• by Lee Hall , May 30, 2002

The look of fear on Jody Foster’s face was palpable. And if you were one of the estimated 130 million Web surfers who ventured onto the Yahoo! network in March, it was hard to miss images from Foster’s current motion picture, Panic Room.

The Sony Pictures Entertainment production, the object of one of the heaviest movie promotions ever on the Internet, roared into theaters March 29 to the biggest Easter Weekend opening on record.

”We employed some pretty sophisticated tactics to monitor buzz throughout the Web,” says Dwight Caines, vice president of Internet marketing strategy, Columbia Tristar Marketing Group. “Based on what we saw and heard, we could react by adjusting our advertising message online.”

The next great Hollywood love affair is happening not on the big screen but rather on millions of computer displays around the world. Recognizing the growing influence of the Internet on movie fans, Hollywood studios are pouring more and more resources into online promotional campaigns in an effort to build relationships with Web surfers, create a marketing buzz for films, and fill theater seats.

”Online marketing is cheap, and it works,” said Denise Garcia, director of research at GartnerG2. “The studios are able to deliver a rich media experience at a lower cost [than television]. That’s the main reason you’re seeing more of them going online.”

Studios’ use of online promotion to market new theatrical releases is soaring. In September, GartnerG2 reports, studios bought a total of 9.4 million banner ad impressions. By the end of January, that figure had nearly tripled, to 26.4 million. Online ad budgets remain minuscule compared to the millions of dollars spent on television ads, but the growth rate suggests that studios and their agencies are beginning to appreciate the ability of Web ads to sell tickets and get people into theaters.

”The exit polls that studios do as a matter of course to find out which of their promotions are really resonating with moviegoers clearly show that the audience is becoming interested in films through online advertising,” says David Mandelbrot, vice president and general manager of the entertainment division at Yahoo! Inc. As one of the Web’s most popular destinations, Yahoo! has scored major marketing deals with most of the top Hollywood studios and recently relocated its entire movie and television team to new offices in Santa Monica, Calif., in order to accelerate its promotional work with the studios.

”We have seen a pronounced shift in the dollars spent online on movie promotion, and we are starting to see a direct correlation between the success of feature films and the amount of online promotion,” Mandelbrot says.

LET’S MAKE A DEAL!

In March, Fox Filmed Entertainment announced what the company said was its largest commitment ever to online advertising, with Yahoo! the primary beneficiary. The titles to be promoted include the animated Ice Age and the thriller Minority Report.

”We have been able to develop a number of innovative marketing programs that will convey our messages in ways previously not available to advertisers,” said Alan Cohen, president of marketing at Twentieth Century Fox, while announcing the deal.

Megaportals like Yahoo.com, MSN.com, and AOL.com, with their ability to aggregate millions of users across numerous sites, are becoming the promotional vehicles of choice for Hollywood’s online endeavors.

Jupiter Media Metrix reports that portals hosted 57% of movie ads in January and February, more than seven times the number hosted on movie-related sites.

Surfers by the millions flocked to movie websites the week before Easter to view and download exclusive Web trailers of highly anticipated movies. Nielsen//NetRatings estimates traffic to the StarWars.com site soared 97%, to 315,000 surfers, most of whom viewed or downloaded the online trailer for the upcoming Episode II: Attack of the Clones.

”Movie trailer distribution has become an online commodity for the entertainment industry,” says Jarvis Mak, senior analyst at Nielsen//NetRatings. “Studios are using these sites as marketing vehicles to hype a film if people are curious, and then to draw them in and engage them further.”

Online movie campaigns, however, are moving far beyond trailers and banner ads.

· **Users of AOL’s Instant Messenger service chatted last fall with actors from the Warner Bros. thriller Swordfish.

· **Characters from 2001’s animated hits Monsters, Inc. and Shrek frequently popped up on websites and toolbars.

· **Online promotion of Artificial Intelligence: A.I. included an intricate Web-based game that featured clues scattered throughout the Internet.

·**Revolution Studios and Sony Pictures created a PDA-based game to promote last year’s The One.

