taking a page from the playbook of their compatriots in the music business.

“What the studios need to do is start embracing the front end of the business,” he said, “to start knowing who their customers are, and to start building mechanisms to communicate with them, and tell them when their new product is coming out.” Within two years, the Apple CEO predicted, selling films “is going to get a lot more interesting, more precise, cheaper, efficient.”

But, some five years after the marketing genius’s death, Hollywood is still struggling with how to efficiently reach audiences and contain mushrooming marketing costs.

Global P&A expenditures for big event movies rarely fall under $150 million, and can spiral to twice that amount, several studio insiders say. It is money that experts say still overwhelmingly — 70% or more, in most cases — goes to buy television time, while once-modest digital spends also are escalating.

“There has been talk for years that there is a new wave coming, and TV buys will be reduced,” says one studio chief, who asked not to be named discussing internal strategy. “But I don’t see that change any time soon. It’s a revolution that is always on the next horizon.”

In 2015, 67 movie marketers placed 934 different spots more than 524,000 times on U.S. national television, adding up to a total estimated media value of $2.36 billion, according to iSpot.tv data. That’s up 39% from 2014, when studios spent an estimated $1.7 billion airing ads.
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One reason the marketing revolution has yet to materialize is that distributors still lack the kind of granular customer profiles that Jobs envisioned. “The studios are gaining more information,” notes one marketing consultant. “But we still have an intermediary, the theater owners, in between us, and our ignorance of our consumers is still extreme.”

Marketers know the power of digital media, but also are becoming more cognizant of its limits. Several executives say they are not convinced, for example, that trailers posted online aren’t just as readily avoided by consumers as are TV ads skipped in the age of the DVR.

“You only know for sure that the consumer saw the first second or two of your trailer. After that, it’s unclear,” suggests a marketing consultant. “And was the volume even turned on? We don’t know. We need better verification of who is really watching and hearing what.”

Also disappearing is the sense — from early in the Internet era — that grabbing an audience online or on a mobile device comes cheap. One producer notes that the standard rate for prime placement across the top of YouTube’s home page is $725,000 per day. Those dollars can add up quickly when buying even a one-weekend perch on the video platform.

“On any site where there is proof that people are actually landing, it is going to cost you,” says a producer, who asked not to be named discussing private negotiations with the giant video network. “In the paid media space, there are no bargains anymore.”

The intense pressure marketing chiefs are under to perform also contributes to the relentlessly high costs of film releases. Marketing executives say that second-guessing over a campaign is more likely to fall on those who commit errors of omission, so better to buy too much, rather than too little.

“It feels like guilt-driven business,” says marketing veteran Russell Schwartz, a co-principal in consulting firm Pandemic Marketing Group. “ ‘Who am I missing?’ rather than, ‘Who am I getting?’ ”

Another veteran studio marketing boss agreed, saying the primary emotion driving decisions comes down to one word: fear. “As long as I was in marketing, if the film worked, it was a brilliant film. And if it didn’t work, it was the marketing,” says David Weitzner, an instructor at the USC School of Cinematic Arts and former top exec at 20th Century Fox, Universal Pictures and other companies. “I always considered my pay to be hazardous-duty pay.”

The studio CEO acknowledges that, particularly on the biggest films, this results in budgets that “are pretty inefficient.” More pointedly, Weitzner offers: “There is a huge amount of money just being thrown away.”

“As long as I was in marketing, if the film worked, it was a brilliant film. And if it didn’t work, it was the marketing. I always considered my pay to be hazardous-duty pay.”
David Weitzner

While TV ads are still the best way to reach the moviegoing masses, there are other reasons, not all entirely rational, that such buys remain the center of campaigns for most blockbusters — among them: inertia, a fear of being second-guessed if new alternatives don’t produce, and a desire to prop up the egos of creatives.

“When you spend as much as we are spending on these big movies, you can’t afford to not open,” says a longtime studio marketer. “And you can’t use your marketing budget to experiment with something new.”

Because studios are locked into the three-week to one-month window before opening night, they can’t haggle over price.

“We need some certainty in when we buy, and therefore we pay a premium,” says one film marketing consultant.

Marketing strategist Peter Sealey, former head of worldwide marketing at Columbia Pictures, says that sometimes spots are added and subtracted at the 11th hour, as buyers pursue one demographic or another. He estimates that the late nature of the ad buys adds 20% to 30% to the cost per gross rating point, compared with what other advertisers pay.

“If you really, really need someone to pick up a ticket on a Friday night, then the one way to reach people is through live TV,” says one studio marketing executive, “and that usually means sports. And that is going to cost you a lot of money.”

That intense drive to reach live audiences is causing another recent phenomenon — the growth of editorial “integrations” into live TV. In these special advertorial segments, stars not only visit a daytime talk show for an interview, they help the host run a game or raffle, perhaps awarding tickets to their film’s premiere.

While a standard television interview still constitutes free media, being embedded in a program in a deeper way costs $100,000 to $500,000, with the “hard costs” of producing the segment typically piled on top, says one studio marketing exec. “The audience sees it as part of the show, so they don’t fast forward around you.”

The change Jobs envisioned may be late in coming, but most who work in the marketing field like to believe it’s still on its way.

“In the next five years, I think there is going to a revolution,” says Adee. “We are going to get smarter and smarter about who is really going to see these movies. And that has to bring the cost down.”

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