CAC: Another Record Fell in 2007

Turns out the $9.6 billion that moviegoers spent at the domestic box office wasn’t the only record set in 2007. According to the Cinema Advertising Council, its members’ revenues reached $539.9 million—an 18.5-percent increase, year-over-year. That’s a couple hundred million more than the top-grossing movie of ’07, Spider-Man 3, earned at U.S. theatres.

“We’re obviously very pleased with the growth,” says CAC President and Chairman Stu Ballatt, who is also senior vice president for marketing and research at Screenvision. “These numbers were in line with the expectation that we would continue to deliver double-digit growth as an industry. And 18.5 percent solidly puts cinema advertising second only to the internet in terms of advertising revenue growth.

“Last year, growth was about 15 percent. So I was really pleased to see that uptick, year-over-year,” Ballatt says. “Not simply maintaining double-digit growth, but also increasing it a bit was a pleasant surprise.”

Ballatt attributed the continuing growth of both onscreen and offscreen advertising—which accounted for $494.6 million and $45.3 million, respectively—to advertisers using cinema as a “sustaining media.”

“It’s not what it was four or five years ago, when people would buy one flight in cinema all year, for a big tentpole event, but nothing the balance of the year. Advertisers are using cinema much more frequently and consistently as part of their overall media mix. So while cinema doesn’t have a traditional ‘upfront’ like television, advertisers are buying cinema in an upfront nature. They’re buying several flights—three, four, five, 10 flights over the course of one planning cycle, and they’re committing to that spending six or nine months in advance,” Ballatt says. “They are making an upfront commitment to cinema because the inventory is finite, there isn’t that much of it. You can’t really expand it at any great level, because you can’t ever—and won’t ever—displace the film itself. So in order to take advantage of the GRPs [Gross Rating Points] that are available there, people are making upfront commitments and they’re doing so for multiple time periods or multiple flights.”

Cliff Marks, president of sales and chief marketing officer for National CineMedia, says the advantages of cinema advertising are manifold. “It is completely engaging, you have the ability to use sight, sound and motion, you have the ability to talk to niche audiences and target and—for a lot of categories—advertisers like the fact that we sell 70 percent of our tickets between Friday and Sunday. That’s when people are out, that’s when people are shopping, that’s when people are looking for new cars, that’s when people are in malls, that’s when they’re more likely to use their credit cards. There’s lots and lots of advantages there, but the cinema medium is a very powerful medium, because the research shows that the recall and the engagement of those ads are stronger than any other media known to man.”

Asked how the current state of the U.S. economy might impact 2008 cinema-advertising expenditures, Ballatt expresses sentiments similar to those shared by many in the exhibition industry.

“In a soft economy—whether it’s an actual, qualified recession or it isn’t—I think advertisers will view cinema as a stable environment. And I think, at that level, theatregoing does pan out to be somewhat recession proof. In fact, in previous recessions, cinemagoing in terms of box office ticket sales has maintained, and sometimes has actually even increased, because people love moviegoing, and movie going is a low-cost, high-value entertainment opportunity. So we would expect that we wouldn’t see significant, if any, erosion, in terms of expectations of admissions. And that means that advertisers can rely on cinema being able to provide the GRPs that they bought,” Ballatt says. “So I would expect that advertisers will continue to use cinema in a greater way.”

But Marks, himself a past president and chairman of the CAC, cautions that “no media outlet is recession proof. … While it’s hard to project what will happen in the future, clearly, any business that relies on marketers and the economy to some depth is vulnerable to a recession.”

For expanded coverage of cinema advertising, including additional insights from Stu Ballatt and Cliff Marks, read the August issue of Boxoffice Magazine.