MPAA’s Dan Glickman on Marketing Costs

No, today isn’t “Pick on the Hollywood Reporter” day. Two articles there just recently caught my eye is all.

The new head of the MPAA, replacing the much reviled Jack Valenti, reported at ShoWest that marketing costs for movies was down by about 12%, meaning the total cost for making a movie was down about five percent. The article doesn’t really offer any theories as to why this is, but I have some ideas.

Word of Mouth

More and more movies being made are in some way tied to an existing property. Look at this summer’s heavy-hitters: Star Wars, Hitchhiker’s Guide to the Galaxy, Fantastic Four, Batman Begins, etc. These come with their own built-in fan bases that really don’t require much monetary expenditure. All that’s needed to get this more or less guaranteed audience in the theaters is to:

1) Let a half-dozen influential websites know the movie is being made.
2) Keep feeding those sites exclusive poster art, production stills and other goodies.
3) Sit back and let the bloggers and second-tier sites spread the news.

Once that cycle kicks into gear they’re set and people will be salivating by the time opening day arrives. Then you release a commercial to television about two weeks prior to opening in order to alert any stragglers and/or common folk that this might be worth $10 each on a Saturday night.

Licensing

This goes hand in hand with the point above on increasing production resources being geared toward existing properties. Why should Fox spend, say, $10,000 on a television campaign when they can get General Mills to put a picture of The Thing on a box of Cheerios for $20,000? They just increased their message’s reach by 1,000% for a monetary outlay of only twice as much. (All these numbers and scenarios are hypothetical by the way.)

With licensing the partner company is also then footing some if not all of the bill. They are getting advertising out of the agreement that they are paying for. It’s a mutually beneficial relationship and one that drives down costs for both players involved.

Theater-to-DVD Window Closing

There’s no denying that the window of time between a theatrical opening and its DVD release is getting smaller and smaller. (I’m excluding the recent National Lampoon’s Blackball which had a four-day window.) This is because that’s where the real money is. Why promote the theatrical release (where only one-in-ten movies makes money) when home video (when four-in-ten movies start making money) is coming so soon?

The ever-shrinking window means that when a studio launches a campaign for the DVD it’s still in the midst of a theatrical release, increasing the bang for that advertising dollar.

Traditional Advertising

At first I thought it was because I was watching less television but now I’ve decided it’s not just me: there’s less movie advertising on TV. It’s increasingly being seen as non-cost effective to advertise on TV, not just for movies but everything else as well. The ads I see now-a-days are almost all for lifestyle staples (food, home products) or cars. It’s too broad an audience to see any effective return-on-investment. Better to target niche websites or magazines. If you setup a target that’s almost completely made-up of a bullseye then the odds are better you’ll hit it and niche publications, whether on- or off-line provide such as easy target.

These target pubs usually cost less to advertise in because their readership is less and the format isn’t as shiny as TV. Hence costs go down.