How Many People Should I Invite to the Party?

From our intrepid tinseltown chronicler Steve Peace

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When I woke this morning I expected to be greeted by a purple sky, or to find that everyone now spoke Esperanto, or to learn that peace had spontaneously broken out in the Middle East . In short, I expected that the historic results of yesterday’s election would have sparked some immediate and dramatic difference in the world, such was the feeling of electricity and redemption in the air. However, I was greeted instead by traffic on the 101. Obama is probably going to need more than 12 hours to effect massive change, I suppose. The guy probably deserves a few days off, in fact, after two straight years of campaigning.

Marketers, however, never tire of plying their craft. We are always there, the lubrication in the engine of capitalism. So, when my President asks for me to work harder than ever in service of my country – I hit the blogs. To work. Today’s topic is about zeroing in on the right size target universe for any given movie marketing campaign.

In previous posts we’ve discussed both how to choose the right target and how to establish the right overall budget for a film’s media campaign. Both of those decisions rely on quite a bit of subjectivity (as noted), which generally makes me kind of queasy given the amount of dollars riding on such decisions. Regardless, we soldier on. Let’s say we’ve got a budget of $12 million and we’ve identified our audience as men and women 18-49 that enjoy watching R-rated comedies. The question then becomes, are we targeting too many people, not enough people, and what can we expect to make?

A quick look at MRI tells us that there are two hierarchies of R-rated comedy watchers, those that have seen one in the last 6 months and those that have seen one in the last month. Or, light R-rated comedy watchers and heavy R-rated comedy watchers. The first group is comprised of 19.2 million people, the second group is 7.3 million. Now we’re going to make some numbers up, and you really shouldn’t try this at work. If you’ve got access to a database of past performance, you can plug real numbers in place of the ones I’m going to make up. Let’s say that the light R-rated comedy watchers have a lower overall response rate to advertising than the heavy R-rated comedy watchers. Our quick peak at our historical database shows us that 9% of the light watchers responded to advertising on the opening weekend in the past while 15% of the heavy watchers responded (I’m lying, of course, I made up the response rates).

If we multiply our response rates, we find that we can expect 1.73 million light watchers and 1.1 million heavy watchers to actually attend the film. At an average ticket purchase of $6.88 (according to the MPAA) that would yield $19.4 million in gross revenues. If you take a look at historical box office revenue figures, you’ll find that an opening weekend gross to advertising ratio of 1.4 to 1.7 is generally considered a success. In this example, we’ve got a ratio of 1.62, which puts us right in the zone. We’ve got the right sized target universe to yield our box office goals, assuming that we can plan our campaign effectively enough to cover the audience with an appropriate mix and frequency of messaging.

In a real life situation, there would be quite a bit of rejiggering to arrive at the right numbers to make all of this turn out correctly. And, it would be especially important to ensure that your research capabilities match your planning needs. In other words, you’d actually need to have the ability to look at the response rates of different segments of consumers to your past advertising efforts. Alternatively, average response rates across all those that viewed advertising could be used to yield a simpler model.

That’s all for today. Enjoy the post-election glow and happy marketing.