Another Crack in the Mass Media Wall

Our mass media ecosystem relies on a constant flow of money to sustain itself in its present form. This flow of money comes from many directions, including but not limited to TV advertising revenue, basic and premium cable subscriber fees and movie box office receipts. This revenue is gathered by various gatekeepers, who take a cut and then send monies back to production companies, movie studios, and cable networks who provide the programming that keeps the ecosystem filled with content.

A new crack in this mass media ecosystem is now affecting that money flow.

Ironically, this crack is being created by one of its own players, the movie studios.

In 2011 the movie studios collectively spent $2.9 billion on television advertising to convince people to show up at movie theaters for their new releases.

A new approach is beginning to emerge that does this more effectively at a substantially reduced cost.

It involves creating online experiences that replace what TV advertising has usually done: create the desire that leads to a consumer action. This takes advantage of what Tim O’Reilly  refers to as the “architecture of participation” that is built into the Internet.

Fast Company analyzed two movies that used this approach, The Hunger Games and Prometheus.  Read both pieces to get a glimpse of a future that will replace TV ads.  The details are fascinating.

In both cases, the studios’ marketing teams created large story worlds that immersed their participants in a variety of media.  These story worlds have game play, various kinds of video and user generated content that is spread across multiple platforms, (Facebook, Twitter and tumblr, among others), and move across multiple screens.  They weave a story that is inspired by the film’s narrative and additional narrative that is created by fans.

This has nothing to do with buying ads online. 

Instead of buying ads online, the studios create an online world that invites the user in, gives her a special experience (that she helps shape) and creates a desire to see the movie.  The platforms that support this world do not require any permission or money from the world makers–they are all free for anyone to use. Thus costs are drastically reduced.

Think of it this way

A movie studio can now get rid of an approach that requires them to hand over large amounts of money to a centralized TV network to reach consumers and replace it with an approach that allows the studio to reach users directly–without paying a distributed network a dime.

In a recent article by Ronald Grover of  Reuters it was estimated that Lionsgate spent between 15 to 20 million dollars less in TV advertising on The Hunger Games because of its successful social media efforts. It cut a 1/3 of its normal spend on TV ads and still got a large box office return. Lionsgate dramatically increased its ROI.

Imagine this occurring across all movie releases.  Suddenly a billion dollars gets shaved from movie studios’ annual TV ad spend. That is a billion dollars less in revenue for the major broadcast and cable networks that have traditionally shown movie ads to their audiences.

That is a lot of money to be pulled out of the mass media ecosystem.

We do not know how fast this will occur.  However, rest assured that it will happen and this approach will quicken its pace as more movie releases make it part of their plans and slash their TV ad budgets.

This is just one more example of how the Internet helps one business find a new way to connect with its customers at a much lower cost and as a result disrupts another legacy business.

And what makes it even more fascinating is that as a result of many media mergers, that other business is often another division in the same company.

Funny how the world turns when innovation runs rampant.

About Chris Dorr

I consult with companies on digital media strategy and business development. Clients include Samsung, MTV Networks, Tribeca Film Festival, Shaw Media and Canadian Film Center. I created the Future of Film blog for Tribeca. I have worked in the movie business for Disney Studios, Universal Pictures, Scott Free and in the digital media business for Intertainer, Sony and Nokia. Contact me at chris@digitaldorr.com or follow me at @chrisdorr
This entry was posted in Advertising, Distribution, Hollywood, Innovation, Internet, Marketing and tagged , , , , , , , , , , , . Bookmark the permalink.
  • Steve Coulson

    Good article Chris, although obviously its not completely cost free – looking at the quality of all the Prometheus marketing materials suggests to me that they had a 7 figure production spend on that. But the interesting thing was the participation of both cast and filmmakers. It suggests to me that Hollywood is starting to treat these projects as production line items rather than from a marketing bucket. That’s definitely the way to go, thinking about a shop like Ignition (who did the digital work) as a production/post production function rather than as a digital agency.

