The cinema industry has roared back to life as Australia returns to a sense of normality after nearly three years since the start of the pandemic.
SMI figures reveal that cinema ad spend for January to November 2022 totalled $63.5 million, more than double the same period in 2021.
While that was still 14% below the pre-COVID January to November 2019 period, there’s cause for optimism – cinema revenue was up 82% in 2022 compared to 2021.
Val Morgan Cinema managing director Guy Burbidge (pictured below right) told AdNews the cinema advertising network grew consistently throughout last year, driven by the depth of content released.
“We saw a lot of incredible box office results with Spider Man: No Way Home at the beginning of 2022, Top Gun: Maverick in the middle of the year and then we book-ended 2022 with Avatar: The Way of the Water.
“Those are three titles that were released in 2022 that now sit in the top six of all time - not just post-pandemic, but all time. Whenever you get a performance like that, it tells you you're in pretty good health and that's an incredible year for us.
“The total advertising market has grown around about 5% last year and we think we'll be around about 80% year on year growth, according to SMI, which puts us as the lead growth medium of 2022.”
2023 has gotten off to a comparably strong start for marquee titles – data from the Motion Picture Distributors Association of Australia shows Creed III topped the box office charts for the period from March 2 to 5, totalling more than $3.4 milion as part of a total overall gross of $9.4 million for the four-day timeframe.
Since the start of the year, the industry has racked up over $110 million in total overall gross, buoyed by the likes of Avatar: The Way of the Water and Ant-Man and the Wasp: Quantumania.
Likewise, the growth in cinema advertising spend has been constant - not just since the decade begun, but since the mid to late 2000s. SMI said that cinema has consistently grown its ad spend – in 2007, it was reporting about $42 million in agency ad spend, which grew to $52 million by 2012 and $63 million by 2013. For the three years prior to COVID, cinema was reporting more than $70 million in revenues.
Daniela Rocchi (pictured right), head of partnerships for Sydney at Initiative, is similarly bullish about the prospects for the medium, saying that cinema is off to a “fantastic start” in 2023.
“The summer of cinema has already showcased that audiences are back with CineTAM reporting 10.55 million admissions in the school holiday period, up 27% year on year. Cinema is back and we expect 2023 to see incremental growth year on year back to pre-pandemic levels.”
Peter Skillman, director & CEO of Star Media Platinum, an independent local cinema advertising network, said the sector is quickly beginning to recover from the depths of the pandemic years.
“With audiences returning to cinema to see blockbusters, we’ve seen a real spike in advertising queries. Local businesses are definitely more open now that we have quantitative evidence of audiences returning in record numbers to see high profile movies.
“During the pandemic, whilst cinemas were still open with reduced capacities and seating requirements, we kept the majority of our advertisers on screen. Our aim was to be able to support them as local businesses as they had supported us and the cinema industry during good times.
"With the continued release of ’tent pole’ movies, we’ve seen businesses very open to advertising on the big screen.
“In the end, you can’t replace cinema with another small screen device. Audiences still want to see the next big movie on the big screen with superior vision and sound, free of their mobiles for a couple of hours.”
Others aren’t so sanguine about the recovery. A number of media agencies that AdNews spoke to highlighted that the once-beleaguered sector’s bounce back is perhaps not as rosy as it may appear.
Jimmy Dau (pictured right), national partnerships director at Bohemia, said that the 14% decline from 2019 total ad spend means “a much-delayed recovery versus other video-based channels".
Justin Ladmore, MD of Enigma Media, said that while cinema has recovered from the pandemic, he doesn’t think it will get back to where it was: “cinema visitation behaviours have changed, audience numbers have fallen, and ad spend will always follow".
Virginia Hyland, CEO of Havas Media Group, said that post-COVID, advertising dollars have been “slower to flow into the cinema market, far slower than audiences”, but said that the upside of this is that those who are advertising are enjoying higher attention and less competition.
Tess Linkins, Half Dome’s strategy director, said that “cinema has been an underperforming media platform since 2020, primarily due to COVID-19 lockdowns”, but the industry has rebounded in the past year, with agencies and brands regaining the confidence to allocate spend.
“The bounce back is likely driven by consumers craving more in-person experiences after going so long without during the uncertainty of the pandemic lockdowns. However, the growing popularity and versatility that streaming services offer consumers remain a threat to cinema.
“2020 and 2021 saw new releases become immediately available on demand to sustain revenue across the global film industry throughout the pandemic, and this is expected to continue in some form.”
The spectre of streaming services has been growing for many years, with the apparent threat to consumer attention increasing over the worst of the COVID lockdowns.
An article last month from the Australian Financial Review, citing data from Kantar’s Entertainment on Demand survey, found ‘6.11 million Australian households subscribed to at least one streaming service such as Netflix, Disney+ or Amazon Prime Video’. An earlier article, from August 2022 and citing data from research firm Telsyte, showed that ‘memberships to subscription video on demand (SVOD) platforms were up 22% over the last 12 months’.
Other research has come to unsurprisingly similar conclusions about Australians’ propensity for consuming streaming content – everyone from Val Morgan Cinema and Star Media Platinum to the media agencies AdNews sought comment from called out streaming services as one of the industry’s biggest challenges to overcome.
