The recovery of the cinema sector—the ebbs and flows, the changes from market to market, and its eventual return to prepandemic levels—is mirrored by the community of companies that work with cinemas to make their operation possible. Included in this, of course, is the cinema advertising community, which was hit by downturns not only in exhibition, but in myriad other industries that buy ads to put on cinema screens, from restaurants to travel. Below, Boxoffice Pro speaks to representatives from leading cinema advertising agencies—including international outfits Pearl & Dean (U.K.) and Val Morgan (Australia and New Zealand)—to get their take on how their corner of the exhibition industry has weathered the pandemic storm.
- Pearl & Dean – Kathryn Jacob, CEO
- National CineMedia – Tom Lesinski, CEO
- Screenvision Media – John Partilla, CEO
- Spotlight Cinema Networks – Michael Sakin, President
- Val Morgan – Guy Burbidge, Managing Director; Paul Butler, Group Insights and Analytics Director
Can you describe, in general terms, what things were like for your company in the first few months after Covid shut down the cinema industry? Did you have any idea how long it would last?
Spotlight Cinema Networks: As with everyone in our industry, Covid had a tremendous impact on our business. While we knew business would be operating again at some point, we knew we needed to get creative, pivot, and prioritize plans for the type of company we wanted to be coming out of the pandemic.
National CineMedia: It was a difficult time, as it was such an unusual situation for movie theaters to completely close with no understanding of a timeline for reopening. The company went into full evaluation mode of what we needed to do to survive and come out thriving on the other end.
Screenvision Media: Like so many businesses, we were severely impacted by the suddenness and the severity of the Covid-19 outbreak. We moved within days to a 100 percent remote work model and initiated immediate outreach to our employees, our theater partners, and our advertisers to plan for a 90- to 180-day shutdown. Honestly, we were hopeful for a Labor Day return, but we made difficult cutbacks and decisions that could help us endure for a much longer time frame. If we hadn’t made the very difficult calls as quickly as we did, it would have been very hard for us to have made it through [to this point].
Pearl & Dean: I think initially we were, like many companies, in a mixed state of surprise and suspense. We had to pivot to remote working very quickly (though luckily, we had just finished a major systems and operations update, which made doing so possible). After that, it was just a waiting game until restrictions would stop. It felt like managing a continually changing landscape. One constant we knew we had to focus on was the reaffirmation of the cinema experience as the clamor around streaming grew.
Val Morgan: In the first market-wide lockdown, cinemas in Australia and New Zealand closed in late March 2020. New Zealand reopened early June, with Australia following a couple of weeks later. We were initially expecting this to last a few months and worked quickly to keep our advertising clients informed. Soon after the initial reopening, we had the first (of what has now been many) periodic shutdown in certain markets, at the same time the industry was realigning itself with titles and release dates moving around in the schedule. At the outset we built different scenarios for the business, with no firm view at the time on when this might be over.
How did your company’s relationship with its cinema partners change/evolve over the pandemic? What kind of conversations were you having with your exhibitor partners as the pandemic went on? How about your advertising partners?
Pearl & Dean: Our cinema partners were in as much flux as we were. Our outdoor and pop-up cinemas had to change their models to drive-ins, and we worked through that with them. In the bricks-and-mortar bit of our business, we communicated frequently, shared information, and worked with the UKCA (the trade body for exhibition) and the FDA (the distribution trade body) to keep on top of any news, trends, and developments. In both exhibition and advertising, communication was absolutely key. We held webinars and regular catch-up sessions—anything that ensured we were helping out and keeping cinema top of mind.
Screenvision Media: Essentially, our overarching position was to be the very best partners we could be. It’s the standard we hold ourselves to during “normal operating times,” and we felt our culture of excellence and of forbearance to be all the more critical during the pandemic force majeure. Specifically, that meant being flexible and creative with our exhibitor partners and maintaining a high level of communication and touch. With our advertisers, it meant shifting or canceling massive advertising-budget commitments no matter what the contracts may have specified. At our core, it was humanity above all. We all took off our respective advertiser or exhibitor or media hats and just became human beings trying to weather the most severe crisis any of us had ever professionally confronted.
Val Morgan: Transparent and open conversations, with both our exhibitor and advertiser partners, have built on the strong relationships we already had with them. For our exhibitors, it was about keeping them up to date with the resulting impact of changes to advertisers’ plans and the subsequent impact on revenue. For advertisers it was about providing reassurance that we were delivering audiences and that campaigns were going to be delivered. As time has gone on, we’ve moved back into the conversation with both parties about the future and getting back to the growth plan we had in place prior to the pandemic.
