The Secrets of Successful Online Movie Advertising

If you want to be a successful filmmaker, you better learn a thing or two about online movie advertising.

The reason I emphasize online movie advertising is because most movies end up in some sort of video on demand platform. And because many of the most popular platforms exist online, selling movies on the internet is very similar to selling anything online

This means you now have the ability to create online movie advertising campaigns to drive people to your point of sale.

If you’ve been reading my filmmaking stuff for any length of time, you know I’ve been sharing similar advice with filmmakers for years. I first published my thoughts back in 2010 – Here’s the article called Financing Movies With VOD Sales Projections. As you’ll read in the comments, most people thought I was crazy.

Fast forward to a recent job interview with a well known distribution company. I kid you not, the whole conversation revolved around this thing called conversion science.

“Jason, WTF is conversion science? I’m a filmmaker. I failed science!”

Look. I am trying to help you. You’re obviously reading this because you want to know the secrets of online movie advertising. And I’m telling you, the big secret is this thing called conversion science.

Online_Movie_Advertising

The Secrets of Online Movie Advertising

Here’s the thing about business (that most filmmakers ignore). Everything in business is measured in profit and loss. So if you spend money for online movie advertising, you better get that money back, plus a profit on top.

So here’s the question: How do you know if your online movie advertising is working?

This one is simple. You track your advertising campaigns. If you make more money then you spend, you’re doing OK. But if you start throwing money into an online movie advertising black hole, you have a BIG problem.

And before we get too crazy, there is something you need to know.

The whole reason you want to do your homework is so you don’t end up depending on the glaringly flawed and totally outdated distribution strategy:

“Gee, I sure hope we get into a film festival and garner a great deal.” 

Hope is not a sustainable business strategy. It is a lottery. And it’s outdated.

Online Movie Advertising Formula

Whenever you think about your movie advertising strategy, it helps to think about some real world scenarios. And because we are talking numbers, I am going to share a basic direct marketing ROI (return on investment) formula.

Here are the MAJOR Filmmaking Challenges:

  1. With no promise of pre-sales, or minimum guarantees in a traditional distribution deal, how do filmmakers justify a budget large enough to pay freelance day rates, while at the same time project enough direct DVD and VOD sales to recoup the initial investment?
  2. And assuming only 1% of your website visitors buy your movie, then how many people must visit your website so that 1% recoups your initial investment? (Don’t forget to include marketplace costs.)
  3. How much will this cost in advertising?

Here is a formula you can test and tweak. Plug in numbers and play around with assumptions.

U = Unit Sales Goal.
A = Amount you pay advertiser per website visit.
C = Projected conversion percentage rate.
X = Number of Visitors Needed.

(X)C = U
EQUATES TO: X= ?
THEN:  X(A) = ?

If all of that seems like a bunch of gobbledygook, you’re not alone. In the real world, most marketers utilize software, an online calculator and spreadsheets to help clarify assumptions.

But here’s the rub.

When you actually crunch the numbers on a One-Million dollar budget by selling $20 dollar DVD’s in Amazon (which is a totally high price), and you rely solely on Pay Per Visit advertising at $.05 cents a visit – Even if you’re lucky enough to garner a 1% conversion, you would need to sell 100,000 units (which allows for a 50% marketplace fee).

Or to put it another way, to get these results, you would need 10,000,000 targeted visitors, visiting your website.

Yes, ten Million people! Which is outlandish… 

This means you will have to think very carefully about your movie budget, marketing budget, your distribution strategy and obviously, you’ll need to make sure your movie actually has a market large enough to support the budget.

If you would like to start planning your distribution, you might want to check out my “How To Sell Your Movie” program.

Who Is Your Target Audience?

The other day I posted this question to our Facebook Filmmaking Stuff community:

“Who is your target audience?”

The responses were varied. Filmmakers chimed in with everything from “tweens” to “adults over 30.” Many filmmakers responded with the word: “Everybody!”

