Thursday, November 09, 2006

I believe the children are our future. Teach them well and let them lead the way

According to a recent research report from eMarketer, Hollywood has only spent 3% of their marketing budget on online advertising. This compares to the average of 5.7% of all industries (estimated 2006 online ad spending = $16B divide by $281B Total media spending estimated in 2006).

This is ironic since the same young people that Hollywood is trying to reach tend to get their movie information online more so than their older counterparts. (MPAA did a study in April 2006 and found that nearly half of 18-to-20-year-olds saw one or more movies per month in 2005, compared to less than a third of those 30 and older). However, the same eMarketer report forecasted that online ad spending by Hollywood will increase to 8% of total media spending by 2010, which is still almost a whole percentage point under the forecasted internet-to-total-media-spend of 8.9% ($25.2B divided by $284B) by 2010. One would have thought that Hollywood’s online ad spending would be above the average amount, which in this case, doesn’t seem to be.

By 2010, the teen population (ages 12-17) will reach about 20M and a staggering percentage of them (~84%) are internet users. Since, this being the target audience that goes to the movies frequently, it only makes sense that Hollywood’s priority should be to reach them where they hang out, ie online. Moreover, this demographic group grew up entirely with the internet and is certainly savvy enough to differentiate between relevant ads pushed to them (and maybe even pull relevant ads themselves) and plain crap. Advertising online where the target audience feels an affinity to the product can certainly leads to the audience paying for the product. So, Rupert Murdoch had the right idea 12 months ago after all.

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