Cinema Spending Up Double Digits for '07

Benefits From Slide in Prime-Time TV Ratings

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NEW YORK (AdAge.com) -- For the second consecutive year, cinema advertising has posted double-digit year-over-year growth, with advertisers spending $539.95 million on in-theater ads in 2007, according to the Cinema Advertising Council this week. That's an 18.5% increase over 2006, a year that saw a 15% increase in cinema ad spend over 2005.
As broadcast prime time loses viewers, cinema is posting incremental gains, with 1.4 billion admissions in U.S. and Canadian cinemas recorded in 2007, up from the 1.39 billion admissions in 2006.
As broadcast prime time loses viewers, cinema is posting incremental gains, with 1.4 billion admissions in U.S. and Canadian cinemas recorded in 2007, up from the 1.39 billion admissions in 2006. Credit: AP

But it might be tough to sustain such robust growth for much longer. "Given our revenues are now over a half-billion dollars per year, it'll be pretty challenging to maintain 18%-20% annual growth," said Cliff Marks, president-marketing and sales for National CineMedia, the national sales arm for the AMC, Regal and Cinemark theater chains. "The good news is, marketers continue to ask a lot of questions and are increasing their spending."

Movie theaters still a draw
Marketers and media agencies looking for TV-like reach at a time when broadcast TV is losing its footing have turned to cinema as an alternative to reach mass quantities of consumers. As broadcast prime loses viewers, cinema is posting incremental gains, with 1.4 billion admissions in U.S. and Canadian cinemas recorded in 2007, an increase from the 1.39 billion admissions in 2006. Box-office receipts also reached record number last year, breaking a four-year sales slump since 2002's tally of $9.27 billion.

Stu Ballatt, senior VP-marketing for Screenvision and president-chairman of the Cinema Advertising Council, expects attendance and ticket sales to remain up in 2008. "In what some people consider to be a recessionary time, cinema is one of the areas that doesn't suffer," he said. "Generally speaking, it's a low-cost, high-entertainment opportunity. There's new programming every week."

The comparative lack of new programming on TV is also what prompted agencies like MediaVest to move as much as $20 million to $30 million in TV dollars from major clients like Procter & Gamble over to cinema during the writers strike-affected period from November to March. Such shifts in spending have been occurring on a gradual basis for the last several years, but have been most noticeable in the last 12 to 18 months, Mr. Ballatt said.

Hard to categorize
Because of the TV-to-movie migration, it's difficult for media agencies to designate which of its sectors should be placing the buys for cinema, which has traditionally been sold as out-of-home media. "We are clearly an undefined animal," Mr. Marks said. "At many places we are still considered out-of-home, but at some places we're looked at more as national broadcast, at some places we're purchased out of the planning group. The agencies are still trying to figure out where we belong."

Not that such a disconnect is of much concern to Mr. Marks' bottom line, either. "The more people understand the cinema business, whether they're out-of-home specialists or planners, the better for us. Wherever we fall, they'll fall."

And although more ads are being sold by the Cinema Advertising Council, which accounts for more than 82% of all U.S. movie screens, that doesn't necessarily mean that will help slow the inflation of the average movie ticket price. Patrick Corcoran, director-media and research for the National Association of Theatre Owners, said there are plenty of other factors that determine the cost of the average movie ticket, which rose from $6.55 to $6.88 in 2007.

Energy costs, heating, air conditioning and the purchase of projectors and their expensive light bulbs are all contributors to the rise in ticket prices. "Transportation costs are up, all concessions and film that's being delivered to the theaters is going to be more expensive just to get there," Mr. Corcoran added. Still, he said, cinema advertising is a "strong and growing source of revenue that will help companies' bottom lines. It's a way to monetize that screen time and lobby space. It's certainly not going to have an adverse effect on ticket prices."
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