While I love the enthusiasm, without much exception, defining your audience by age or gender is extremely broad. And unlike the major movie studios, you do not have the marketing budget to support this.

target_audience

Who Is Your Target Audience?

Every week at least one filmmaker emails me with something like this:

“I made a movie and we just won best picture at a regional festival you never heard of! Since my movie appeals to every man, woman and child on the planet, I want to sell it for a million dollars? How do I make this happen?”

Can you understand why this sentiment is seriously flawed?

If your movie does not have enough juice to get a an awesome distribution deal, your returns will be limited by your own marketing and distribution efforts.

Let me be very clear.

I have been working in distribution for a half-decade and I can tell you that even great movies end up with crappy distribution deals.

The truth is, most film distribution deals suck.

And without a marketing budget to reach a global audience, you must focus on finding your niche audience.

One of the first places to find your audience is the local newsstand. If there are print magazines devoted to your movie subject, then those subscribers are part of your target audience. In addition to print, you will want to explore the Internet for online publications.

Open up a spreadsheet and add these publications to your list. Your goal is to create a database of the top fifty publications geared towards your niche audience.

Make a list of 5 ideal movie fan categories for your title

Once you create your list of print publications catering to your niche, your next step is to understand your audience.

To do this, reach out to the top ten publications on your list and ask them to forward information about their subscriber demographics. Since magazine revenue is based on understanding their subscribers, most established publications will have this info readily available.

From there, you will want to study this info and get to know your audience.

Who are these people?

Are they primarily men? Women? Teenagers? Do they have jobs? Are they business owners or unemployed? What is the average income? Are they college educated? Do they live in the city or on the farm?

From this information, you can create audience profiles for five ideal types of movie fans that you want to target within your niche.

Figure out why these fans should watch your movie.

In addition to getting inside the head of your audience, your next task is to figure out why these people enjoy your genre. Why would they want to watch your movie? What makes your movie unique from the other, competing movies in existence? How will your movie to appeal to viewing needs of your audience?

Who Is Your Target Audience: Action Steps

1. Who is your primary target audience?
Ex: Mid-west, male college kids who love zombie movies. 

2. What makes your movie different from competing movies?
Ex: Our movie is about zombies that attack ninjas.

3. Why should your audience spend two hours watching your movie?
Ex: Fangoria says: Funniest zombie movie since Shaun of the Dead!

Taking time to understand your audience will enable you to create an image of your ideal audience member. This information will then be utilized when you create and refine your marketing message.

If you have a movie you’re looking to sell, you may also want to check out How To Sell Your Movie.

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How To Finance Movies With VOD Sales Projections

Do you know the most popular question filmmakers ask me?

I’ll give you a hint. It has to do with video on demand.

Ready. . .

Without too much variation, the most popular question is: “Can you provide some VOD sales projections?”

I understand the motive behind this question.

Believe me, I do.

You’re a filmmaker. You either made an awesome movie and you’re trying to use VOD sales projections to convince your partners that VOD is the way to go. Or you are in the process of making a movie and you need to convince your investors that VOD is awesome. In both scenarios, you’re trying to find proof that movies make money in VOD.

I get that. . . But. . .

Let’s make one thing clear. Asking for VOD sales projections is asking the wrong question!

If you dig around, examples of VOD Sales successes are out there. Check out what The Polish Brothers did. And if that’s not enough, Google the case study around Indie Game the movie.

But the truth is, one filmmaker’s past success does not guarantee that your movie will be successful.

Read that statement over and over again. And if you need a little more clarity, take a look at what the cat is saying here:

VOD Sales Projections

Realizing that VOD sales projections are BS is essential for your success. And I am going to explain how you can use your new found understanding for good, very soon…

But before I go there, let’s talk about why people invest in independent film.

Why Investors Invest In Indie Film

Independent movie investors invest because (aside from having an appetite for risk and an interest in the film business) most of these people want a return on their money. If you are doing things by the book, you probably created a marketing strategy as part of your business plan. This plan provides prospective investors an overview of how investment dollars will be budgeted, spent and hopefully recouped.

