Case Study: How I Would Have Run Miramax

As the piece in Business Week I referenced in the previous post observed, network TV advertising is pretty much down to four big categories which still find it worth the trouble to target everybody—cars, drugs, phone service and movies.

Edward Jay Epstein—in the news separately this week as the man who ID'd Mark Felt as Deep Throat 30 years ago-- regularly explains the crazy-like-a-fox economics of Hollywood in a Slate column. This time he's talking movie advertising-- and he says Hollywood is about to find that, in fact, marketing movies on TV, and making the kind of movies that you can market easily on TV, doesn't pay:

I asked a very savvy executive at 20th Century Fox how the studios recover this huge advertising expenditure. He explained that big opening-weekend numbers, even if they are expensively acquired, may pay off in later markets—specifically video, pay-TV, and foreign release. At that time, the year 2000, he was right...

Since then, however, the digital revolution has radically changed the movie business. The video rental market, which had been the studios' cash cow as late as 2000, is rapidly disappearing. It's been replaced by the business of selling DVDs in which a handful of mass retailers, such as Wal-Mart, account for most of the studios' revenues. Unlike the video chains that rented videos, the big retailers don't simply peg their orders to a film's box-office results. Instead, they view DVDs as traffic-builders: The stores use them to lure in the relatively well-heeled, plasma-screen-purchasing customers—who are usually not the so-called LICs (or low-income consumers) who are recruited by ads for movie openings. As a rueful Sony marketing executive pointed out, "Unfortunately, our teens are not always who they want."

Hollywood's reliance on the kind of sensational fare that gets one good opening weekend from teens, if you promote it enough, drove a generation of adults out of movie theaters-- especially the female kind of adults. Every once in a while a female-oriented grownup movie manages to survive past that first deadly weekend and become a sleeper hit over weeks and months-- A Room With a View, Fried Green Tomatoes, Enchanted April, Amelie, My Big Fat Greek Wedding, etc.-- but Hollywood has never figured out how to make that lightning strike with any regularity.

The studio that could have done it, I think, was Miramax-- and that they didn't think outside the TV advertising box to do it was the lost opportunity of modern movie marketing.

Remember Talk magazine, the short-lived Tina Brown magazine they started? Suppose that instead of that effort at making themselves New York literary figures, they had put the same effort into marketing certain of their movies to 30+ women through a similarly glitzy publication-- placed free in movie theaters, hair salons, nail places, wherever, and sent out free to whoever signed up for it. On top of it they could have done viral email campaigns where you'd get advance word about the movies, clips, solitaire games, exclusive content with Johnny or Gwyneth or whoever-- all of which, by the way, you'd be encouraged to share with friends, unlike the way the movie industry normally screams "piracy" at anything digital. And they could have helped the theaters-- or better yet a coffee chain-- launched women-only movie discussion clubs, to encourage viewing of the movie du jour the way Oprah can order every woman in America to read a book.

For a fraction of the cost of TV advertising, they could have developed a whole niche marketing channel which would have women lined up for the opening of the next My Big Fat Greek Wedding when their husbands and teenaged sons had never even heard of it. Well, sooner or later the movie biz, like almost every business before it, is going to have to figure out how to market to different audiences through channels other than TV. Epstein suggests it will be sooner.

Not just a bad dream

Back when I was at Leo Burnett in the early 90s, doing direct mail for McDonald's and first getting a glimpse of new media, Rishad Tobaccowala was the guy in the Burnett media department whose job it was to pay attention to things like America Online. Fast forward a decade and if there's a story on the new era in advertising and marketing, he's bound to be quoted in his position as the top exec at Starcom and Publicis whose job is, uh, to pay attention to things that might be the next America Online. For instance, in this article:

Fragmentation and consumer control will drive the cost of digital media upwards by 20 to 30 percent annually over the next several years, predicts Rishad Tobaccowala, chief innovation officer at Publicis Groupe Media and president of SMG Next.

"At some stage it becomes more expensive to buy Google than to buy network television," said Tobaccowala...

The gist of the talk he gave seems to have been a sensible warning that prices for online media are likely to go up-- especially when you have somebody like Google in very nearly a monopoly situation. Of course, this is only logical, since so many sites are dirt cheap right now, priced nowhere near equivalent mass media which reach the same numbers of eyeballs. The top political blogs draw more viewers than the top political shows on the cable news networks, for instance, and they probably have a substantially more engaged readership to boot, yet it seems safe to say that Daily Kos and Instapundit are hardly pulling in revenue comparable to CNN off their Blogads. Some upward price adjustment is bound to happen.

