Madison Ave. should buy into pix
Guest columnist
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Advertisers are wising up. Why should they sink millions of dollars into product placement and cross-promotion into films they don't own when they could leverage the same amount money by financing the gap (the shortfall between the budget and sales) and own the film outright?
Under such an arrangement, in addition to product placement, they would also have the benefits of branding, the ability to precisely target their audience, control over content, and even the chance to make a profit on their investment. It doesn't get better.
A perfect recent example of a move in this direction is the video premiere movie being made titled "Bionicle: The Mask of Light," being co-produced by Lego and Miramax. The movie is based on a successful toy line by Lego named (you'll never guess) Bionicle. Although the details of the arrangement aren't public, Lego had been working on the film project on its own for some time, so you can bet that Lego is investing in the film.
Advertisers know that the medium is the message. You don't need ReplayTV to zap commercials; most consumers do it on their own by just mentally dismissing advertising as, well, advertising. But if Tommy Hilfiger can get a rock star to wear his shirts on stage, or Mercedes can sponsor the Mercedes Tennis Cup, then our defenses are down and the message is more powerful.
And now is the time. The independent film industry is on its knees, so the golden rule (he who has the gold, rules) dominates. It's no secret that most equity sources have dried up and that foreign sales are down, big time. As for equity, insurance-backed financing is long gone, the German Neuer Markt is kaput, and German tax shelters are on the wane.
As for foreign sales, Kirch is in bankruptcy, Canal Plus is in chaos, and pay TV is in the toilet. Given the foibles of film financing, the financing source must have an incentive that goes beyond the immediate economics of the film itself -- and advertisers do. Even if they were to lose part of their investment on any particular film, they would more than make it up on increased sales from promotion.
BMW must certainly agrees with that notion, since it has spent more than $20 million financing a series of creative short films on the Internet - for no possible direct return at all. Someone out there might want to mention to BMW that the same $20 million investment applied to fund a 20% gap would buy BMW a $100 million "Fast and Furious 2" with BMWs. Go figure.
This development would simply hark back several decades to when advertisers like Proctor & Gamble sponsored daytime television series (which is why they are called "soaps"). Hallmark has taken this concept to the next level in television with the Hallmark Channel.
The synergy is best summed up in a recent quote by Hallmark CEO Donald Hall: "Our independent retailers benefit from the powerful exposure of national cable television programming. The Hallmark Channel benefits by reaching the millions of consumers who visit Hallmark Gold Crown Stores across the country."
Here are a few potential benefits to advertisers:
- Branding. Advertisers could get a presentation credit and logo in the main titles and on ads.
- Product placement. The model works even without product placement, but all the better with it. And it could be subtle. But they can at least make sure that their products don't end up on the cutting room floor, as too often happens now because they don't have final cut rights.
- Precisely targeting their desired audience. They will be able to make sure that the film is not too violent, sexy, or whatever for their market.
- Making a return on investment.
The large advertisers each spend hundreds of millions of dollars per year advertising their products, and they know the value of being associated with films. They pay millions per year for product placement and far more for associated advertising for a premier film. If, instead, they invested in the film itself, a little money would go a long way.
Advertisers do not need to finance 100% of a budget; they need only plug the gap, which might be perhaps 20% of the budget of a film. For example, a $20 million investment might be leveraged to fund $100 million of production costs, either in one blockbuster or over a number of moderately budgeted films.
Oh, but what about the impact on freedom of artistic expression? And the Big Brother subliminal manipulation implications. Come on, this industry sold out years ago. "Cast Away" was one big FedEx commercial, and no one objected. Would it have made any difference if one of the credits had said "Presented by Federal Express"?
The product placement aspect has already been asked and answered, and other than the presentation credit, the investment aspect is transparent to consumers. As for possible objections from talent, what's the difference between this and product placement? Talent likes money, and advertisers like talent. It's a marriage made in heaven.
Schuyler Moore is a partner at Stroock & Stroock & Lavan, an adjunct professor teaching Entertainment Law at the UCLA School of Law, and author of the book "The Biz: the Basic Business, Financial and Legal Aspects of the Film Industry" (Silman-James Press, 2000).
