Regal Entertainment Group, the movie theater industry's new leader with nearly 5,900 screens nationwide, recently announced plans to begin selling its own in-theater advertising and in-lobby promotional opportunities, through a new 60-person sales force it's assembling.
With cash from a recent stock offering, and by combining the resources of Regal Cinemas, United Artists Theatre Co. and Edwards Theatres, Regal is now building the industry's first-ever digital network for in-theater advertising, said Clifford Marks, president of the newly named division, Regal CineMedia. Mr. Marks, recruited to lead the new unit two months ago, is a 13-year sales veteran of Walt Disney Co.'s ESPN/ABC Sports.
"We're replacing the cumbersome process of reformatting TV commercials for theater use with a new turnkey system allowing advertisers to target specific audiences in specific regions using digital technology," said Mr. Marks.
Regal also plans to ramp up its in-lobby promotions to include regular product sampling and displays by national marketers. Previously, independent representative firms sold Regal ad inventory, typically consisting of three-minute commercial blocks shown to moviegoers before the feature; promotions were sporadic.
"Movie theaters are the only places where people pay to give their undivided attention to commercials, and our attendance numbers are huge," said Mr. Marks.
Thanks to a series of blockbuster films this year plus a surge in the number of Baby Boomers' children hitting adolescence, the nation's box-office results are up 20% over last year, according to AC Nielsen EDI.
Total movie theater admissions have also boomed, last year reaching a 40-year high, according to National Association of Theatre Owners (see chart, below). Regal alone claims more than 250 million visits to its theaters annually.
No. 2 rival AMC Entertainment, specializing in giant 25- to 30-screen megaplexes with stadium seating, located primarily in upscale suburbs and cities, boasts the most successful frequent-buyer program for moviegoers (moviewatcher.com). AMC, which farms out its in-theater ad sales task to subsidiary National Cinema Network, is also increasing the pace of in-lobby promotions and this year aims to use incentives to increase the frequency of moviegoers' attendance to its sites, said Rick King, the company's spokesman.
Coming on aggressively this summer is No. 4 theater operator Loews Cineplex Entertainment, which plans a blitz of new promotions for lobbies connected to its 2,300 screens, billed as drawing the industry's most upscale crowd because 80% of its sites are located in the nation's 10 largest metropolitan areas.
After emerging from bankruptcy earlier this year, Loews hired John McCauley, the National Football League's former senior director of marketing and advertising, to head its new push for in-lobby promotions.
This summer's "Picture Perfect Summer" is the first of a series of promotions designed to drive consumers to Loews theaters for discounts and deals; several more seasonal promotions with brand marketers are planned for the fourth quarter.
"We see promotions as the way to differentiate ourselves, because consumers see the same ads at all theaters but they're only getting discounts on major brands at Loews lobbies," said Mr. McCauley, Loews' VP-marketing and new business development.
General Mills headlines Loews' current summer promotion; other partners in ongoing promotions include MasterCard International, Coca-Cola Co. and Cingular Wireless. Screenvision, a theater ad-rep firm, continues to sell ads on behalf of Loews.
Consumers can get a "VIP Card" from packages of General Mills' Pop Secret microwave popcorn, entitling them to free refills and/or soda at all Loews Cineplex Theatres; the promotion encompasses 1 million packages in supermarkets nationwide.
The Picture Perfect Summer promotion also includes a sweepstakes offering one grand prize of $1 million; 8 million box-office coupons will be given out free to Loews moviegoers, who can redeem tickets for random drawing to win the cash.
All theater operators are rapidly adding plasma screens to lobbies for additional opportunities to sell advertising aimed at loitering consumers.
Prices for in-theater ads vary according to region and volume, but transferring made-for-TV ads to movie theater formats has been a longtime headache.
Increasingly, advertisers are using movie theater advertising for product launches and to break new campaigns, said Todd Siegel, senior VP of sales and marketing for New York-based Screenvision, the nation's largest in-theater advertising rep company.
"With TV viewership constantly declining, and viewers more distracted by remote controls, VCR's and TiVo, the only place you can show a commercial in the dark with the undivided attention of consumers sitting in comfortable seats, is a movie theater, and advertisers are using this as a showcase for their best ads," he said.
Although U.S. advertisers spend only a fraction of media on in-theater ads vs. Europe and Asia, where 1% to 3% of media budgets are in-theater ads, Mr. Siegel said in- theater advertising is growing fast.
"We see tremendous growth potential, and with the spread of digital delivery, it will only get easier for advertisers to deliver ads to moviegoers," he said. Screenvision currently has the capability to deliver advertising digitally to 177 screens nationwide and is rapidly expanding its digital reach.
Screenvision has also extended its overall marketing platform in recent years, adding opportunities for marketers to have displays, kiosks, hand-to-hand sampling, and to sponsorships of cups, popcorn bags and even the theater lobby carpet.
"We've become a marketing solution, giving advertisers the opportunity to reach consumers six times in six different ways with a brand message, while going to see a movie," Mr. Siegel said.
Regal's Mr. Marks said a growing number of advertisers are creating commercials specifically for theaters.
Through its new Regal Out of Home Media Network, which includes a satellite-powered digital commercial delivery system, Regal says running ads in theaters will soon become dramatically less expensive.
Regal also hopes to harness its nationwide digital delivery system for corporate clients, enabling companies to stage sales and training meetings at movie theaters with nimbler technology and satellite access.
"We have 20 million people a month coming through our theater lobbies. It's a marketing platform we've never really leveraged before," said Mr. Marks.