Movie ads are climbing back from pandemic lows. And while the development may not exactly be welcomed by impatient theatergoers, one company is applauding.
"Just as the movie theaters are coming back, cinema advertising is coming back," Tom Lesinski, CEO of National CineMedia (NCMI), a movie advertising company that emerged from bankruptcy last week, told Yahoo Finance on Friday (video above). He praised the entrance of "Barbie" into the $1 billion movie club as exhibitors saw record-breaking attendance levels in July.
"The movie business has been under a lot of distress during COVID, and we finally see the light back into business this summer with 'Barbenheimer,'" he said, referring to the "Barbie" and "Oppenheimer" double feature that hit theaters recently.
So far this year, the box office has totaled more than $6.2 billion in sales, according to Box Office Mojo. Although that's roughly 15% below 2019 levels, the overall haul is still more than 20% higher than last year.
Amid that improving viewership, cinema ad spending in North America is expected to reach $763 million in 2023 and $839 million by the end of 2024, according to Statista. That's still shy of the $1 billion-plus the advertising segment saw in 2019 but more than three times 2020's spending levels as the pandemic hammered the industry.
National CineMedia emerged from Chapter 11 bankruptcy last Monday after a financial restructuring that eliminated approximately $1.2 billion of debt.
"We look at us as a recovery stock that many people haven't discovered yet," Lesinski said.
Lesinski cited recent research conducted by NCM in collaboration with attention measurement firm Lumen that showed ads played in movie theaters rank No. 1 for consumers' attention when measured against all other video platforms.
According to the data, 97% of movie audiences watch cinema ads compared to 38% of linear TV viewers and 13% of connected TV viewers.
"When [consumers] are in front of a 50-foot screen, they're going to see our ad and it's going to have a lot of impact," Lesinski said.
Lesinski said the company lays out the box office slate to brands at least once a month, noting there's usually at least one movie, often more, that's of interest to advertisers.
The executive said he's interested in exploring non-theatrical opportunities as well, such as digital out-of-home advertising.
"Often those are in malls or places where we can deliver additional advertising to people coming and going, so I see that as a really important adjacency," he said.
Strike uncertainties loom for theater chains
One looming risk to movie theater chains and, therefore, cinema advertising centers on the double Hollywood strikes after actors joined writers on the picket line for the first time since 1960.
SAG-AFTRA — the union that represents approximately 160,000 actors, announcers, recording artists, and other media professionals around the world — announced the strike after failing to negotiate a deal with the Alliance of Motion Picture and Television Producers (AMPTP), which bargains on behalf of studios including Warner Bros., Disney (DIS), Netflix (NFLX), Amazon (AMZN), Apple (AAPL), and NBCUniversal (CMCSA).
The Writers Guild of America (WGA), which represents about 11,500 television and movie writers, called for a strike in early May. Following a 101-day hiatus, WGA leaders and studios officially restarted negotiations on Friday after talks initially fell apart last week.
In a report released last month, Moody's predicted "a relatively long strike," which would hit movie theater companies such as AMC and Cineworld (CINE.L) first, followed by diversified media companies with both streaming and linear television businesses.
"If there is a protracted strike, cinema operators are most at risk with their nearly complete dependency on new product," Moody's said. "Theatrical exhibitors are already strained from damage caused by the COVID pandemic such as lighter release schedules that followed and shortened distribution windowing. They also have mostly weaker balance sheets and credit ratings."
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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