    • chrisdorr

       Hi Steve, thanks for your comment. You are right, it can still be very expensive to pull off, though I would argue that it is still much cheaper than buying TV time. I like your thought that it is an extension of the movie budget itself, hence the movie itself.

      • http://twitter.com/evandeh EVAN DEHAVEN

        Great article Chris and something that is dear to our hearts at Ignition Interactive. We truly believe in expanding on the movie experience through the marketing efforts. As Greg said the “marketing should become the product” but the important part is that it is done in an organic fashion through narrative based marketing. 

        Consumers don’t want to be force fed ads anymore and in most mediums we can bypass ads quickly and easily so they have become less and less effective. For instance try naming the last site you saw a banner ad on. This is hard to answer although they are on every website. The reason is we know where they are placed, the shapes and sizes so our eyes are trained to look around them.

        Instead if we bring a story world to the mediums users frequent and allow them numerous and easy entries along with opportunities to participate your marketing effortlessly becomes pleasurable instead of an annoyance. This pleasure in many cases converts to a purchase and/or share.

        STOP INTERRUPTING WHAT PEOPLE ARE INTERESTED IN AND BECOME WHAT PEOPLE ARE INTERESTED IN.

        • chrisdorr

          Evan, thanks for your excellent comment.  I think your point about banner ads is very important.  I recently had a conversation with a very smart VC who has invested in many social media startups.  He mentioned that whenever he talks to an audience he asks how many of them have clicked on a banner ad in the last 6 months (no one raises their hand) and then asks how many of them have shared a link in the past week (and everyone raises their hand).  That is the shift we are experiencing.  Eventually every movie or brand will have to confront this massive change in consumer behavior we generally refer to as “social media” and learn to stop interrupting people as you well point out.

  • http://twitter.com/gregverdino Greg Verdino

    Ah – so the product becomes its own marketing… :-)

    This was of course the cornerstone of Blair Witch many moons ago (hat tip to Mr Coulson’s friends) and a notion I wrote about extensively in my book. The first Paranormal Activity was the movie industry case study, but product+participation was a thread that ran through many of the other cases including Ford Fiesta Movement, Queensland Best Job in the World (remember that one?), and many others.

    For me the point is less about “is it free” (to Steve’s point, it isn’t – in fact it can still require quite a large investment) and more about “it is more efficient and/or effective than pumping money into traditional advertising”. And interestingly enough, signs are starting to point to yes. I’d much rather invest my money (even if it *is* 7-figures’ worth) in building consumer buy-in and participation, and in creating the kind of social ownership that fills theaters opening weekend – rather than in spray and pray advertising that looks, sounds and feels pretty much the same as everyone else’s.

    Great piece, Chris.

    • chrisdorr

      Greg, thanks for your comment, especially for laying out what has led to this moment.  You are right, this has not come out of the blue. It has great precedents some of which you point out here as well as in your book and in other pieces you have written.

  • Jeff

    I’m confused…what you describe is a destination that consumers can go to, not the marketing that drives awareness. You have to reach people where they are, and where they are isn’t initially on your experience. So why is television advertising not an aspect of this strategy? People who watch television also watch movies. Do people who are active in social media watch movies?

    • chrisdorr

      Jeff, thanks for your comment.  I agree with you that TV ads will (and should) be a part of the strategy in movie marketing. I am arguing that TV ads will become less important as other forms of marketing that are more effective and cost efficient begin to replace it.  I.E, the marketing mix will change. The worlds that The Hunger Games and Prometheus created online exist in a number of places that consumer of movies go–on their PCs, tablets and phones.  Most importantly they provide a way for them to engage with the movie that creates awareness and drives desire to see the movie in a theater. Put it another way, TV ads create awareness but they do not provide engagement.  And engagement is becoming more valuable every day.  Storyworlds (or transmedia, if you like) provide that in a highly concentrated and powerful fashion. And yes, people who are active in social media definitely watch movies.

