The Real Hollywood Genius

The genius of modern Hollywood lies not just in its ability to make movies, but to create weekly audiences for them. Back in the pre-TV days, when two-thirds of Americans were weekly moviegoers, that was unnecessary. Even as late as 1948, some 90 million Americans went to their local movie theaters every week without any national advertising to prod them. That habitual audience withered away after the introduction of color TV in the mid-’60s. Today, Hollywood can count on less than 10 percent of the population seeing any given movie, and getting those people requires multimillion dollar ad campaigns.

Studios must now provide two different products to multiplexes: the movies, of course, for their 39,000 screens, and, far more important, ad campaigns that will fill seats with popcorn-munching, soda-guzzling consumers (without which every multiplex in America would be out of business). So, when Paramount booked 3,900 screens in May for Thor, it also had to (and did) deliver 9 million warm bodies—including people who never read the comic book, and despite the movie’s bad reviews—on opening weekend.

The nearest equivalent, in theory, is a presidential election. Candidates need a large national audience to vote at a particular location on a particular date. But these elections occur only once every four years. Studios mount campaigns biweekly—and without a partisan base of support.

The challenge for the studios’ marketing departments is to build campaigns on budgets that don’t bankrupt their employers. In 2010, studios spent on average $32 million in advertising per movie in wide release. While this sum includes everything from coming attraction reels to newspapers ads, the lion’s share of it goes for 30-second TV spots, aired the week before the movies open.

“People-moving is a far more difficult proposition than merely predisposing people to buy a product,” one studio marketing chief explained to me. “Despite all the talk about using the Internet, and stunts and hype in gossip columns, the only real tool for pushing millions of people into movie theaters on the opening weekend is TV spots.”

Ironically, the very medium that destroyed Hollywood’s habitual audience is now viewed as its salvation.

But the problem here for studios is that a $32 million budget doesn’t go far when a prime-time spot can cost as much as $339,700, as, for example, during Sunday Night Football. And studios have found that they need seven ads per program to be sure of reaching any audience and getting them into theaters on specific weekends. As daunting as this sounds, studios have developed a trifecta that (sometimes) works.

First: The targeting of frequent moviegoers, or FMGs, even though they constitute only about 11 percent of the population. Fortunately, the FMGs are heavily concentrated in three demos: young adults, teens, and children. The latter two are ultra-FMGs because they tend to go to the movies weekly, especially in the summer. There are others FMGs scattered in the population, but they are harder to laser beam TV messages to. The under-25 population, and especially the ultra-FMGs, all cluster around their respective popular shows.

Second: Finding affordable programs. Since targeted FMGs can be found on less-expensive cable and network media, such as MTV, The CW, and Adult Swim, spots can be bought for less than $30,000.

Third: Greenlighting movies that might appeal to these targeted FMGs. For the ads to work, they need iconic characters and snatches of action (since the sound is often turned off during commercials), and where better to find these than comics, children’s books, action games, and theme park rides? Sequels are all the better, as their previous merchandise tie-ins and licensing will likely result in even higher awareness.

Luckily for the studios, they are well stocked in comic book and animation characters. (Disney wisely invested $7 billion in buying Marvel Entertainment and Pixar Animation.)

Even with this trifecta, however, studios can experience costly failures at the box office. But enough of these campaigns succeed, including in the all-important licensing and foreign markets, to make Hollywood’s people-moving exercise a highly profitable enterprise.