· **Yahoo’s auction site peddled original storyboard art and character drawings from Ice Age.

Studios have learned to leverage the interactive advantages of the Web in creative new ways that are proving not only effective but cost-effective as well.

CHEAP PROMOTION

Rather than investing $100,000 to $200,000 to develop a title-specific website, studios are increasingly cutting deals with portals and devoting ever larger shares of a film’s promotional budget to online efforts. In 2001, the typical theatrical film cost just short of $50 million to produce. Marketing and promotional expenses added another $30 million. While studios won’t disclose specific numbers, historically the budget for online promotion has been less than 5 percent of the total marketing plan. That figure, however, is climbing.

”The spend level [for online marketing] has grown to about three times what it was three years ago,” said Sean Black, vice president and media director of Grey eMedia, which handles online promotion activity for Warner Bros. There is growing evidence that increasing the share of online in the media mix can raise the effectiveness of a campaign without increasing the budget.

A study conducted earlier this year for the Advertising Research Foundation, the Interactive Advertising Bureau, and the MSN Network found that a higher proportion of online spending increases brand awareness and purchase intent more efficiently than higher TV or print spending.

While the study focused on a campaign for a consumer packaged-goods product, it marked “the first time we have measured how online really stacks up against television and magazines,” says Jim Spaeth, president of the ARF.

In many cases, studios find that they can directly associate an online campaign with ticket sales. A recent Warner Bros. campaign prompted Web surfers to print online coupons good for free popcorn when they purchased a ticket to a particular flick. Studios also frequently link specific ads to online ticketing sites like Fandango.com, Movietickets.com, or AOL Time Warner’s Moviefone.com. Online purchases make up only about 1 percent of total ticket sales, but the proportion is expected to grow.

”To me, the Holy Grail will come when people can actually print their tickets online and have them widely accepted at theaters. That’s a big goal for us, but we’re not there yet," says Columbia Tristar’s Caines. Warner Bros. has commissioned a research study to determine the influence of online campaigns in driving patrons into theaters. Results are expected later this year.

”We want to know the effectiveness of online within the total media mix and how online affects interest in movie attendance,” Black says.

MORE THAN A BANNER

While traditional banner ads still form the basis of most ad campaigns, studios are taking fuller advantage of rich media and interstitial ads.

“The ad models are starting to replicate what the entertainment industry really is,” Black said. Rich media applications such as Eyeblaster and Unicast’s Superstitials are becoming more popular as methods of delivering a TV-like experience.

”It’s really the first time for them in any medium that they can convey the same type of messages that they can convey on television,” said Alli Savarino, vice president of global marketing at Unicast.

Rich media ads, with CPMs ranging from $30 to $40, cost significantly more than banners ($1 to $4). By contrast, audience CPMs for broadcast television networks average about $15, with cable somewhat lower. One prime-time television ad that reaches millions of viewers simultaneously can cost upwards of $300,000, about the same price as an entire online campaign.

NOW, THE BAD NEWS

Hollywood’s embracing of the Web as a potent marketing vehicle comes at a time when Internet growth is peaking. “The number of people online is reaching saturation, meaning nearly all of the people who will ever be online already are,” said GartnerG2’s Garcia. About 68% of the U.S. population has access to the Internet, just short of the 78% Garcia defines as the point of saturation.

The growth in broadband Internet connections opens another marketing door for studios to deliver high-bandwidth, rich media content. But broadband growth has slowed as well, thanks in part to high cost and recent economic uncertainty.

The adoption of high-speed cable modems and digital subscriber lines (DSL) fell precipitously in the first few months of 2002, dropping from an estimated 440,000 households per month to fewer than 260,000. Somewhat fewer than 20% of U.S. households are wired with a broadband connection today. Analysts project that that proportion will top out at between 50% and 65% within seven years.

”One of the things we know as marketers is that we need to get our trailer streams online and get them in front of as many viewers as possible,” said Caines. “Broadband opens an entirely new opportunity to reach people.”

This story first appeared in MediaPost’s Media magazine’s May issue.