In the past, trying to convince investors movies were a good investment involved projecting returns based on speculative data. To guess how much money a movie may make, filmmakers would compare their project to other successful movies.

Creating indie movie comparables is complete BS.

The reason for this is simple.

Just because you make a low budget horror movie does not guarantee your movie will have the same success as Paranormal Activity.

In fact, Paranormal Activity is an outlier. It is not a fair comparison. And using breakout hits as examples, while ignoring the thousands of unsuccessful horror movies made each year, is short-sited at best and I dare say a little unethical.

Video On Demand Sales Projections

Given the birth of VOD distribution, as a filmmaker you now have the ability to access and enter into a non-discriminatory marketplace as soon as your movie is ready. And because many of these marketplaces exist online, much of your sales will come from internet traffic.

This is actually awesome news.

It means that you can boost your sales by using a very common marketing concept called…

[Seriously… Are you ready? You are about to receive the secret sauce of modern, indie movie marketing.]

More important than VOD Sales Projections is:

Conversion Rates

What is a conversion rate?

Conversion Rate Defined, According to Wikipedia:

Your conversion rate is the proportion of visits to a website who take action to go beyond a casual content view or website visit, as a result of subtle or direct requests from marketers, advertisers, and content creators.

Conversion_Rate

In other words, if you send one-hundred people to your movie website and two people buy your movie, your conversion rate is two percent. This is profound. This is life changing for indie filmmakers!

Question: Why should filmmakers be enthusiastic about the internet marketing, nerd concept of conversion rates?

Answer: If you know your conversion rates, you can model and potentially project more accurate movie sales projections from day one.

But before you start noodling around to find your conversion rates, it helps to answer the following questions:

Modern MovieMaking Model

  1. Who Is Your Target Audience?
  2. How Large Is Your Target Audience?
  3. How Will You Reach Your Audience?
  4. What Is Your Marketing Strategy?
  5. How Many VOD Sales To Break Even?

While I won’t get into the actual mechanics of marketing and selling your movie here (My Action Guide How To Sell Your Movie provides you with an actual step-by-step plan for getting your movie seen and sold), I will simply note that a marketing plan must now be included with your business plan.

The Secret VOD Sales Projection Formula

When you create (or refine) your marketing plan, you must now include some marketing math.

Truth be told, math is a weak subject for me and I dare say, most of the filmmakers I know. But luckily there are many spreadsheet templates that allow you to test several conversion rate scenarios. You can use these scenarios as a guideline to ballpark the potential ROI for your movie.

Here is a basic website conversion rate calculator you can utilize: http://bit.ly/17TSCrt

Before you get overly excited (like I am) calculating your movie website conversion rate is only one metric to determine your movie’s potential for profitability. You still need to figure out how to price your movie. And at the same time, you will need to determine how much targeted internet traffic will cost you.

Generating Internet traffic is the result of executing four strategies. You can either get free traffic online, free traffic offline, paid traffic offline or paid traffic online.

For the sake of this example, I am going to incorporate pay per visit advertising. With pay per visit advertising, you simply pay for someone to visit your movie website.

One example of Pay Per Visit traffic is StumbleUpon. It’s a social bookmarking site that also allows you to pay for semi-targeted traffic. This works well if you have a movie with a dose of controversy and a strong hook.

And again, if you’d like more info on specific traffic generating strategies, check out my indie guide to distribution.

Ok. Here is our first example…

Let’s assume only 1% of the targeted folks who actually visit your website, buy. Then how many visits will you need to sell 100 units?

100 units = Our goal for this ad campaign.
$.05 = Amount you may pay advertiser per visit.
X = Number of Visitors Needed to buy 100 units if only 1% buy.

(X).01 = 100 units
EQUATES TO: X= 10,000
THEN 10,000($.05) = $500 paid for targeted traffic.