But I fear this is not how many people inside ad agencies are going to read it. Their logic will be something like this:

Google will soon be more expensive than TV.
TV is back! We don't need to change a thing after all!

In fact, while there will be probably be a leading edge of top-name new media vehicles capable of jacking up rates because they are seen as having superior positions (Google, of course, being the primary example), there will surely be just as much pressure keeping prices low coming from the fact that there will be more and more sites selling space out there. So Google may get more expensive, but online as a medium is likely to offer even more variety of price points than cable TV. There's absolutely no reason to believe that online as a whole is about to price itself above TV as a whole, or even close to it.

Sorry, TV creative directors. It wasn't all just a bad dream. The world you know really is being replaced by a new, less cushy reality.

But it's not only the cost of the medium but the cost of operating in this new way that he says is going to be higher:

"We have a different economic model for our television-based plans, and a different one for the re-aggregated plans, and the second one costs 10 times as much."...

Some of those costs will be driven by targeting and measurement technologies necessary to reach increasingly fragmented audiences, while others will stem from the need to make creative more attention-getting, Tobaccowala said.

Okay, Rishad, they cost more. They're not as efficient. But how does what they deliver compare?

One of my key points in the Introduction (I'll link that eventually) is that mass media had to be so efficient at delivering lots of potential buyers because it was so incredibly inefficient at converting them into actual buyers. But you don't need a low cost per thousand if you're converting a lot more than one in a thousand.

This Business Week article from last year had one of the few solid comparisons for how fragmented marketing performs that I've seen in print:

In 2003, P&G spent $4.4 billion, or 10.1% of sales, on advertising. In 1998, the last time its spending reached 10%, unit sales volume rose by nearly 4%. Today, P&G's unit growth rate is running closer to 9%. "You can draw the inference that they are spending smarter on advertising," says William H. Steele, an analyst at Banc of America Securities. "They are spending about the same money and getting three times the lift."

Not a dream. Reality.

"Advertising will become a dialogue between brand and customer"

Chicago, corner of Webster and Ashland, 6/6/05.

Enthusiasm For The Boring Stuff, Part 1 (it's the time and place, stupid)

One of the things friends have often said when I've bounced all this Enthusiasm Economy stuff off of them is, "Sure, it'll work for Apple or Porsche, but what about the stuff nobody gives a s--t about? How do you make it work for toilet bowl cleaner and kitty litter and other boring crap like that?" (Hmm, there seems to be a scatological undercurrent to this question.)

Buzz Machine has a post about this that suggests a killer app for RSS-- pushing a list of this week's specials at your local grocery store to subscribers.

This is a perfect example of how to take a mundane, usually ignored form of advertising and make it relevant to the user's life by the simple expedient of being smart about the time and place in which it is delivered. Deliver the list to me quietly, let me consult it when I'm shopping or getting ready to and it's exactly the sort of information I might find useful enough that I would sign up for it. Needless to say, the stores which I'm signed up for would pretty quickly become the only stores I shop at-- anybody else would fall off my consideration list just because I didn't know what I'd find there before even leaving the house.

So here's Enthusiasm Marketing For The Boring Stuff: give me the ability to conduct the entire interaction with your marketing on my own terms. Let me use it in my way (instead of you shoving it in my face), and I'll give it exactly as much attention as I need to to make a purchase.

Now compare that type of transaction with something that the Jewel stores in Chicago have actually done to combat the increasing invisibility of their mass media advertising. At the checkout, they tape up a little poster for a featured item of the week-- something they're no doubt being paid to promote, as it's usually the most artificially flavored and genetically modified sort of big brand pseudo-food imaginable. As I check out, I'm always asked in a mumbling monotone, "You innarested inna feachud item uddaweek?" Of course, the odds that I'm going to be attracted by this one item are low to begin with, and the odds that I want to turn around, when I'm almost done with shopping and out the door, and spend another five minutes at Jewel hunting for Tropical Tornado Froot Snax Shooterz are even lower. (They must have somebody fetch it for you, or something-- they can't really make everyone else in line behind me wait while I go look for it, can they?)

The difference between the totally customer-focused idea of RSS weekly specials and the totally store-focused idea of trying to force one last impulse purchase on me on my way out the door could hardly be greater. One is a smart strategic way to build sales and loyalty at the same time by serving the customer on his own terms; the other is just annoying and, hopefully, as fruitless as Froot Snax Shooterz.

(But notice that the post says "Ask your wife if she'd subscribe." Ahem, some of us Free Agent Nation types-slash-shoppers are not wives, you know...)