National CineMedia: We stayed very close with exhibitors on how things evolved and were in constant communication throughout. We had ongoing communication with advertisers about how they were doing and how their business was evolving, and we kept them up to date on what was happening in the world of cinema, which at times during the pandemic was a very fluid situation. We made sure to keep our advertising partners informed of the movie release schedule and when audiences started to return to theaters.
Are there any pivots that your company made, changing their status quo to better reflect the realities of the Covid era?
Val Morgan: Agility, communication, and flexibility have been key. The business quickly transitioned to enable our teams to work from home effectively. Communication across the business has been a major focus throughout this period, keeping our teams engaged, informed, and motivated. To connect effectively with our advertising partners, we also developed a range of initiatives to keep the profile of cinema high amongst media agencies and clients, who were working from home themselves.
Screenvision Media: We pushed ourselves to try to help our theater-exhibitor partners maintain and deepen their own customer and community relationships. We could only mostly provide counsel and creativity, but we also invested some of our hard-earned dollars to build a new loyalty digital app that could help some of our exhibitors provide fresh and updated trailer previews while incorporating local and customized theater messaging. In some instances, we were able to create shared advertising monetization that benefited our advertisers and our theater partners.
We also looked to experimentally pivot into some other adjacent audience platforms, such as health care, sports, and essential retail advertising. Though this did not directly benefit our theater exhibitors, it was not unrelated to their long-term interests in that it helped sustain our Screenvision Media business and economic health.
Pearl & Dean: What came out of Covid was the closeness and focus of the team here. You can take that for granted in more regular times. It made us stronger as a group.
Spotlight Cinema Networks: Spotlight is known for its dedication to serving the needs of luxury, dine-in, and art house cinemas. Our exhibitor- and advertising-partner relationships were reinforced during the pandemic. Communication was key and the message was clear: “We are all in this together.” We worked relentlessly to continue providing new opportunities, services, and resources throughout the pandemic. In fact, Spotlight is emerging with a few key accomplishments post-Covid-19:
- We strengthened and grew our exhibitor network over the past 22 months. This includes an expansion of our long-term relationship with Cinépolis Luxury Cinemas, where we now exclusively represent all of their locations. We also welcomed new exhibitor partners, including LOOK Dine-In Cinemas and Cinema Lab. We are proud that we were able to grow our network during this difficult time, with our national screen count growing 14 percent and our local screen count growing 35 percent.
- Expanded media portfolio for our advertising partners to reach and engage with moviegoers. Options include in-theater pre-show and vertical networks; outdoor and premium streaming AVOD.
- Enhanced proprietary digital-distribution technology to include media and content delivery without use of servers, installation costs, and thumb drive shipments
National CineMedia: We’ve been closely examining all of our business since the pandemic began. We’ve pivoted and have gotten into the digital OOH media space, along with enhancing and expanding our digital and data offering, and have much more advanced audience targeting capabilities.
During the year or so, how has your company been able to help your cinema partners through their recovery process?
Screenvision Media: We continue to stay highly communicative, flexible, and adaptable. Fundamentally, we are focused on generating maximum advertising revenues as quickly as we are able to help supplement our exhibitors’ finances during these very difficult times.
We have also taken on additional creative and marketing support responsibilities where most helpful to some of our partners.
Spotlight Cinema Networks: Our event cinema division, CineLife Entertainment, provided much-needed content to exhibitors as their theaters reopened across the U.S. Highlights include the release of John Carpenter’s Halloween, which reached over 1,000 screens across the U.S. and Canada during the fall of 2020. 2021 included releases of the critically acclaimed Chicago: America’s Hidden War, Sopranos Sessions: A Special Theatrical Triple Feature, and another screening of fan-favorite Halloween.
Pearl & Dean: We have offered to support them in any way we can. There isn’t a pattern to the support we give, as our partners are varied. But they know we’re here to support and help in any way we can. We also linked up with one of the big advertising groups, Omnicom, to run a £2 million “Cinema Is Back” campaign, where other media platforms gave us inventory to publicize the return of cinema. The help that Omnicom gave us was exceptional, and they were brilliant partners. At that time no one was in a position to spend much on advertising, so we were delighted to do that.
