LOS ANGELES (AdAge.com) -- Hollywood this week gave up even trying to understand the true cost of marketing its films. But consumer brands facing shrinking marketing budgets and the weakest economy in decades are more anxious and determined than ever to leverage the movie studios' marketing efforts to their own advantage.
What brands are demanding from studios, and what studios are prepared to give in return, is changing markedly. But unlike so many marriages ruined by arguments over money, the union of Hollywood and Madison Avenue seems to have grown fiercer and more interdependent in the firelight of the economic meltdown.
"It was counterintuitive to me," said Marc Shmuger, chairman of Universal Pictures, of brands' continued ardor for Hollywood in such a dire economy, because marketing budgets "are under great scrutiny. They're going down, not up."
And the studios are practicing a bit of quid pro quo. "We understand the days of a studio using a large chunk of money from a partner, and giving only the glow from that film in return, are over," said Universal's marketing chief, Adam Fogelson.
Cheaper scatter prices
Mr. Shmuger, like several other studio chiefs interviewed, said one reason for the health of the relationship is "finally we're seeing a stemming of the chronic rise in media costs." Thanks to a softening ad market, TV spots purchased in scatter (that is, on an as-needed basis after the networks sell the bulk of their advertising in the spring) are some 25% to 30% cheaper than a year ago, according to two media buyers with movie accounts.
And not only are studios and their promotional partners getting more TV exposure for less, they are also more willing to share it, under certain conditions.
"It's almost as if people on the brand side are recognizing that drafting off of a movie that has incredible awareness by launch date and is very valuable, and may even get them more bang for their buck," said Stephanie Sperber, exec VP, Universal Studios Partnerships.
Given that, many brands are stepping in as promotional partners for some of this summer's biggest releases, especially in light of Detroit's reluctance to back entertainment projects once considered a natural fit for the car business. For instance, when Paramount Pictures' "Star Trek" opens May 8, it will go boldly forward with Burger King, Lenovo, Kellogg, Nokia and Esurance -- and no car brands.
Those promotional partners are taking advantage of this new Hollywood austerity and lowered media costs. Esurance will use half the time in its upcoming 30-second TV spots to showcase "Star Trek"-themed footage and the remaining 15 seconds to hype its service.
The online auto insurer was able to demand exclusive, custom content such as filmmaker interviews and first looks at new monsters from the film for its "Star Trek" microsite. Kristin Brewe, director of brand and public relations for San Francisco-based Esurance, said the deal helps mitigate plunging auto sales and a "very boring category," and gets her brand exclusive content that would otherwise be prohibitively expensive to license outside of a movie promotion.
"Everyone is trying to protect themselves by making deeper, more substantial deals," said Steve Grubbs, CEO of entertainment and sports at Omnicom Media Group.
Doctor's Associates' Subway sandwich shops did exactly that. For buying costly Super Bowl advertising on NBC's broadcast of the game, Subway was later able to finagle a world premiere of the trailer for Universal's "The Land of the Lost" on own website, freshbuzz.com. (Universal and NBC are corporate siblings within NBC Universal.) This week, Subway is shooting new TV spots featuring Sleestaks, creatures borrowed from the set of the film.
LeeAnne Stables, exec VP- worldwide marketing partnerships at Paramount, said her studio has "been able to get top dollar out of our partners" in part because of "custom content" deals with brands such as Esurance.
Ms. Stables even allowed two of the five "Star Trek" promotional partners onto the Starship Enterprise set to shoot their own TV spots during production of the film, though she declined to say which ones, citing confidentiality agreements with the brands. (Insiders say a substantial portion of Burger King's summer advertising will feature spectacular "Star Trek" spots shot "aboard the Enterprise," though a request for comment from a Burger King spokeswoman was not returned by deadline.)
Still some tension
All this is not to say the recession isn't creating any tension between brands and Hollywood. Farrah Louviere, director of film integrations at Davie Brown Entertainment, the Los Angeles-based product-placement giant. Said studios are becoming more aggressive regarding the terms of product integrations.
Traditionally, brands pay only if a product placement is satisfactory, after the film has been shot. "Now studios are asking for 50% to 80% of the [integration] cost up front, and guaranteeing the placement if we do," Ms. Louviere said.
With each studio film containing 15 to 20 product-placement categories costing from $10,000 to as much as $150,000, the immediate savings to a studio can amount to millions of dollars.