Studios cut film marketing as landscape changes

Thu Apr 8, 2010 7:31pm EDT
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By Sue Zeidler

LOS ANGELES (Reuters) - "How to Better Market a Film Opening" might be the sequel to 3-D film "How to Train Your Dragon" if critics have their way.

Analysts say DreamWorks Animation SKG Inc's strategy for 'Dragon' failed, underscoring how Hollywood, which spends over $4 billion a year promoting movies, is under pressure to cut costs and experiment -- and stumbling occasionally.

From Time Warner Inc's Warner Bros to Walt Disney Co, Hollywood's stalwarts are employing Youtube and Twitter, consolidating advertising staff, using fans to spread the message through viral marketing -- any way to get the word out in an era of stretched budgets.

"Marketing costs are the most dramatically impactful on a studio's quarterly earnings. If you don't open strongly, it really hurts, so there's a high level of attention to efficiency. Everybody's trying to do more with less," said veteran Hollywood marketer Gordon Paddison, who spearheaded the online media campaign for "The Lord of The Rings" films.

Pummeled by the downturn, Hollywood cut ad spending by 8 percent to $4.39 billion in 2009 after trimming it by 3 percent in 2008, said Michael Nathanson of Bernstein Research. More cuts will come through the first half of 2010, he added.

The point is underscored by Dreamworks' latest animated tent-pole film. It spent $160 million to $175 million to market "Dragon," then had to revamp its promotional materials and TV commercials right before it opened. Analysts say its campaign fell flat with audiences.

The movie pulled in $43.7 million in its domestic debut weekend, compared with a projected $65 million to $70 million.

"It wasn't resonating with its target audience, leading DreamWorks to refocus its marketing efforts, but perhaps not in time," said Piper Jaffray analyst James Marsh, noting longer-form trailers were scrapped for shorter, funnier ones.   Continued...