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Hollywood’s Soaring Marketing Cost Dilemma

As marketing costs soar for domestic theatrical releases and summer box office revenues decline, distributors of independent movies are struggling to find answers to the dilemma of supporting distribution with sufficient advertising budgets to release films, while managing the return to producers and P&A investors.

An advertising budget for an independent wide release to support an opening weekend can start in the $20 million range, and for a studio tentpole release, P&A can reach in excess of $150 million. Rising advertising costs compounded by the ever-increasing fragmentation of advertising consumed by the moviegoing audience is creating significant investment challenges. What was once a vibrant P&A investment space now sees traditional P&A funds limiting their exposure and demanding higher returns in response to the volatile landscape.

Recently, a new P&A investment platform has emerged that blends an advertising agency media placement model with a risk-tolerant investment model to provide funding for the advertising side of the P&A budget while mitigating capital risk and significantly increasing investor returns.

Media Funding Partners, the Los Angeles-based media placement and investment firm, announced this new approach in panel discussions at both the Winston Baker Film Finance Forum and the 2017 Variety Massive Entertainment Marketing Summit. The company has provided funding and media placement for three wide release films and two smaller releases in the last 18 months.

As a media brokerage and buying agency specializing in independent theatrical releases, the firm provides media placement services for TV, radio, print, outdoor, and web advertising as well as providing funding for those placements. The company is able to tie their investment return to the success of the film while taking a subordinate role in the recoupment waterfall, lowering the risk and providing a significantly better return for the other P&A investors of the film.

More information on Media Funding Partners, including access to a February 2017 case study of a 2000 screen release showing over delivery of planned impressions at a lower cost per point than the media plan called, for is available at MediaFundingPartners.com

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