And it could come back to haunt them, says a study set to be released today from eMarketer, an online research firm.
Studios spend about 3% of their marketing budgets on online ads, which is below the 5.7% that the average U.S. industry spends, according to the eMarketer study. Hollywood is expected to make up some ground, though, spending 8% of ad budgets online by the year 2010. That translates to $526 million and 17% of studios total ad spending. Other marketers will spend about 8.9% of their budgets on the web by that time, the study found.
Studios give higher figure
The eMarketer study, while reporting that studios spent 3% of their budgets for online media, said that a number of movie marketers surveyed put that figure considerably higher. "The general consensus was that 6% of their budgets were going toward online efforts," the study said.
The research report, dubbed "Hollywood Online: Ad Innovators Play Spending Catch-Up," states that studios have made a misstep by not increasing their online spending sooner in order to reach the coveted young consumer who spends significant amounts of time on the web.
Still, real-world examples show that filmmakers have spent wisely on the web. Some of the most successful movies of the recent past have had extensive online exposure leading up to their launch, including Mel Gibson's "The Passion of the Christ," Paramount Vantage's "An Inconvenient Truth" and New Line Cinema's "Wedding Crashers." Executives who marketed those films gave considerable credit to the online campaigns for pushing the box office to lofty heights.
The study points out that teens and young adults are the most frequent moviegoers, and they also make up a large portion of internet users. With 73.7% of 12- to 17-year-olds in the U.S. using the internet now, and 83.9% expected to do so by 2010, the studios need to jump-start their web spending, the report recommends.
Creating original web content
Executives at Viacom's Paramount Pictures, who have been innovators in the use of online campaigns, said it's less important to spend on banner ads and more vital to create original materials to hype films.
"I'm shifting my focus into original digital content that people can engage with," said Amy Powell, senior VP-interactive marketing at Paramount.
Digital campaigns around "Nacho Libre" and "Jackass Number Two" helped both those movies reach the desired young male target, Ms. Powell said.
Studio marketers have said they still rely primarily on traditional media such as TV, radio, newspapers and magazines for launching broad-based movies, such as Walt Disney's "Pirates of the Caribbean: Dead Man's Chest" or Sony's "Talladega Nights: The Ballad of Ricky Bobby." Art house and niche films often get more online exposure that's targeted at particular audiences.
MySpace, Grouper strategies
Even if the spending figures don't reflect it, studios are becoming more embedded in the online world in a number of ways, including some recent high-profile acquisitions. Sony bought the online video file-sharing site Grouper in August for $65 million and already has started using it to promote films, such as the upcoming Will Smith drama "The Pursuit of Happyness."
News Corp. earlier this year gobbled up the social networking behemoth MySpace, and corporate sibling 20th Century Fox frequently uses it to promote its upcoming films. The two worked together recently, hosting a series of screenings for the comedy "Borat" that have stoked critical and consumer word-of-mouth around the satire.
EMarketer's study found that the majority of internet users (57.2%) still get their information about movies and TV shows from TV. Fewer people (46.1%) get those details from websites.
The major Hollywood studios spent an average of $36.2 million to market a film last year, according to the Motion Picture Association of America. Attendance was down for three straight years -- 2003, 2004 and 2005 -- but has seen an uptick this year of about 3.5%, according to box-office tracking firm Exhibitor Relations Co.