Movie marketers at Integrate '05 discussed possible reasons behind recent box office gross failings.

Box office gross for the first six months of 2005 is down almost nine percent from the same period last year, according to BoxOfficeMojo.com. At Variety and iMedia's Integrate '05 Summit last week, this was the top question on the minds of most attendees. Although the studios make more money from home entertainment than from theatrical releases, Charlie Koones, president of the Variety Group, reminded the audience that Box Office is still the engine that drives the studio train. “Is there nothing good to see?” asked Koones.

Adam Fogelson, president of marketing for Universal Pictures, was frank in his response. “Earlier in the year, we thought this was a blip but six months is long enough. This is serious and we don’t have the answers.” Agreeing with him was Dawn Taubin, president of marketing for Warner Bros. Pictures. “It’s not the product; we have fine movies this year. Something else is going on. Perhaps it is the shorter windows to DVD release, perhaps it’s something else.”

Koones asked Fogelson specifically why "Cinderella Man" did not do better. The Ron Howard movie starring Russell Crowe and Renee Zellweger cost $88 million to produce. Universal released the picture on June 3, just as the post-Memorial Day summer season began. Domestic Gross until the fourth weekend was just $51 million, according to BoxOfficeMojo. Fogelson answered that this movie was planned for release last Christmas, but was delayed due to Crowe being injured. “Perhaps the studio could have waited until next Christmas to release it. Or perhaps we should have waited until later in the summer, such as early July.” It’s one of those imponderable questions that can’t be answered experimentally. The surprising news with this movie was not the low $18 million opening, according to Fogelson, but the steep successive drop over the next three weekends, at 47 percent, 43 percent and 38 percent from weekend to weekend.

Koones compared "Cinderella Man" to 2003’s "Seabiscuit," a Universal release that grossed $120 million domestically. “And we did release 'Seabiscuit' on July 23,” late enough into the summer blockbuster season, rejoined Fogelson. “Few people say that they won’t see a movie about a horse. But perhaps many people don’t want to see a movie about a boxer,” he added. Crowe stars as depression era boxing champ James J. Braddock in "Cinderalla Man."

The role of media fragmentation

Taubin of Warner Bros, also expressed concern about media fragmentation and the power of broadcast TV to pull in an audience. “Network ratings are declining but costs continue to go up.” However, Fogelson added, “We do 16 movies a year and we don’t have the luxury of testing theories about what works. The results of our decisions are painfully public each weekend. By 11 PM on Friday night we know where we stand. By Monday morning the whole world knows,” since the morning talk shows devote time to the winners and losers at the box office.

Procter & Gamble announced a 20 percent cutback in TV advertising, perhaps due to questions about its effectiveness. Both Fogelson and Taubin underscored the fact that audiences perceive movie ads as content and entertainment, more so than toothpaste ads. “TiVo records show that people replay our trailers,” emphasized Fogelson.

When asked about the internet, Taubin replied that it’s becoming more and more important but it’s still questionable if we can take dollars away from television advertising. “Exit polls continue to show that TV is the most powerful medium. Yes, the internet numbers for 'Batman Begins' were staggering, where something like 40 percent of people heard about it from the internet. But even so, new media can’t be additive. I can’t spend less on TV; perhaps I pull back from newspapers a bit to spend on the internet.”

“For us the greatest use of the internet is to enable communities around our movies to aggregate together,” Fogelson pointed out. “We do buy online advertising but it’s primarily during the week of movie release. Even at that time, we find that the click rates are quite low.”

Koones of Variety asked whether TV spending dominates because the research is geared around TV. Taubin disagreed. “Movies are a visual medium. TV shows them off best. I don’t spend much money on radio for the same reason.”

Integrated marketing plays a part

Earlier in the year NBC Universal and Volkswagen announced a far-reaching strategic partnership. Universal would integrate Volkswagen's products and brand in its films, DVDs and theme parks, while VW would support media and entertainment-related properties of NBC Universal through international marketing and promotional efforts. Fogelson described how the trailer of "King Kong" premiered last month on the VW.com site even though the car is not featured in the movie. Peter Jackson’s "King Kong" releases this Christmas.

Taubin further explained another aspect of integrated marketing: “While it's important to have an automotive or packaged goods partner in the marketing of a major event or tentpole movie, it does not mean that I can reduce my ad spend by $10 million just because the partner is spending $10 million from their side.”

Watching these talented marketers talking so frankly about their projects, I felt that they were being much too hard on themselves and the industry they represent. When technology companies contact me for advice about new or radically different ideas, the entertainment business is generally very high on the list of industries that I suggest they approach. (See number eight on my list of predictions for 2005). I find that generally they are more open to new ideas than packaged goods, automotive or financial services vendors. They are less reverent about the past and more intent to create the next big thing. Yet, from inside the eye of this creative hurricane, neither Fogelson nor Taubin see the movie business as willing to try new ideas. No, my friends don’t sell yourself short. So much innovation is driven by your industry.

Likewise, when Koones asked “Does it pay to take risks in this business?” the response from both executives was somewhat muted. Compared with other industries, movie marketers roll the dice every weekend. A snowstorm, a plane crash or even unexpected good news can alter fickle consumer behavior on a Friday or Saturday night. Lexus or Crest can recover from a bad weekend; their brands are built over decades. But for Fogelson and Taubin, there is no room for correction or recovery once that crucial first weekend is locked and loaded. The studios have no brand of their own; it’s just the movie and stars. And it’s typically a new one every weekend. Of course you want to avoid risks are much as possible in any business. But the studios play a purer form of risk than most other businesses, in my view.

At the end of the day another such risk taker, Gordon Paddison, EVP of integrated marketing for New Line Cinema, was given the Integrated Marketer of the Year award. While he’s best known for the groundbreaking work on the "Lord of the Rings" website, Paddison and his team continue to embrace new ideas and take risks by inviting the audience to interact with the movie. Their next movie is "The Wedding Crashers" and you can crash its trailer here.

Gunjan Bagla runs Amritt Ventures, an advisory service that enables media, entertainment and advertising companies to use global resources. In addition to iMediaConnection, he also writes for Variety and CIO Magazine.