Industry News :: Media spending down, studios cutting back on releases

05/29/08 By Stephen Galloway, thr.com

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"We're on a diet," brags one studio chief.

He's right, according to the latest numbers from Nielsen Monitor-Plus. Money spent by major studios on media buys dipped in 2007 to under $3.4 billion, compared with $3.5 billion in 2006.

That's positive news for studio marketing chiefs haunted for years by escalating marketing costs. But in March, the MPAA said the average cost to market a studio release actually grew by 4%. How to explain the discrepancy between the MPAA and Nielsen?

"There are less movies," explains David Brooks, president of worldwide marketing for Focus Features. "It doesn't seem to me that people are spending any less on the marketing of films, and if anything, they are spending more."

In other words, the studios' diet consists of fewer meals but plenty of calories per serving. And that's a concern to marketing executives.

"There is nobody I talk to in the business who isn't under pressure to defend what is being spent to market films," says Adam Fogelson, president of marketing and distribution for Universal. "There is more scrutiny and rigor in the financial process of how films are being marketed -- and that is justified."

Given this, one might expect to see a shift in spending, or at least a more radical way of marketing movies. But the Nielsen numbers are surprisingly consistent with previous years. With all the talk about how the Internet would revolutionize advertising, most marketing departments are still fairly traditional.

"We continue to experiment with how to use the Internet," Fogelson notes, "but when we spend $5 million in traditional media, we can see we are increasing audience awareness, and that is not necessarily the case with $5 million spent in new media."

Like all marketing chiefs, Fogelson gets daily tracking numbers from four separate companies, allowing him to see how well his campaigns are working. Since spending in new media does not result in a visible spurt of interest, he says, "it is hard for anyone to risk a $200 million investment to try out a theory."

Not that the studios aren't spending on online campaigns. "A digital campaign could be in excess of $1 million," says Gerry Rich, president of worldwide marketing for Paramount. "It could be half a million for primary placement" -- meaning, for advertising on the homepage of major Web sites.

Any shifts that did take place in 2007 could largely be attributed to so many sequels, which are marketed somewhat differently.

"There was already great awareness of 'Spider-Man 3' and 'Shrek the Third' and 'Pirates of the Caribbean: At World's End,'" says Jim Gallagher, president of domestic marketing for Disney. "With pictures like that, you might not spend in traditional areas of media, and you might spend more on publicity or the promotional space."

So where did the studios spend on ads in 2007? As always, they spent the most on network television -- though the bad news is that network spending dipped to $1.09 billion, or 32.2% of the studios' total media purchases last year, compared with $1.13 billion (31.2%) in 2006 and $1.2 billion (33.8%) in 2005.

That's a reflection of three things: First, the failure of the broadcast networks to come up with many bona fide hits. Second, the flight of audiences from network to cable. And third, the move away from television altogether by the most desirable audience: young people.

"Overall, the network numbers were a little bit down last year and there were a lot of 'make goods,'" Gallagher says, referring to the free advertising networks offer when a show does not deliver promised ratings. "That tends to affect the money the networks are taking in."

Given the decline in network viewing, cable television spending predictably rose a notch to $893.5 million, or 26.5% of total media purchases, compared with $851.9 million (24.1%) in 2006 and $804.2 million (23%) in 2005.

"Cable was always looked on as a secondary or tertiary thing; that is not the case any more," says Sue Kroll, president of worldwide marketing for Warner Bros. "Now there are all these wonderful first-run programs on cable."

Cable is allowing marketers to target precise segments of the audience, which is particularly valuable to specialty and genre releases.

"In our world, we have been buying as much cable, if not more than before," Brooks says. "Places like Comedy Central or Spike work great for our more male-oriented programs, and the Bravo audience tends to line up with a number of our movies."

Media spending remained curiously flat for Spanish-language network television, which many insiders had expected to grow more. The studios spent $75.4 million, or 2.2% of the total, on Spanish network television (compared with $80.6 million/2.3% in 2006 and $66.2 million/1.9% in 2005).