AGENCYFAQS, issue dated 22nd August 2014
Advertisers are trying out innovation and direct messages to market their wares in theatres.
The buzz in cinema circles - apart from Kick getting into the Rs. 200 crore club and the release of Singham Returns - was the recent takeover of Satyam Cineplexes by Inox Leisure for Rs. 182 crore. With this acquisition, the number of screens for Inox went up by 38 to 358, placing it behind leader PVR Cinemas, which has 444 screens across India. Together, the two control more than 40 per cent of the multiplex screens in the country. Big Cinemas has 280 screens, Cinepolis 84 screens and Fun Cinemas, 82 screens. Today there are over 1,500 multiplex screens while five years ago this number was around 250. More screens and more movies make for more advertising space for what is called in-cinema advertising. As footfalls grew, film releases gathered momentum, distribution improved and cinema became digitised, in-cinema advertising aroused the interest of a number of national advertisers. The genre grew at a compounded annual growth rate (CAGR) of 20 per cent in the last five years. According to a KPMG report, in-cinema advertising is varyingly between Rs. 400 to Rs. 600 crore. Consolidation is taking place in the multiplex business.
Now, over a century old, the Indian film industry is worth Rs. 13,000 crore. Nearly 30 films across 10 different languages are released every week. Experts point out that an estimated 3.5 billion tickets are sold annually and an average Indian visits the theatre thrice every year. It has also built up a great eco-system for brands to interact with audiences. In-cinema advertising refers to on-screen and off-screen branding that consumers see in theatres. "Many mainstream brands today," points out Harshavardhan Gangurde, vice president, marketing, Inox Leisure, "are using in-cinema advertising and have upped spends after realising the impact." In the on-screen space, a brand can run the traditional 30-, 45- or 60 second promos or 10-second static slides giving information. The interactive use of on-screen space has clicked too. Nokia designed a short film in November last year for the Lumia. In it, the protagonist, who is trapped in a maze, calls a person from the audience to help him out. The activation-cum-on-screen film ends with the protagonist coming out in person and gifting the viewer a Nokia Lumia. In the off-screen space, there is a mind-boggling variety of options ranging from seats, audi name(or door), lobby, wall, floor, box office, security check point, popcorn counter, lift, kiosk, product display, staircase, washroom, ticket jackets, interactive zones or kiosks, poster box and sampling. Piramal Healthcare partnered with Big Cinemas across 100 screens and placed the I-Sure (an ovulation test kit) communication in women's washrooms. Sachin Rajpal, general manager, marketing, consumer products, Piramal Enterprises, says, "The dialogue between the brand and the consumer happened very well."
No remote button
Gautam Dutta, COO, PVR Cinemas, says, "Cinema delivers unparalleled impact as brands play with the senses of the consumer." A brand manager is upset if the consumer switches channels, closes a browser or chooses the YouTube ad skip button but he is happy at a theatre because it does not allow the consumer this luxury. "Brands get a captive audience glued to the screens," says Devang Sampat, business head, strategic initiatives, Cinepolis. Kapil Sharma, vice president, marketing, 9X Media (an advertiser in this space), however, argues that the attention wavers because of the commotion caused by people coming and going. Brands, however, get to know who they are interacting with and that the chances of spillover are less. Ronita Mitra, senior vice president, brand communication, insights and online, Vodafone India, says. "Cinema gives you a unique audience in every show and we can advertise in select geographies with different propositions." In 2012-13, for instance, 9XM ran campaigns in 100 Cinemax screens (now PVR) in the Hindi-speaking markets to promote its Bade Chhote characters. Says Sharma, "Since we play Bollywood music, theatres were the perfect destination." The medium allows even the small retailer to advertise and play longer ads that could be prohibitively expensive on TV. The effect, however, may not be the same. "It is not a frequency building medium. The cinema screen acts as an ancillary to any large TVC," adds Gangurde of Inox. Theatres are great for sampling. Samsung, for instance, placed small fridges in the aisle next to the seats in PVR's Gold Class filled with eatables and encouraged viewers to consume the products and judge the efficacy of the fridge.
