2016 was another marquee year for cinema advertising. The industry grew 5.8 percent above 2015’s $716.4 million record, crossing the $750 million mark for the first time in history and setting a new benchmark of $758.3 million. That performance put cinema advertising on a hot streak of six consecutive years with over $600 million in revenue, seizing the opportunity that presented itself with a record year at the box office.
With that lofty summit conquered, the country’s two largest players in the sector, National Cinemedia (NCM) and Screenvision, presented their latest pitches to advertisers at their annual upfront events in New York City this May. Although competitors, their messages were similar in their appeal: as home-entertainment audiences continue to fragment across platforms—broadcast, cable, and OTT providers like Hulu and Netflix—cinema continues to offer unparalleled value with a consistent, captive audience year-round.
Another emphasis of their respective messages was addressing the misconception that cinema advertising is limited to the pre-show. NCM’s presentation, for example, focused mainly on their “Noovie” concept, an integrated consumer experience that encompasses original content, consumer data, and new gaming initiatives. “When we began to reimagine the pre-show, we knew that we wanted to build Noovie into an entertainment brand that develops engagement through content that is relevant to today’s movie audiences,” explained NCM president, Cliff Marks, at the event. “But we also knew we needed to expand Noovie beyond the four walls of the theater by creating new digital properties including a Noovie app and social media channels that will allow us to consistently drive people from the pre-show to mobile and back again—engaging movie audiences wherever they may be. We’re building it all to be a great consumer experience, which will of course make it a great opportunity for brands as well.”
Part of that drive toward further engagement includes NCM’s acquisition of Fantasy Movie League, the box office predictions game co-created by Matthew Barry, one of the leading figures in the fantasy sports world. It positions NCM’s future beyond the screen, as the company explores additional platforms to reach moviegoers—and not all of them are purely digital. NCM also announced plans to roll out an in-theater magazine for audiences, Moviebill, slated to launch at Regal locations.
Screenvision bolstered the case for cinema in its own presentation, stressing the impact that only a silver screen can provide for advertisers. “We firmly believe that not all impressions are equal. It’s great that you’ve got the numbers and the scale; that’s the point. But your impression has to make an impact,” John McCauley, Screenvision’s chief strategic development officer, told Boxoffice. “There needs to be a qualitative evaluation of the impact that each of those impressions is truly having on your target.” It’s not just talk. Screenvision commissioned a research study on the subject by neuroscientist Duane Varan. Moreover, the company is making an investment in audience tracking measures such as its proprietary targeting tool Cintel, a service that allows brands to target consumers based on behavioral and psychographic data to complement already established metrics in the industry like film genres and ratings. The company is also committed to expanding the reach of cinema advertising beyond the pre-show with its Connected Cinema service, which follows a consumer’s engagement before, during, and after a trip to the movies.
Just as there are differences among impressions and audience demographics, cinemas themselves are also part of a diverse ecosystem. Spotlight Cinema Networks has been able to establish itself as a leader specializing in art house cinema advertising—tailoring its offerings for the specific audiences that patronize those institutions. “We have the unique ability to reach an upscale, educated, and highly desirable audience,” said Michael Sakin, president of Spotlight Cinema Networks. “This is a defining characteristic of Spotlight, and it enhances our ability to develop partnerships with cutting-edge content providers. This allows our exhibitors to offer visually distinctive and highly engaging short films to their sophisticated moviegoing audiences.”
That focus on content is reflected in Spotlight’s partners, such as Vimeo, which provides access to an extensive pipeline of material, and its collaboration with WME/IMG’s Made to Measure (M2M), which brings unique art, fashion, and design content to theater audiences. Spotlight has kept pace with the evolution of cinema technology as well, most recently evidenced by the debut of a pre-show spot mixed and screened in Dolby Atmos—the first of its kind—for luxury car manufacturer Lexus.
Spotlight’s ties to the independent community extend to its lead sponsorship of Art House Convergence, where they host an annual legacy award for industry leaders, and this year’s launch of the Art House Public Service Announcement Project with the Salt Lake Film Society, a series of PSAs highlighting the importance of independent cinemas that currently screens in 150 theaters. Earlier this year, Spotlight partnered with Boxoffice to bring the stories of art house theaters to readers nationwide in this magazine’s monthly Indie Focus column.
“Each art house is the lifeline of culture in its community,” added Sakin. “Owners are passionate, dedicated to independent film, and take pride in treating their moviegoers as family. This is the uniqueness of art houses and we are proud to share their stories.”
The importance of art house audiences in this sector has not gone unnoticed; Screenvision announced its entry into the market in 2017 with the launch of Screenvision Select, designed to offer a customized pre-show experienced to that very sector. “We’re really excited about Screenvision Select,” said Darryl Schaffer, EVP of operations and exhibitor relations. “The pre-show that will run there is really tailor-made for that audience, who’s there to enjoy independent film and celebrate art.”
While national and regional sales composed 78.5 percent of all cinema advertising revenue in 2016, companies have also seen a surge in interest from local sales. The Cinema Advertising Council reports that local spots represented more than $162 million in 2016, a solid sign of support on behalf of Main Street. 1 Better has been selling and producing full motion on-screen commercials for local business owners in 28 states over the past 16 years. According to the company’s CEO, John Engel, 2016 was the best year in company history—with 2017 sales already outpacing last year. 1 Better is one of the few companies that works with local advertisers to produce custom-built commercials, making them a hands-on presence in those communities.
“A top priority of our theater partners is receiving a good monthly advertising paycheck combined with positive feedback from their movie patrons regarding the pre-show. Our goal at 1 Better is to present a very enjoyable pre-show for the local community by showcasing—in full video motion—business owners, their staff, and their place of business. The audience loves it because they are often familiar with the participants.”
Before the Movie has also benefitted from the industry-wide success of 2016. The company’s chief executive, Corey Tocchini, cites double-digit sales growth for the first half of 2017, with an expectation of continued growth through the strong slate of films scheduled for Q4. Before the Movie is also focused on providing a local, customized experience for exhibitors. “We are launching our “personals” segment,” said Tocchini. “Moviegoers in local markets can wish their friends and family a happy birthday, anniversary, a get well soon, and so on. This will not only further tie the theater to its local community; it will generate even more income as well.”
While record revenue at the box office has certainly helped the rise of cinema advertising, advertisers are also turning to the silver screen as viewer erosion continues to affect the size of the audience at home. “We’re seeing more and more TV dollars come our direction as advertisers continue to look for those impressions that are harder and harder to find in the TV marketplace. Especially amongst millennials and cord cutters, a hard-to-reach demographic,” said Screenvision’s Schaffer. And while the threat of a shorter theatrical window or the introduction of an at-home PVOD offer could cause further ripple effects on cinema advertising, Before the Movie’s Corey Tocchini believes the sector would nevertheless prove to be resilient and remain competitive.
“I grew up in the theater business and remember my dad always worrying about home theater and how it would hurt our business. In the end, I have always believed that people want to get out of the house, and as long as Hollywood delivers good movies and theater owners deliver good experiences, the business will thrive,” he said. “Everyone has a kitchen, but people still go out to dinner. Theater owners have had to evolve and they have done that. Our ad sales are up and I believe that is because marketers understand the power of the big screen and a captive audience. I believe that cinema ad sales will continue to grow over the coming years, and it is our job to make sure our content is compelling.”