Blockbuster Shifts Marketing Dollars Away from Advertising

DETROIT Blockbuster, whose lead agency is Doner, Southfield, Mich., will lower its marketing expenditures over the next two years as part of a company-wide effort to lower operating costs, said Scott Parks, vice president of advertising for Blockbuster.

Agencies which work with Blockbuster, including Doner and J. Walter Thompson, Chicago, will be impacted in that the company plans to shift some of its marketing funds which previously would have been earmarked for broadcast to customer relationship management activities, which it handles in-house. Email marketing is handled by Quris in Denver.

In 2002, marketing spending was a little under 5 percent of their sales revenue, Parks said. The current plan is to lower it to about 4 percent over the next two years, he said. The Dallas-based retailer reported its 2002 revenue as about $5.6 billion. Five percent of that would be about $275 million, while 4 percent would total about $226 million. Of that, the company spent about $120 million on measured media advertising in 2002, according to CMR.

Part of the reason the video retailer is able to cut the marketing budget is because the movie studios have been drastically increasing their support of new video releases, so Blockbuster can reduce what it has been spending on similar efforts, he said.

They also plan to reallocate some of the saved broadcast money into more direct marketing activities. The company has spent the last two years assessing its customer relationship management activities and compiling a vast database of all of its 52 million customers. “All marketers want to get better at reaching the right people with the right message at the right time,” he said.

Doner is currently finishing two new TV spots continuing the “Pet Shop” themeline that feature a rabbit named Carl and a guinea pig named Ray. The first one breaks this summer and the other will break this fall, Parks said.