Val Morgan: Working closely with our partners in exhibition and providing realistic revenue forecasts based on our conversations in-market with advertisers and their agencies.
We’ve seen how changes that occurred during the pandemic—shorter exclusivity windows, to use one particularly big example—will have a long-ranging impact on the industry. Has the pandemic caused any shifts in the cinema advertising landscape that you think might be permanent?
Screenvision Media: Beyond the truncated exhibition windows, I believe cinema operators have more fully recognized they are deeply allied with the talent industry of this tremendous sector. Theater owners and Hollywood talent—directors, actors, producers—are uniquely aligned in their fierce determination to protect and promote the most valuable and impactful canvas on the planet.
Spotlight Cinema Networks: I expect some change as a consequence of the pandemic. Everyone and everything has changed. While the dust has not settled yet on what the new normal will be, I believe moviegoing remains a magical experience and cinema advertising will rebound as it emerges from Covid-19. It is encouraging how well films such as Shang-Chi and the Legend of the Ten Rings, No Time to Die, Dune, and House of Gucci have done at the box office.
Val Morgan: Early after the first national lockdown ended in Australia, we commissioned research to gauge sentiment about cinema. The findings showed the desire for out-of-home experiences and that Australians’ love of cinema was as strong as ever. Importantly for brands, those with the most positive outlook and those most willing and able to make big purchase decisions were also the first to come back—we dubbed this segment “the Great Escapers.” Whilst we’ve faced several periods of closure across the year, we’ve been encouraged by the appetite to get back to the movies. Whilst many have suggested the death of cinema, we believe in the future more than ever based on cinemas’ sheer power for brands and the “experience” factor it offers versus in-home media and movie viewing.
National CineMedia: The streaming day-and-date experiment generally failed, as studios are leaving money on the table. The theatrical window has shortened and looks to be settling in at 45 days. The audience’s pent-up demand and passion for shared live experiences and seeing the world’s best content has come back with a vengeance. During the pandemic, the move of audiences to non-ad-supported streaming platforms has only increased the value of cinema as one of the last places to reach young people at scale. We are seeing strong and consistent attendance and box office numbers, particularly among the hard-to-reach 18- to 34- and 18- to 49-year-old audiences.
Where would you say the cinema advertising landscape is in its recovery process? Do you have a ballpark estimate as to when you’ll be back to prepandemic levels?
National CineMedia: We’ve been bringing our partners back to cinema throughout most of 2021, and that rebuild will continue into 2022.
Spotlight Cinema Networks: We are hopeful for 2022. Cinema is a resilient business, and I think the lessons we have learned over the past two years will help set us up for future growth. Audiences love to immerse themselves with great content in a great theatrical environment.
Pearl & Dean: I would say that we are cautiously optimistic regarding the recovery. Industry forecasts show that advertising revenue in 2022 will show strong growth, and we expect cinema revenues to follow suit. Our advertising revenues in Q4 2021 are ahead of the same period in 2019, so we are starting 2022 with a positive outlook.
Val Morgan: We are in the early stages of the recovery cycle, as our vaccination rate initially lagged behind the world for the first half of 2021. The key markets of Sydney and Melbourne only came out of the last lockdown in October 2021, and Auckland has just reopened again at the beginning of December. It’s still early days, but I estimate that we could be back to prepandemic levels by the end of 2022.
What’s the number one lesson you’ve learned from this pandemic?
Screenvision Media: At the core, humans fundamentally need socialization, storytelling, and shared experiences. No couch or pandemic can negate that truth. Ever.
Pearl & Dean: The number one lesson is the importance of our team. During the darkest times of the pandemic, our mutual support helped us enormously. We are also part of the global family that is SAWA [Global Cinema Advertising Association], so sharing experiences, knowledge, and plans with colleagues in other markets was really great.
National CineMedia: The cinema experience has survived 100 years of change, ranging from technological innovation to audience behaviors—yet we still survive and thrive. Our company will continue to reinvent itself to meet our audience and advertiser needs.
Val Morgan: The importance of a long-term perspective.
Spotlight Cinema Networks: The biggest lesson I learned over the past two years is to be prepared for the unexpected. It is imperative to have an efficient emergency plan to activate. Spotlight jumped right into action to effectively work remotely and keep Spotlight top of mind while reflecting on-the-ground realities.
The post Back to the Big Screen: Industry Leaders on In-Cinema Advertising’s Pandemic Journey appeared first on Boxoffice.
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