The joy of growing
There are many reason why in-cinema advertising was not explored much in the past. Single screen theatres used print rolls that were prone to damage, expensive to produce and had to be distributed individually to each theatre. These theatres were not designed for off-screen branding and mostly reported incorrect footfall numbers. Piracy also lead to several single screens shutting down. All that has changed. "The emergence of multiplexes and their rapid expansion to tier I and II cities is a big reason why this change has begun," says Ajay Mehta, managing director, Interactive Television, part of WPP. In 2013, growth came from tier II and III cities. PVR added 60 screens, Inox 21 and Satyam Cineplex (now Inox) 12 that year. In 2013, Interactive Television also launched Cinema Auditing and Monitoring (CAM) Report, a proprietary tool to ensure transparency in the audit of Cinema advertising. It is the only third party monitoring system available in the country for Cinema advertising. The monitoring is carried out in top 8 cities covering 200 screens which contribute approximately 60 per cent of the cinema ADEX in a given week. Multiplexes have better ambience and good picture quality and drew SEC A, AB, A+ audiences back to the theatres. A KPMG report points out that the occupancy levels for major multiplexes rose from 23-27 per cent in 2011 to 30 per cent in 2013. PVR claims to get more than 72 million viewers annually, while Big Cinemas gets 40 million. According to the report, average ticket prices went up from Rs. 150-160 in 2011 to Rs. 168-175 in 2013 for leading multiplex chains. Other developments have changed the movie-going experience. Digitisation has improved film quality. Digital prints cost less than analogue and are easy to distribute. Today, viewers in big and small cities get to see the show on the day of release. Kick, for example, was released simultaneously in 4,000 screens. Producers push films on as many screens on Day One but their shelf life is low. Multiplexes monitor footfalls and provide brands with a log of the ad (when, where and how many times it played) thereby bringing transparency. Most multiplexes have a capacity of 200-500, giving them the flexibility to run small ticket films, giving more options to the advertisers.
Them and us
When it comes to in-cinema advertising, are there watertight compartments? Do regional brands advertise with big-ticket Hindi or English films? Will a national brand advertise in a regional film? "We measure capacity on demand and assign the number of shows. A regional brand would not mind advertising with any other language movie if it can benefit," says Dutta of PVR. Swaroop Reddy, managing director of the Chennai-based Sathyam Cinemas (no connection with the Delhi-based Satyam chain) differs. He says that the fact that a movie is regional, Bollywood or English does affect advertisers' decisions. Gangurde of Inox points out that most brands tend to go for larger Hindi releases with assured eyeballs. Sampat of Cinepolis adds that advertising depends on the resources available, not whether the movie is regional, Bollywood or Hollywood. "If the brand is allocating budgets to its regional offices then advertising with regional and small budget movies is more. But if it is only from the central pool then it is mostly the national campaigns with big ticket films," he explains.
Screen vs screen
More than 70 per cent of the 13,000 cinema screens in India are single, which are less monetised from an advertising perspective. The rest are multiplexes. On the revenue front, the latter gets 70 per cent of its income from ticket sales, 20 per cent food and beverages (F&B) and 10 per cent from ads. Both F&B and in-cinema advertising make multiplexes profitable. With the consolidation in the multiplex business, brands and agencies now have to deal with fewer people. Inox-Satyam is the latest in a line of acquisitions - PVR acquired Cinemax in 2012 and Inox Leisure acquired Fame Cinemas in 2010. Many brands opt for cinema deals based on cost per thousand (CPT). According to Sharma of 9X Media, there will be low and high days because weekdays in north India see thin attendance. On the other hand, footfalls are heavy through the week in the South, especially Tamil Nadu. Surprisingly, brands prefer to advertise more in western Indian theatres. To attract crowds on weekdays, tickets are priced low and marketing initiatives used in collaboration with brands such as Vodafone, Vivel, Kotak, and Freecharge.in. These are win-win situations for all parties. Cinema houses co-invest with brands to make them grow. It works quite well.
PVR's ad revenue for last three fiscal years rose from Rs. 85 crore to Rs. 140 crore between 2011-12 and 2013-14. Big Cinemas' revenue went up from Rs. 18 crore to Rs. 44 crore, while Inox Leisure saw revenues move from Rs. 33 crore to Rs. 50 crore in the same period. Many single screens are trying to transform themselves or converting to multiplexes. Companies like UFO Moviez (which holds rights for 3,500 single screens) provide digitization solutions. The audience is larger (SEC B and C) and it is cheaper to advertise here. Government ads that attempt to educate or spread awareness go for single screens. However, Gurudutt Monas, senior manager, corporate ad sales, UFO Moviez, says, "Corporates are also taking this route and look to full year deals."
