LOS ANGELES (AdAge.com) -- After Hollywood's record year at the box office, it should come as no surprise that cinema advertising was one of the few kinds of advertising to win more revenue in 2009 than in 2008. But even the cinema industry's lift in ad revenue, which increased 2% to $584 million according to a new report from the Cinema Ad Council, didn't keep pace with the movie-going audience, which increased 6%.
The picture for 2010, however, is a much different story. The stunted growth last year stemmed largely from cutbacks in local advertising, which accounted for 20.6% of cinema ad spending but dropped 9.6% from 2008, according to Mike Chico, president and chairman of the Cinema Ad Council as well as exec VP-ad sales for cinema rep firm Screenvision. Many of those local dollars have already returned in the first half of 2010, accompanied by significant spending increases by national advertisers marketing packaged goods, healthy and beauty products, cars and retail. "We've seen double-digit growth collectively in the first two quarters," Mr. Chico said, referring to the cinema industry at large.
The largest cinema ad sales firm, National CineMedia, has already reported a 12.8% gain in first quarter ad revenue, for a total of $67.8 million, and projected an increase of 6% to 8% in the second quarter. Its growth is largely due to first-time spending from brands that hadn't used cinema before, including marketers in the electronics, package-goods, video game, confection and automotive categories, according to Cliff Marks, president of sales and marketing at the company. And then there's a significant lift in spending from Kraft Foods, which recently moved several million of its TV dollars into cinema for brands such as Oscar Meyer Lunchables, Ritz Crackers and Stride gum.
National CineMedia got advertising from nearly 200 national brands last year, up from 30 when it debuted in 2002, Mr. Marks said. "When we started this our only real customers were video games, automotive and military," he said. "If you look at us today, any brand that considers a 12-to-34 audience will have cinema in their consideration set."
3-D has also been a source of growth for cinema. Since Screenvision debuted the first 3-D cinema ad last summer, the company has booked three more 3-D campaigns, including ads for the Air Force and Friskies cat food. National CineMedia has also picked up 3-D buys from Samsung, Sprint and Lexus.
Producing 3-D ads generally cost marketers an extra $20,000 to $50,000 in production costs, but can lead to some of the industry's strongest results in measures such as ad recall and purchase intent, Mr. Marks said.
During the July 2 opening of Paramount's "The Last Airbender," Lexus will become the first automotive brand to create a 3-D ad, airing a 3-D version of its new "Pitch" campaign for the Lexus LFA, created with Saatchi LA and Team One. In the spot, the car is showcased for its ability to generate a musical pitch that can break a champagne glass.
"That sort of beautiful and dramatic kind of action works in a 3-D format when you're looking at the car and watching the glass fly across the screen," said Deborah Senior, Lexus's corporate manager-advertising, brand and product strategy.
Next on cinema's priority list? Capitalizing on digital media such as websites. National CineMedia recently formed an ad network comprised of about 20 movie review and entertainment sites -- including Flixster, Rotten Tomatoes and Examiner.com -- to go after advertisers who want to reach movie fans on opening weekend, but also several weeks ahead of a film's release. The network has attracted cross-platform buys from 15 National CineMedia clients, including a first-ever cinema buy from Lowe's.
"It's not huge revenue yet, but we're seeing more and more brands saying, 'Of course, I get it,'" Mr. Marks said. "The movie-going experience happens before, during and after a fan goes to the theater. What cinema is doing is just touching the 'during.' Now we have a chance to reach those consumers at the other touchpoints."
The extra revenue earmarked for the sites will be reported to the Interactive Ad Bureau and not reflected in future Cinema Ad Council industry revenue reports.