Coming Attractions: Cinema Advertising Growing Fast, Poised For More

by Joe Mandese, Jun 27, 2005, 7:00 AM

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It's still miniscule by the scale of the most established media, but cinema advertising is gaining traction with major advertisers--and their ad budgets. In fact, U.S. advertisers invested $438 million on cinema ads--TV-like commercials that run on screens in theaters before movies--during 2004, an increase of 23 percent over 2003, according to estimates being released today by the Cinema Advertising Council (CAC).

That makes cinema one of the fastest-growing major ad media, yet not as fast as online ad spending, which rose 33 percent in 2004. But cinema's growth is being driven for the very same reasons: a shift of advertising budgets from traditional television ads.

"How cool would it be for someone to walk into your living room, sit down and watch a large-screen version of your commercial, and know that there is nowhere else for them to go?" asks Cliff Marks, president of sales and chief marketing officer for National CineMedia, the advertising and marketing sales division of Regal Entertainment Group and AMC Entertainment, the nation's two largest movie theater owners. Some of the nation's biggest advertisers are joining that consensus. Already popular among sports apparel companies like Adidas and Nike, and soft-drink marketers like Coca-Cola and Pepsi, the medium has been embraced by financial services marketers like American Express and Visa, and even by packaged goods marketers including Procter & Gamble and Unilever, all of whom have vowed to shift money from TV into other media.

"There is a very classic profile for our industry: Some advertiser--an innovative one--will seek out new ways of getting their message out to a consumer audience. They discover cinema works, and come back and buy more. Meanwhile, their competitor notices what they are doing and asks their agency why they're not involved," says Matthew Kearney, president and chairman of the CAC.

The market has also accelerated as a result of better research on cinema advertising exposure, including a syndicated report from Nielsen Media Research that merges box office attendance data with cinema ad exposure data.

Big cinema chains like Regal and AMC, meanwhile, have formed what amounts to the equivalent of national television networks with thousands of affiliates, giving advertisers and agencies the ability to achieve national reach delivery with a single ad placement. Interestingly, the ad growth is coming equally from CAC members like Regal and AMC, as well as from unaffiliated theater chains. For non-CAC members, on-screen and off-screen revenues grew to an estimated $33 and $15.3 million, respectively--up from $28 million for on-screen and $13 million for off-screen revenues in 2003, according to the CAC report.

Even with that growth, however, U.S. cinema advertising remains only about 0.4 percent of total U.S. ad spending, but the CAC's Kearney said the United States is still playing catch-up, noting that in more established markets like France and Australia, cinema advertising accounts for "1.5 percent to 2.0 percent of total ad spending."

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