Boffo Box Office Brightens Cinema Ad Picture

by Erik Sass , August 11, 2009

Cinema advertising is one of the few bright spots in an otherwise dreary media marketplace, and the trend continued with National CineMedia's positive earnings report for the second quarter of 2009.

Total revenues grew 7.2% compared to the second quarter of 2008 -- from $86.7 million to $92.9 million, thanks to an 11.6% increase in advertising revenue, which grew from $74.8 million last year to $83.5 million this year. Operating income grew 5.8%, from $42.8 million to $45.3 million. Net income was $5.9 million. The second-quarter gain follows strong first-quarter results, when revenues increased 17% compared to 2008, from $62.7 million to $73.5 million.

Although any revenue growth is remarkable in the current recession, NCM's results suggest the national cinema advertiser had to cut rates considerably to boost revenues. Its 7.2% increase in revenues came with a 15.1% increase in ad inventory utilization, meaning the volume of ad sales increased at twice the rate of total revenues. By contrast, in the first quarter, inventory utilization increased just 8.7% alongside the 17% jump in revenues.

Nonetheless, cinema advertising -- a relatively new medium -- seems to be weathering the downturn better than most of its older competitors. That's due in part to the rollout of digital infrastructure for delivering ads to movie theaters, which allows much more rapid planning and execution of campaigns.

The escapist appeal of movies may very well trump the spiraling cost of tickets during a recession. During the first two months of 2009, movie attendance increased 21% and box office receipts climbed 23%, according to Hollywoodboxoffice.com. For the year-to-date through August 9, total box office revenues are up 6.6% $6.64 billion, while attendance increased 2.76% and the average ticket price increased 3.7% to $7.45.

Since the immersive experience begins in the lobby, cinema advertisers are expanding their digital video offerings there as well. Earlier this year, Screenvision, National CineMedia's main competitor, announced it is rolling out digital ad platforms in movie theater lobbies in partnership with Cinema Scene Marketing, which has already installed digital poster outlets in 100 locations -- a number that Screenvision expects to increase to 230 by the end of this year. Cinema Scene's digital displays include 3-D LCD screens and billboards, as well as interactive kiosks.

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2 comments about "Boffo Box Office Brightens Cinema Ad Picture".

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Ken Kueker from Billboard Connection, August 17, 2009 at 11:12 a.m.
I would be interested in statistics broken down into local vs national advertising. Since local ads are relegated to time slots at least 10 minutes prior to the movie previews, it is difficult to get local advertisers excited about cinema advertising. I iusually do not get into the theater until about 5 minutes prior to the previews. and even when my family and I try to get to the theater early so I can see any local advertisers, we often do not get ther ein time. Combine that with the higher cost-per-impression of theater ads and it is a tough sell.
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Carissa Gingras from scheibel halaska, August 18, 2009 at 10:57 a.m.

Ken -- as a local advertiser, I can provide you with some exciting statistics that support the effectiveness of advertising for our client, a non-profit organization.

As part of an integrated marketing plan, we suggested cinema advertising for mPower, an under 21 alcohol & drug crisis line that just launched in the Metro Milwaukee area. We targeted three geographic locations to appeal to our audience -- teens ages 15 to 20 -- who frequent movie theatres during the summer months.

Our movie slides increase awareness by encouraging teens to sign up for mobile alerts on their mobile phones. As part of an incentive program, mPower is giving away 10 wii's throughout the summer program.

The ad runs for 28 weeks (began March 2009) before 11 movie screens; appearing three times preshow, for approximately 10 seconds. The repetition of the ad allows for it to be seen more frequently for those last minute movie-goers strolling into the theatre.

Thus far, we’ve garnered 123 sign-ups directly from cinema advertising. This is significantly greater than the impact we’ve seen running Facebook social ads, where we’ve received nearly 24 million impressions since March 2009.

As for the higher cost per impression, it may be worth it if it’s one of the more effective channels in reaching a niche audience.