Recall and returns
With increasing disposable incomes, families don't mind spending at multiplexes. On an average, a family of four in big cities spends at least Rs. 1,500 in theatres during the weekends. Every brand is after this audience. The best part about in-cinema advertising is that the recall is higher compared to other media. "Cinema is a much better place to advertise as people are more receptive than in their offices or homes," says Dutta of PVR. Measuring the return on investment (ROI) is, however, difficult. According to Karthi Marshan, EVP and head group marketing, Kotak Mahindra Bank, cinema amplifies brand campaigns running on TV so there is no direct ROI for it. Brands can measure kiosk sales and leads, but it's difficult to put a number to the impact from static branding. The cost per contact may be high but people like Cherian Peter, CMO, The Muthoot Group, feel that it is not a problem. "Everything cannot be looked from an ROI perspective because there are certain things we do for brand building purpose, not for ROI," he says. Another problem is the limited reach of the medium. Brands have to run multicity and multiweek campaigns since they want more accuracy and transparency. The density of screens in India is low. There are just eight screens per million people compared to 117 per million in the US. Metros are saturated and next set of investment is coming in the non-metro cities. Brands, unfortunately, are not as bullish about these markets as the theatres would like them to be.
Onscreen ads are still the most preferred among brands. A multiplex plays an average of 23 ads (30 seconds each) or 12-15 minutes of advertising. The rate differs from chain to chain and could range from Rs. 7,000-20,000 for a 30-second ad. When it comes to off-screen models, poster branding costs between Rs. 15,000 and Rs. 30,000 a month per poster box while a standee costs around Rs. 18,000-25,000. Brands are now beginning to opt for quarterly, semi-annual and annual deals. A niche or an upmarket product goes for screens attracting the SEC A+ audience, while a mass product goes for SEC A, AB screens. Says Shirish Srivastava, senior vice president - marketing & sales at Reliance MediaWorks, ''Today, 50 per cent of brands opt for the annual deals.'' It insulates the brand from box-office failures. Annual deals give companies the chance to use the space to advertise different products at different points of time. Media agencies help theatres get 40 per cent of the deals struck, while the exhibitors get the rest themselves. The innovations are executed by the outdoor agencies. Theatres have adopted the 'pay per eyeball' model where brand pays for the number of people visiting the theatre in that period. For now, only premium brands get this offer. "Kotak," says Karthi Marshan, EVP and group head marketing, "assesses its investments based on the eyeballs reached and not the number of ads aired."
A note from the Editor, Sreekant Khandekar
The movie theatre makes one of the most fascinating Indian business comebacks of all time. For those of you who are old enough to remember, by the early 1990s the movie hall was a place of horrors. Cavernous and ill-maintained, it was shady in every sense. And it stank. Recently introduced to the delights of satellite television, the Indian family had stopped visiting the local cinema hall. In many places, the exhibitor was reduced to running semi-porn films to fill the low-end seats. I lived in the residential area of Saket, New Delhi in the mid-1990s. That's where, in 1997, PVR created India's first multiplex just a few hundred yards from my home. All of us who visited PVR Saket were flabbergasted. This was beyond anything we could have ever imagined. Where the old theatre treated customers as if they were bootleggers, here it was like entering a five-star. The place had marble floors, was brightly lit, and smelled nice. Compared to the old movie theatre, this was as alien as a spaceship. For younger readers, brought up on multiplexes, it will be hard to comprehend the impact at the time. They will think I am going over the top. But then, the memory of the dirty old theatre does not fill their nose, does it? When a new business emerges, how it performs depends on a host of factors. Its course is also dictated by the leading players in the game. They determine the rules of the game and whether the industry will take the high road or the low one. In that sense, PVR has proved to be a good role model. The first to enter the business, it has kept its leadership over 17 years – a remarkable achievement, considering the degree of competition. The founder, Ajay Bijli, is known for being obsessed with his brand – and it shows. PVR has set high standards, forcing the competition to emulate them. It is publicly listed and its reputation in the investment community is clean. As the multiplex business expands into smaller towns, it will need to raise serious money, and a good reputation will be a big help