Skillman: “Obviously, the streaming platforms have been a threat to cinemas, pre and post pandemic. We’ve seen scenarios play out whereby cinema has been abandoned in favour of subscriber-driven releases on streaming platforms, or some content only shown in select cinemas for a short time to enable a possible Academy Award nomination.
“Studios have also tried releasing solely on streaming platforms and there is evidence that this hasn’t delivered the same financial results they would have expected from a traditional cinema release. Although we don’t know what will happen in the future, we believe there is always a place for cinema.”
Burbidge said that the pandemic accelerated such trends as the decline in linear TV ratings, the growth of new platforms like TikTok and ads being introduced across the likes of Netflix, Binge and Disney+, but even with Val Morgan Cinema’s number one challenge being competition from the streamers, the company is clear about its point of difference, role in client screen strategies and the value it provides.
“We have three key areas that we're focused on - we've doubled down on attention with our partnership with Amplified Intelligence; we're focused on the power of cinema to be part of Australian media culture, beyond sports; and we have a focus around bringing the experience side of our business to life.”
It’s a view shared by Rob Shaw, group account director at Adholics, who noted that while advertisers were quick to flock to other media channels to reach their audiences or pulled their spend altogether in 2020 and 2021, “it's crystal-clear that cinema is a big part of Australian culture, with admission bounce-back numbers surpassing the next best country by 20%, according to Val Morgan.”
Paul Butler (pictured right), Val Morgan Cinema’s director of insights and analytics, said the cinema advertising network worked hard to take all the barriers to entry away from the channel.
“COVID had a big impact, but audiences are back and when people run a campaign with us, we guarantee an audience to hit a delivered number and we run the campaign until that number is achieved. We've negated any risk from a media execution and planning point of view.
“We've also recently announced our partnership with Seedooh, where we're doing independent verification on cinema campaigns, so that clients have that assurance that advertising is actually being scheduled as planned.
“Since day one, cinema has always been used for impact and engagement, so it's really good to see that kind of attention coming back into focus in the media market. For us, that's great news because it gives us a chance to even the playing field so that clients don't just look at the headline CPM but look at the actual true value that different channels deliver. An exposure on a cinema screen is very, very different to one on a TV or on a digital device.”
Still, the streamers loom large in the minds of filmmakers and advertisers alike; Ladmore said that the increased consumption of short form content is the biggest concern for both cinema visitation and movies in general.
“We are getting used to short snappy pieces of content and impatient with longer forms of content like movies. Two years ago, my family and I would happily sit down to watch a 90-minute movie and enjoy it. Now, if it’s over 60 minutes, they will screw their noses up at me.
“In saying that, you can’t beat watching a big movie on the big screen. I think moving forward, we will go to the cinema less but there will be larger audiences to the big movies.”
Hyland (pictured right) said that the cinema industry has always been touted for doom since the rise of video rentals, but many blockbuster movies like Top Gun: Maverick have recorded the largest sales revenue in the history of cinema, despite the uptake in streaming consumption.
“Streaming and watching movies at home is not the same exciting experience when compared to being at the cinema in reclining lounge style seating with surround sound. Cinema is a core experience for all generations.
“Youth as a total percentage of audience grew from 51% in 2019 to 52% in 2022, showing the power of the channel to deliver against harder to reach demos. Because of this, the industry will continue to gain advertising dollars especially in the second half of 2023, when advertisers are confident of lockdowns no longer affecting their media campaigns. We are forecasting audiences to be 95% of those in 2019.”
This idea of ‘cinema as experience’ – especially one that is not able to be replicated by the streaming services, even if consumers do possess a near-100-inch 4K smart TV overflowing with important-sounding acronyms (UHD, OLED, QLED etc) – is something that Val Morgan Cinema is betting heavily on to contribute to the continued renaissance of delivering audiences to big-screen advertisers.
Burbidge: “The reason the ANZ region has bounced back better than any other market globally from a box office perspective is really down to that experience. Exhibitors have invested heavily in the last five to ten years in delivering that incredible experience.
“You've got near 100% take up of recliners, unique viewing experiences like 4DX and DBOX, the premium experiences like LUX and Gold Class for a treat, as well as outdoor cinemas. We’re really, really lucky to have the best cinemas in the world in this country and we're really excited by that part of it.”
All of this means that cinema advertising has not just remained a viable medium for brands to communicate messages – it’s never been more important, according to those who spoke to AdNews.
Skillman: “When you calculate the cost of an ad, it’s ridiculously cost effective. When we bring an advertiser on board, they screen their local advertising on every session, in every screen, generally for a 12-month period in one complex, and sometimes multiple complexes, depending on their location.
“The cost of this can be as little as $2 per screening. With a ‘captive’ audience who can’t swipe, block or mute you, it is still a great proposition for advertisers to be seen larger and louder than life.”
Ladmore (pictured right) said cinema is still a “really important part” of the media mix, recognising the advantages that a campaign that needs to evoke emotion can have when aired on the big screen.
