Topic:

ADVERTISING; DECEPTIVE ADVERTISING; STATISTICAL INFORMATION;

Location:
ADVERTISING; THEATERS;

January 28, 2005 2005-R-0091

(Revised)
MOVIE ADVERTISING AND STARTING TIMES

By: Paul Frisman, Associate Analyst

You asked (1) for information on trends in movie advertising and movie trailers,
and (2) whether other states require movie theaters to advertise the actual
starting times of feature films.

SUMMARY

Between 1992 and 2002, the movie industry grew from a $ 4. 9 billion to a $ 9.
5 billion enterprise. The Los Angeles Times reported in 2002 that more than
half the nation’s approximately 35,500 movie screens displayed some form of
advertising.

The Cinema Advertising Council (CAC) reported in 2004 that its members
spent 48% more on movie advertising in 2003 than 2002, with revenue
increasing from $ 212. 3 million to $ 315. 1 million. If non-CAC members are
included, the overall advertising figure increases to $ 356. 1 million in 2003,
compared to $ 259. 3 million the previous year.

Two recent surveys offer conflicting reports on moviegoers’ attitudes towards

movie ads. An Arbitron survey found that two-thirds of adults and seven in 10
moviegoers between the ages of 12 and 24 “don’t mind” the ads. But an
Insightexpress survey found that 52% of those surveyed found the ads
intrusive, 53% said theaters should stop showing them, and 27% said showing
the commercials will cause them to go to movies less frequently.

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Several organizations have web sites urging people to oppose movie advertising.
However, we could find only anecdotal information on the increase in the
number of movie trailers. There does not seem to be the same level of
opposition to the showing of previews.

According to the National Association of Theater Owners (NATO), the National

Conference of State Legislatures, and two organizations opposed to movie
advertising, no state requires movie theaters to advertise the starting time of
their feature films.

ADVERTISING IN MOVIE THEATERS

In 2004, the CAC, a trade association of national advertisers, released the first
comprehensive study of movie advertising. A June 14, 2004 article in the
Hollywood Reporter East (“Cinema Advertising Exhibits Growth,” attached)
reported that CAC members spent $ 315. 1 million on movie advertising in
2003, a 48% increase over the $ 212. 3 million they spent in 2002. Advertising
expenditures by non-CAC members would boost the overall movie advertising
figure to $ 356. 1 million in 2003 and $ 259. 3 million in 2002. According to
the article, overall U. S. advertising increased only 6. 1% in 2003.

The publication reported that revenue from onscreen advertising, including

commercials shown both before the lights dim and before the movie trailers are
shown, grew 45% in 2003, from $ 212. 3 million to $ 276. 7 million. (Lobby
advertising rose 79% in that time, from $ 21. 5 million in 2002 to $ 38. 4
million in 2003. ) The article reported that leading movie advertisers included
confectionary and media companies, followed by car companies, the military,
fashion, broadcast and cable television, video games, government, and the
health and beauty industries.

The growth in movie advertising has been attributed to (1) advertisers

recognizing that moviegoers are an affluent, captive audience; (2) reduced
costs, thanks to digital technology; and (3) television advertising becoming
somewhat less desirable because of the large number of television channels
and the availability of technology that allows viewers to bypass TV
commercials.

Two recent surveys attempted to measure audience reaction to movie

commercials.

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Arbitron Survey

In 2003, Arbitron, a media and marketing research firm, released the findings
of a movie advertising survey entitled “Appointment Viewing by Young,
Affluent, Captive Audiences. ” Arbitron, whose clients include advertisers and
ad agencies, conducted the study in consultation with NATO and the CAC. It
conducted four telephone surveys of more than 5,000 people, aged 12 and
older, in 2002 and 2003.

It reported moviegoers to be receptive to the ads, finding that more than two-
thirds of adults and 71% of moviegoers between the ages of 12 and 24 “don’t
mind” commercials. Arbitron reported that movie advertising is particularly
essential in reaching moviegoers between the ages of 12 and 24.

Arbitron also reported that:

• The more often people attend movies, the higher their acceptance of movie
advertising (69% of adults who have seen two movies in the past month say
advertising is acceptable).

• Moviegoers arrive at the theater an average of 19 minutes before the movie

starts, with three-fifths (62%) of those who saw a movie in the previous month
saying they went early to watch the trailers.

The Captive Motion Picture Audience of America (CMPAA) (http: //www.

captiveaudience. org/), which opposes the showing of commercials in movie
theaters, has criticized the Arbitron survey as misleading. To illustrate its
point, CMPAA posted a letter that another website, BadAds. org (http: //www.
badads. org) sent to its members. The letter pointed out that the Arbitron
survey found that one-third of respondents do mind commercials in movie
theaters and suggested that people who do not want to see the commercials
have stopped going to theaters as often.

Insightexpress Survey

A 2004 online survey of 500 adult moviegoers by Insightexpress, an online

market research service, reported that 53% of those surveyed said theaters
should stop showing commercials, 52% said the ads are intrusive, and 27%
say the showing of commercials will cause them to go to movies less frequently.

This survey also found:

• 71% believe they should pay less for a movie if ads are shown;

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• 18% enter the movies later to avoid the commercials;

• moviegoers younger than 35 are more receptive to movie ads; and

• moviegoers would be more receptive to ads if they were funny, or of higher

quality than conventional advertising.

We have attached copies of both surveys.

OPPOSITION TO ON-SCREEN COMMERCIALS

In 1998, Ralph Nader and Commercial Alert, a nonprofit organization that

opposes exploitive and intrusive advertising, called upon movie theaters to
inform customers as to when the show actually starts. In 2003, two Illinois
attorneys filed a class action lawsuit, Fisch v. Loews Cineplex Entertainment
Group, on behalf of a moviegoer “forced to sit through four commercials” before
the feature film began. We have attached a copy of the complaint, which is also
available online at

http: //www. nomovieads. com. The case is now before the Illinois Court of
Appeals.

We contacted John Fithian, president and CEO of NATO, which represents the
ten largest movie chains in North America and 29,000 movie screens; Mark
Weinberg, one of the attorneys who filed the Illinois class action lawsuit; and
Jason Thompson of CMPAA. They are unaware of any state that requires movie
theaters to list the actual starting time of feature films.

We were unable to find any similar opposition to the increase in the number of
movie trailers. Fisch explicitly does not challenge the right of theaters to show
movie previews. CMPAA’s web site acknowledges that moviegoers are
accustomed to, and often enjoy seeing coming attractions, which have been
part of the movies since 1912. We have attached a May 11, 2003 article on the
subject from the St. Paul (Minn. ) Pioneer Press.

PF: ro