As movie releases in 3-D proliferate, opportunities for advertisers to run on-screen ads in the out-sized format would seem attractive. Still, the top executive at in-cinema sales group National CineMedia doubts whether marketers will pay a premium for the spots.
NCM has held talks with marketers about 3-D ads on the silver screen, but hasn't run any.
"Whether we can charge more for it, I don't know," CEO Kurt Hall said Thursday at an investor event. "I'm a little skeptical because the offset is the production costs are going to be higher for the advertiser."
NCM has held back even as competitor Screenvision ran the first on-screen 3-D spot in May for Skittles. NCM has had concerns that the "infrastructure (is) in place to really deliver a meaningful campaign to a client," Hall said.
But Hall said a year from now, the pipes should be primed for wide use -- particularly as Digital Cinema Implementation Partners ramps up its operations. DCIP was formed two years ago by three theater operators to finance the rollout of digital projection technology that can allow for 3-D.
"There will be a significant enough 3-D platform out there to make advertising something that makes sense [for marketers] ... but I don't see it as a huge panacea [as far as driving NCM revenues]," he said.
Through August, there were 2,744 screens that could offer 3-D films, 7% of all U.S. screens. Only a dozen 3-D films are slated for release this year, with the same amount expected in 2010.
Screenvision sold the breakthrough 3-D spot to Wrigley for the Skittles brand; it ran for five weeks starting May 1 on 762 screens in 461 theaters. The spot had been shot in the traditional format and was converted into 3-D.
Screenvision vice president, marketing Tim Contado said the rep firm is in negotiations with several advertisers to run 3-D spots attached to releases later this year. Advertisers are interested in producing spots using 3-D technology, he said.
For the Wrigley effort, pricing was based on a per-screen, per-week basis. Screenvision uses a CPM as currency normally.
Contado said as long as 3-D films are special events, "there would still be a premium for 3-D ads because of the enhanced impact."
The Wrigley ad ran several months after DreamWorks Animation and PepsiCo partnered on a stunt to run 3-D ads in the Super Bowl with a trailer for film "Monsters vs. Aliens" and spot for SoBe drinks. NCM sells ads on nearly 17,000 screens, with Screenvision on over 15,000.
Even as NCM's Hall has questions about 3-D ad sales, theater owners are counting on 3-D films to drive their business. (They they charge several dollars extra per showing.)
"It's not a fad in our mind," Carmike Cinemas COO Fred Van Noy said at the same event. "We think that this is a true business model." Carmike operates 2,285 screens, with 499 capable of running 3-D films. The company said 3-D films helped boost attendance in the second quarter.
Carmike is the country's fourth-largest theater owner behind Regal, AMC and Cinemark. Screenvision sells for Carmike, NCM for the other three.
Theaters have run stunts, such as a special 3-D simulcast of TNT's coverage of the NBA slam dunk contest in February, in about 80 theaters. Ads in the broadcast, however, ran as they did on TV in 2-D.
"Live 3-D simulcast seems to me to be a logical place to experiment with advertising," Ken Kerschbaumer, editorial director for New York-based Sports Video Group, told Media magazine. "The ads run in the program. The audience cannot TiVo or skip the spots. And, at least anecdotally, we have seen some good retention for commercials in the theaters during games."
Studios have been increasingly releasing films in 3-D, with the high-profile "Avatar" from director James Cameron set for this holiday season and "A Christmas Carol" readied for November.