Omnicom Makes $50 Million Commitment to National CineMedia

In-Theater Advertising Developing Targeting and Retargeting Capabilities

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'50 Shades of Grey' drew crowds to theaters on Valentine's Day weekend.
'50 Shades of Grey' drew crowds to theaters on Valentine's Day weekend.

Omnicom's media agency network has made a commitment to spend $50 million with National Cinemedia, its largest bet on in-theater advertising yet, as the medium gets a digital facelift and becomes part of the premium video discussion.

For National Cinemedia, which says it sells ads before movies on over 20,100 screens in about 1,600 theaters, it's also the largest commitment yet from an agency, and it more than doubles previous Omnicom commitments, the media company said.

"This deal for me is part of a broader conversation that we're trying to lead in terms of defining what is premium video," said John Swift, CEO of North America investment for Omnicom Media Group. "I want to stop talking about out-of-home versus other channels." The inventory is popular with clients and tends to sell out, he added.

National Cinemedia, or NCM, is owned and operated by the Regal, AMC and Cinemark movie theater chains as well as 36 other exhibitors. Omnicom Media Group houses buying shops OMD and PHD.

Cinema accounted for 0.5% of global ad spending in 2014. That's not expected to grow at all between 2015 and 2017, according to ZenithOptimedia's December forecast.

Omnicom's sizeable new commitment comes despite the Department of Justice's lawsuit to halt NCM's planned acquisition of Screenvision, which the companies announced last May, although it would have been larger if the merger went through, according to Cliff Marks, president of sales and marketing at NCM.

Mr. Marks declined to comment further on the effort to buy Screenvision as the companies await an April court date. Omnicom declined to comment on Screenvision.

So how does a medium as traditional as the movie screen attract ad buyers focused on buzzy digital platforms like Facebook and Twitter?

It's partly the usual audience argument: Cinema sellers have always offered brands a captive audience with no way to change the channel. And despite last year's decline in theatergoing and a slow January, according to various reports, NCM's Mr. Marks said attendance is up so far this year on strong titles like "Fifty Shades of Grey," "American Sniper" and "Kingsman."

But NCM is also pitching marketers on ads that reach consumers outside the theater, using a new digital ad network called Cinema Accelerator that lets the company tap credit card and other data to target moviegoers again with online ads, Mr. Marks said. The company is working with ad-tech firm Rocket Fuel.

NCM has also spent the past couple of years repositioning itself as a premium video player, adopting Nielsen ratings measurement, the same cost-per-thousand-impressions, or CPM, pricing model common in digital media and TV, and lowered pricing to be competitive with other "video players" such as TV networks, said Mr. Marks. "We had to lower CPMs so we could be competitive," he said.

"What we can't do today that we can in the next year is better audience targeting," said Mr. Marks. "We want to become to movies what ESPN is to sports. You know when you buy ESPN you reach [fans of] sports news and magazines. We have the same offerings with NCM. We can reach [consumers] onscreen, in lobbies and on mobile."

"One of the biggest barriers for cinema has been lead time and cost-of-entry in the past," said Mr. Swift, explaining that it's been "very expensive" to cover all screens and theatres. "We see a world where we buy cinema in a lot more of a targeted way."

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CORRECTION: An earlier version of this article said cinema accounted for 5% of global ad spending in 2014 and was expected to double by 2017, according to ZenithOptimedia. The correct proportion is 0.5%, and it is not expected to grow.

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