      • Steve Coulson

        Jef, I think that’s a simplified version of the way the world is, or will be.  Interruptive advertising, like TV commercials and banner ads will increasingly be filtered by technology like ad blockers and DVRs.  To gain attention and interaction, you need to move to permission marketing tactics, that excite people rather interrupt them, that they want to engage with.  The Prometheus campaign emerged on multiple platforms, and spread primarily via social media WOM.  In that sense, these type of campaigns – free creative prequels to paid entertainment experiences – work in the way that a free product sample does to drive awareness.  Try before you buy, coupled with an organic distribution method that does not end when a media buy finishes.

        • chrisdorr

           Steve, thanks for your comment. I like your way of explaining this method as a free creative prequel and a free product sample. Great insight.

  • yamL

    Great insight.

    • chrisdorr

      yamL, Thanks for taking the time to read and to comment.

  • Faye

    I think its telling that the two examples used are The Hunger Games (with its rabid fan base from over 11M print copies sold in the US alone) and Prometheus (which has no doubt capitalized on its loose ties to the Alien franchise – the benefit of 6 films + their marketing budgets).  I think successful digital marketing campaigns in these examples are less a reflection of marketing brilliance and cost cutting, but more of a movement towards efficient marketing spend and strategies based on the actual origin and bankability of the films being produced.  I think it should not be expected that all films, or even the majority of films, end up moving  in this direction as original content and brands will still need the benefits of mass TV advertising to drive audiences.  I think these dynamics lead to even more films becoming adapted from popular franchises, prequels, sequels and the like, but the true math for ROI therefore shouldn’t just be box office dollars, since these films will likely cost more in film rights and backend.  

    • chrisdorr

       Faye, Thanks for your comment, you make several valid points. I think that existing franchises definitely have a leg up when using the strategy I discussed.  I would also add that this is traditionally where the TV spends have been the highest, so declines in this part of Hollywood’s TV spend will have a disproportionally larger effect.  The trend to adapt movies from popular franchises has been underway for a long time and for big budget Hollywood movies this strategy may accelerate the trend.

      However, I also think that some of the techniques of building story worlds and using transmedia as Prometheus and The Hunger Games have done are adaptable by productions that are not franchises or don’t have large budgets.  The use of social means to attract audiences and develop community in order to create consumer desire to buy are in their infancy either as employed by the two movies mentioned or by individual artists such as Louis CK or Amanda Palmer who are also leading a sea change in this area. I would argue further that what these individual artists are doing and what the movie studios are doing in social and transmedia are driven by the same underlying dynamic–what Tim O’Reilly correctly calls, the Internet’s “architecture of participation”. Companies and artists, big or small can leverage this architecture to drawn in consumers effectively.  And as they become better at it, TV ads will decline in importance, use and spend. This will place greater pressure on the mass media networks that use ads as a means of financial support.

      • http://ciarannorris.co.uk Ciaran

        I’m sorry, but despite the extra detail in your response, I still think that Faye has the more compelling argument. 

        It’s not to say that TV is the only form of advertising for non-franchise type products, or that social & transmedia have no place, but using these two as examples and then extrapolating to the rest of the world misses something IMO, particularly if, as you seem to be, you’re trying to compare media events like these movies to bog-standard brands (your reference to “companies & artists”).Most brands aren’t Ridley Scott, and most companies don’t have Kirsten Stewart on the staff, and for many of those, even if they do have great content, there is not going to be anything that allows them to scale their messages as quickly and, importantly, as efficiently, as big media like TV.

        • chrisdorr

           Ciaran, thanks for your comment. Two thoughts:  1. Most artists can not afford TV ads, so they will have to use other means to get their audience.  2. Check out the comments on the post from Greg Verdino, Steve Coulson and  Evan DeHaven, (who know much more than I about this subject).  The points they make about the need for non interruptive marketing is key.  TV ads will still have a role, it is just that more marketing that does not interrupt the viewer, like The Hunger Games social media campaign will become more the norm whether used by big well known brands or lesser known brands/artiststs.  TV ad revenues will decline over time as a result.