Movie Box Office Numbers are Down Adding One More Media Woe

Philip Stone June 13, 2005

Movie studio advertising is really big business for newspapers and television. Open the movie section of a major metropolitan daily newspaper on a Friday and Saturday and usually there are pages and pages of studio ads touting their latest releases, let alone all those ads on television. But not as many as last year -- movie studios cut their ad spend by a whopping 11.2% in Q1, 2005.

And if that wasn’t enough to cause grief, America’s second largest advertiser, Proctor & Gamble, cut its Q1 spend by 8.2%. And even more bad news – department store advertising was down slightly, too, all according to Nielsen Media Research.

Luckily other advertisers, particularly US and other automobile makers picked up some of the slack, but the bottom line was that in Q1 advertising revenue across mainstream US media rose just 2.4% over the same period a year earlier marking the lowest rate of growth since Q4, 2003.

For the Internet it was another story -- first quarter ad spending rose by 26% according to TNS Media Intelligence. That marked the 10th straight quarter for online ad growth, according to the Interactive Advertising Bureau, making it the highest grossing quarter since the dot.com bubble burst. Many forecasters are predicting 2005 online advertising growth to be between 26-28% although some forecast as much as 34%.

And Merrill Lynch forecasts that sponsored search listings on the various search engines will increase by an amazing 47% this year to about $5.1 billion, spurred on by increased broadband usage.

The Newspaper Association of America ‘s  (NAA) own figures confirmed the print/Internet trend, noting that while newspaper advertising rose 2.4% in Q1 over the same period 12 months earlier, advertising on newspaper web sites increased during the same period by 39.7%.

More proof, if any was needed, that the definition of a truly successful newspaper will be the one that becomes a multi-platform information vendor using both print and the Internet to their own best advantages.

“Newspapers typically own the leading local information Internet sites in their markets, and the significant growth in on online ad spending is a recognition of newspapers’ leadership position on the web,” according to NAA President John F. Sturm.

Declining newspaper advertising figures are still all too often the story such as the Wall Street Journal’s May ad linage falling 2.6% from a year earlier marking a 6.2% drop for the year, but among all the bad news there are some snippets of good news.

A Mediamark Research report has shown for the second reporting period in a row an increase in daily newspaper readership within the top 25 US markets. Last Fall Mediamark reported a 1.5% increase and in its Spring report just released it noted an additional 1% increase, with readership by women increasing 2.3%.

And in fact there could even be a positive message for newspapers faced with less movie studio advertising – a bit of a puzzle since US movie attendance is dropping for the third straight year and one would think that would cause marketing spend increase by the studios rather than a decrease.

Is the drop in movie attendance because the movies are not so great, advertising budgets have been cut, or is it because of the way we have come to choose how we spend our spare time? Technology of the past few years has seriously helped us to organize better our free-time activities, and the constant current running beneath it all is that we are continually using technology to do things when we want, and where we want, and not when someone else wants us to do them.

That’s one reason, for instance, for the big increase in recording television programs for later playback, and the huge increase in DVD purchases and rentals. The new world order is that we, not the TV station or the movie theater, will choose the time we spend watching programs.

There used to be the movie theater experience – surround sound, huge screens etc., but bit by bit technology is bringing all of that closer to home. Home theater sound systems are now very inexpensive, and television screens are getting constantly bigger, and even home video projectors now make it seem almost like the movies – but far less expensive when multiple tickets, parking, and food and drink are taken into account.

Some producers have even talked about releasing DVDs of their films at the same time as the film is released to the cinema, (if you can’t fight them, join them) but the real answer will come from a movie industry marketing genius who will ensure that the true movie theater experience will become something that just cannot be found at home.

The point is that renting or buying the DVD - those numbers have increased 675% since 2000 according to the Motion Picture Association of America – are signals that within our new lifestyle we do what we want when we want. Movies on demand, delivered via the broadband Internet, or renting/buying DVDs means we don’t have to show up at the movie theater at a particular time.

That same type of thinking applies also to newspapers in their relationship with the Internet. The Internet may have a lot of advantages, but true portability is not one of them.  It’s much easier to grab one section of a newspaper, preferably tabloid, and read it on the commuter bus or train instead of opening up the portable PC. Any guy can attest it’s preferable to grab the sports section when going to the bathroom than it is to open up the portable PC.

A newspaper gives us the ultimate choice of reading it when we want with very few exceptions. And it is that portability within the modern lifestyle that publishers must strive to take advantage of. Portability has become increasingly important to our lifestyles, and that is one of the key ingredients that the free tabloids have latched on to.

But it doesn’t mean they own the idea; they are just showing one way forward.