• by Jonathan Cohen , Columnist, November 17, 2016

The convergence of art and science has yielded some of the more interesting innovations of our time. As a brand analyst, I’m fortunate to see on a daily basis how technology is transforming marketing. I was recently reminded of this when reading Powerhouse: The Untold Story of Hollywood's Creative Artists Agency. While the buzz around this book has mostly been about the decaying friendship between CAA co-founders Michael Ovitz and Ron Meyer, there’s a more salient storyline hiding in plain sight that reveals why data analytics and insights are massively important to the future of the film industry. 

CAA was ahead of the curve in their use of statistical modeling to project what a movie’s potential earnings were based on factors such as the box office performance of a movie star’s past films, the potential for overseas ticket sales, and axillary revenue sources. For instance, CAA negotiated a deal with Universal where Arnold Schwarzenegger, Danny DeVito, and director Ivan Reitman agreed to film Twins for zero salary upfront in exchange for 35% of the gross revenue generated. It ended up being a huge hit and the trio reportedly never made as much money off a single movie, all because the data pointed to there being more value in a backend deal.

The agency eventually created a film financing department to act as a strategic advertiser to independent film investors. In an environment where getting studios to fund a movie for $60 million or under is a huge challenge, CAA used its expertise in analytics and modeling to project which films are the safest bets for investors that have CAA-represented talent attached which include successful movies such as 12 Years a Slave, Black Swan, and The Butler.     

Just as CAA has evolved to incorporate big data into its projects at the pre-production stage, the movie industry is now realizing it, too, has to leverage analytics for marketing, advertising and promotions to remain competitive in driving box office success.

We see this in cross-channel digital advertising, particularly social media, which has become a valuable entertainment marketing tool to reach a relevant, engaged audience. Ahead of the release of the first Pitch Perfect movie, Universal found an unexpectedly high level of interest among college students, including males, on Twitter when they had assumed the audience would be identical to the behavior of viewers of the hit TV show Glee, which skewed heavily female. As a result, the studio changed their release strategy by offering free tickets for +1s at early screenings to draw in more males, opening up the movie to an entirely new audience. 

Analytics are also helpful in evaluating the right media mix for a marketing campaign by genre. Google did a two-year study of the 26 largest U.S.-produced, PG-13-rated action movies, and found while 82.6% of the studio’s marketing spend was allocated to TV ads, the film studios actually started seeing diminishing returns when they invested over 50% of their ad spend in television, due to over-saturating the channel. With digital being three times more effective than TV at driving ticket sales, the study was able to follow the audience down the sales funnel and reveal a much more holistic view of what was effective.

Back in the ’70s — around the inception of CAA — “disruption” became a favorite word of Ovitz, and, in a way, modern movie marketers have reached a similar fork in the road. In an entertainment business ecosystem where doing the same old thing and embracing innovation are both options, movie marketers who leverage data and insights for their media-activation strategy will have the best-positioned campaigns to drive box office success.