These have been challenging times for National CineMedia. In January, Cineworld, hurt financially by the pandemic, filed for bankruptcy, and threatened to leave NCM’s advertising network. Then, NCM itself began a comprehensive restructuring effort with the support of its secured lenders, through which all the company’s debt would be converted into equity of the reorganized company. Under that agreement, NCM will assume all its critical contracts upon emergence, ensuring that the company will maintain the largest national cinema advertising network. But there have also been some positive developments for the company. In March, NCM released the first U.S. cinema attention measurement study conducted by the attendance measurement company Lumen in collaboration with Dentsu, the agency leader in attention metrics. The major finding proves that ads played in movie theatres rank number one for consumers’ attention when measured against all other video platforms. Other key findings include a greater attention score, significantly more consumers watching for a longer duration, and a correlation with recall and choice. To get a better picture of the survey’s and NCM’s prospects moving forward, I recently spoke via email with Mike Rosen, the company’s chief revenue officer, who makes clear that he believes NCM has weathered the storm. Here is our conversation.
Digital Cinema Report: You recently released a study that showed how cinema advertising can be much more effective than any other media formats. That study focused less on how many people saw a particular ad, exposure, and more on how they responded to it, attention. What do you consider some of the more important findings of that study?
Mike Rosen: Marketers searching for a young diverse audience are challenged by cord cutting and ad skipping. There is one medium left that is fully opt in and on demand where consumers are riveted to the entire experience, ads included – cinema. Research showed cinema audiences are not only paying attention to the ads at dramatically higher percentages than any other ad-based video platform, but that there is also a correlation between brand recall and brand choice with higher attention metrics. This is a major value for advertisers and one that we feel will continue to strengthen cinema advertising’s position in the premium video marketplace.
DCR: At least twelve major advertisers including Wendy’s and Adidas took part in that study. Can you share what some of their thoughts were about the results?
MR: Across multiple brand categories we saw statistically significant attention results. This speaks volumes to the power of cinema with the most premiere content on the biggest screens. Based on the overwhelmingly strong response to the study, we believe this will positively impact how brands across all categories view their cinema advertising strategy moving forward.
DCR: For at least the last ten or fifteen years, study after study has confirmed that cinema advertising consistently delivers the best viewer results of all competing media. Much of this stems from the fact that the audience is largely a captive one. Are there other factors at work here, and, if so, what are they?
MR: During the pandemic, NCM invested heavily in its data capabilities and intelligence. We put insights and analytics at the heart of what we do. The result of which was the launch of NCMx last year during the 2022/2023 Upfronts. It has been a huge selling point and added value to our advertisers. We are now able to deliver custom KPI’s from sales lift to foot traffic to web traffic, optimizing each campaign for reach, frequency, and attribution. The results are greater attention, engagement and return on clients’ cinema advertising investment. We are now truly both a performance and brand medium.
Additionally, cinema’s success for advertisers can be attributed to the power of the shared experience, especially after the isolation of the pandemic. Cinema’s ability to connect deeply with audiences, who have come to the theater to be immersed in the world’s greatest storytelling, alongside their friends, families, and neighbors, also translates into the stronger impact of the brands who are part of that experience.
DCR: Despite all the evidence in its favor, are there still prospective advertisers that remain unconvinced about the value of cinema advertising?
MR: Almost all our advertisers are back on-screen post pandemic. But what’s even more interesting the number of the new clients seeking measurability and that brand impact you can only get from a 50-foot screen. We reach nearly 50 percent of all 18–34-year old’s each year who are also incredibly diverse. This demographic is known as unreachables for a reason. The good news for advertisers is that the ad skipping, cord cutting Gen Z and young Millennials are at the movies each week at scale. It’s a very attractive incremental reach opportunity for many of our clients.
We see our growth continuing thanks to our data-led platform, NCMx, which enables marketers to use cinema advertising as a performance media, above and beyond our legacy strength as the best branding media. Advertisers looking for greater measurability and accountability for the media investments now have the unique option of the best of all ROAS measures with cinema.
DCR: Cinema advertising companies in general suffered greatly because of the pandemic. NCM was no exception. When do you see cinema advertising revenues returning to pre-pandemic levels?
MR: The box office is up [by more than 44 percent] this year to date compared last year and we know that the movie slate is going to continue to increase with double-digit box office growth projected in 2023. With the recent announcement of Apple and Amazon investment of billions into theatrical releases, I think we have very good reason to feel optimistic about the future of our business. The average box office performance per title is actually higher than it was pre-pandemic, so as the number of releases continue to build back up, our expectations is that the overall box office will return to those levels as well.
DCR: These are challenging times for National CineMedia overall. What does the future hold for your company?
MR: It’s business as usual for NCM. We are incredibly excited about the future NCM and of our industry. 2023 is off to a fast start with January being the highest-grossing month at the box office since 2019. We’ve got a full slate of releases with strong performances from Avatar, Creed III, Ant-Man, Scream VI, and John Wick: Chapter 4 and the year has only just begun.