“Outside of being big and loud, other benefits to media planners include the proximity to retail, location targeting, genre or movie targeting or activating strategies such as shared family moments.”
Rocchi agreed, saying cinema offers a unique and immersive experience for audiences, allowing brands to reach a captive and attentive audience like no other medium, due to “cinema advertising often featuring tailored impactful visuals, quality high-definition sound and effects including 3D & 4D.”
This tailored approach was mentioned as being key for advertisers considering cinema as part of their media mix, with both Hyland and Dau emphasising the prevalence of research that has shown the higher recall and memorability rates that cinema advertising provides.
Hyland: “This means that cinema is at the forefront of impactful results. Spending 5% of a budget can extend campaigns to engage new audiences where impact and attention are at their highest level of delivery.”
Dau: “In 2022, we saw higher year on year investment into cinema from categories such as retail, who are traditionally linear TV advertisers, due to lower CPMs for the same video format. If a cost sensitive category such as retail can pay the premiums to invest into cinema advertising, then there is a good case for the effectiveness of the medium for advertisers.”
Linkins (pictured right) said that cinema remains a highly engaging media channel that provides brands with an effective platform to convey strong messaging in a less cluttered and competitive environment, but agencies need to be diligent about strategically including cinema in their media ecosystem, ensuring it plays a role in supporting additional channels.
“Now more than ever, cinema can deliver meaningful moments to viewers, real-time experiences that mesmerise and excite the audience - moments when the audience is attentive, tuned in, and connected. In a world where people select brands based on an extension of themselves and their values, cinema elicits emotion that delivers strong and successful brand results.
“As the industry works out the role of attention in media, cinema already plays a huge role in active attention in an immersive environment that delivers strong cut-through across a variety of audiences.”
By all accounts, cinema advertising appears to be in the midst of a renaissance. Whether it’s the likes of Val Morgan Cinema, local cinema advertising networks such as Star Media Platinum or any number of media agencies, any questions that remained about the effectiveness of the format seem to be extinguished, whether by clear numbers outlined in research or a tidal wave of positive sentiment from advertisers.
Burbidge: “We have a strong story across our key demographics, they've all bounced back and we’re continuing to see growth. If you look at the youth demographic, 52% of our audience last year fell within P16-39, which is a pretty unique position to be in. We regularly see that composition of youth exceeding 60% to 65% in key titles and that's an incredibly unique opportunity for brands to get involved with.
“in a world of shorter and smaller ad formats, especially in digital, we’ve positioned ourselves as the antithesis of that. We are that canvas for brands to tell their story in glorious long form and a lot of that has come out of the attention study that we did with Amplified Intelligence last year.
“What it found was we deliver 0% wastage, total and sustained attention through all creatives and pre-creative sizes and pre-show. That is unique to us and there are no other channels that can claim to deliver those numbers all the way through creative.
“That's where we're viable for brands - understanding that true value of what we deliver, not just doing headline reach and CPM analysis, which doesn't tell you a great deal about the quality of what you're buying. Those are the key reasons why we're incredibly viable and a very important part of the mix.”
What’s next for cinema and its advertisers then? If the confidence has been restored, audiences have returned in droves and the revenue is flowing, how does cinema slot into the pipeline for brands, especially in a challenging economic environment?
Shaw (pictured right) said that despite the ever-increasing cost of living, and general economic uncertainty, “projections for 2023 look positive... I only see it going one way: up.”
Dau said that as fears of an economic downturn loom, advertisers will likely look to reduce ad spend, but cinema has proven to be “recession-proof” due to its mix of escapism and immersion.
“While other channels fight over attention metrics, it’s the viewers' connection to the cinema experience that allow movies to strike an emotional chord with the content that provides a gateway to memorable experiences at the cinema."
Linkins agreed that with a potential recession looming and additional financial pressure from mortgage rates and inflation, a decrease in consumer spending is expected, which means people may choose to spend less on luxury costs, such as holidays, but still want enjoyment in their lives and therefore opt for a less costly experience, such as a night out at the cinema.
“Cinema must continue to progress in creating a multisensory experience that will continue to draw people into seats. There’s merit in ensuring we don’t make the mistake of desensitising the experience but continue to attract people back to the big screen by evolving the brand experience through activations that will see more of an emotional effect on their audiences and deliver long-term growth.”
On the content front, Burbidge said the slate is “unbelievable” in terms of the schedule of blockbusters set to release in the rest of the year.
Whether it’s Antman and the Wasp: Quantumania that’s just come out, The Super Mario Bros. Movie that’s slated to hit screens around Easter time or Mission: Impossible – Dead Reckoning Part One, “it’s the strongest we've seen for many years in terms of the line-up that's ahead,” said Burbidge.
That doesn’t even begin to mention the likes of Barbie (starring Australia’s very own Margot Robbie), Christopher Nolan’s Oppenheimer, or the Joaquin Phoenix vehicle Beau Is Afraid, nor the next instalments of the Spider-Man, Guardians of the Galaxy, John Wick or Indiana Jones franchises.
Butler may have summed it up best: “What we can see is a real appetite for the exclusive cinema release schedule again, the confidence around that window and having cinema as part of that global marketing strategy for those big franchise brands.”
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