Why Hollywood studios are upending spending
Advertising Age, September 04, 2006
Billions in play as Lions Gate, Fox seek future-forward media agencies
T.L. STANLEY And ALICE Z. CUNEO
4 September 2006
Advertising Age 3
Volume 77; Number 36
The rapidly evolving media landscape is shaking Hollywood as two major film studios put their hefty media accounts into review and another hires-and dumps-its agency in less than six months.
As more dollars flow from traditional media to web, VOD and wireless platforms, News Corp.‘s 20th Century Fox has thrown its $1 billion media business up for grabs as it consolidates most of its worldwide account at a single global agency. MindShare has handled the majority of Fox’s buying.
Lions Gate Entertainment, one of the few remaining independents, is searching for a new shop for its $130 million account after working with Palisades Media Group for seven years. And MGM, trying to make a comeback, hired Palisades for its $90 million account in March only to abruptly switch to RPA this summer, according to executives familiar with the matter.
The moves come as the studios, like most marketers, seek out agencies to guide them through the maze of new-media options. “It’s a wake-up call,” said Christian Anthony, chairman and co-CEO of Special Ops Media, an interactive agency that works with DreamWorks SKG, MTV, Miramax, Focus Features and others. “The space is so dynamic that you have to constantly revisit how you address it.”
Marketers “used to want the agency with the clout to get them a 30-second spot on ‘Desperate Housewives,’” said Dennis Miller, general partner at Spark Capital, a venture-capital firm focused on media and technology. “Now they’re talking about things like contextual advertising and search-engine optimization.”
In fact, although there are no exact figures, Frank N. Magid Associates managing partner Mike Vorhaus estimates that entertainment companies’ internet spending is up anywhere from 5% to 20%.
“The studios are launching 25 movies a year, and each one is a brand with a very short shelf life,” said Bill Cella, chairman-CEO of Magna Global Worldwide. “They have to figure out how to hit the target in a very short time.” Network and cable TV are still vitally important, but so are viral marketing, online and emerging media. “The studios are trying to find different ways to market themselves,” he said.
Crew Creative, a Hollywood ad agency that works with HBO, Universal, Sony, Warner Bros. and others, said its clients have increased online spending 25% this year, though with funds diverted from other media, not new money. “We’ve had clients tell us to stop building print ads in midstream because they wanted to redirect the money to online,” said Damon Wolf, a founder. “Everyone’s getting bolder because online doesn’t just appeal to niche audiences anymore.”
Brad Agate, senior VP-research, Horizon Media, said changes in the movie business-flat DVD sales, competition from Netflix and burgeoning download services-might be among the causes for the media upheavals.
The studios may be trying to see “which media shops have vision about what the industry will be like in five to 10 years,” he said.
Pam McNeely, senior VP-group media director, Dailey & Associates, Los Angeles, said the recent media reviews are emblematic of the highly competitive environment. “When a movie doesn’t do well, the producer blames the marketing department and the marketing department blames the agency.”
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