So in other words, if you were lucky enough to get a 1% return, you just paid $500 dollars in pay per visit advertising to sell 100 units of your movie. But let’s go one step further. Let’s assume you’re like me – and you hate order fulfillment and shipping. So you decide to let a company like Amazon’s Create Space or iTunes (or some other popular marketplace) handle your order.

Video On Demand For Rent (Electronic Sell Through)
100 units ($3) = $300 – 50% paid to marketplace = $150
minus $500 paid for advertising = -$350 NEGATIVE

In this VOD rental scenario, the Pay Per Visit Ad numbers don’t work, unless you like losing money.

Video On Demand For Download (Electronic Sell Through)
100 units ($10) = $1000 – 50% paid to marketplace = $500
minus $500 paid for advertising = BREAK EVEN

In this VOD download to own scenario, the numbers work a little bit better. Assuming you’re lucky enough to get 1% of your money returned, at least the advertising pays for itself. But unless you can increase your conversion rates, pay per visit advertising is going to be very difficult method for returning money to your investors.

Physical DVD Sales
100 units ($20) = $2000 – 50% paid to marketplace = $1000
minus $500 paid for advertising = $500 in profit.

Ah ha! If you’re fortunate enough to get 1% return on your pay per visit advertising, you can see how physical DVD’s (or units) sold at $20 dollars may offer a slight profit margin. In other words, in this scenario, for every $.50 cents you spend, you get $1 dollar back.

So let’s tackle the bigger problem. Let’s try to get a return on our 1Million dollar movie, selling physical DVD sales and using pay per visit advertising alone:

Movie Budget = 1 Million dollars
Physical DVD Sales using Pay Per Visit Advertising

$1,000,000 divided by $20 per unit = 50,000 Units

Since we will give 50% to the marketplace for all sales, we will need to project for double our budget.

100,000 units = Our goal for this ad campaign.
$.05 = Amount you may pay advertiser per visit.
X = Number of Visitors Needed to buy 100,000 units if only 1% buy.

(X).01 = 100,000 units
EQUATES TO: X= 10,000,000 (Yes, TEN MILLION people.)
THEN 10,000,000($.05) = $500,000 paid for targeted traffic.

100,000 units ($20) = $2,000,000 – 50% paid to marketplace = $1,000,000
minus $500,000 paid for advertising = $500,000 in profit.

So to break even, you would need to sell 100,000 units and make $2,000,000.

Some Sales Conclusions

Based on this scenario, as a filmmaker you will (obviously) need to expand your promotion beyond pay-per-visit advertising!

But importantly and most AWESOMELY, you can treat your movie business like any other small business. With VOD Sales projections, you can find the marketing formula that works for your movie and crunch your numbers until you find a scenario that brings you profits.

Create a plan that included your marketing costs in your budget.

While there are no guarantees in any business, having a plan for marketing, sales and distribution sure beats the old days when your only plan for ROI involved crossing your fingers in the hopes someone will offer you a profitable, traditional deal.

While these may not be the VOD Sales Projections you were looking for, hopefully you now realize the power of knowing your conversion rates.

Treating your movie business like any small business simply means you don’t have to ask permission. You can make your movie NOW! And your prospective investors might take notice…

Also, can you do me a favor? If you liked this filmmaking article, could you kindly retweet or share this article with your friends?

Why You Need To Sell Movie Merchandise

After you make your movie, people will email asking when it’s available. This period of time is called the social window. It’s the time when your fans are most eager to buy your movie and tell their friends about it. And you will know you’re in the social window when you find yourself communicating this response: “We are still waiting for our distribution deal. Check back soon.”

At this stage, you could choose to put your movie on iTunes, Amazon or any number of the more than 200 video players out there and these early adopters would buy it. In fact, if it were possible, these rabid fans would buy your movie on the moon!

Why You Need To Sell Movie Merchandise

It’s been a few weeks since I started working with the folks at Chill. The ongoing goal of the company is to help you source and expand your audience reach. And through our data analysis we found that many early adopting, rabid fans want more than just the movie. So in response to this demand, Chill provides filmmakers the ability to bundle merchandise with the movie. The response is significant – with some titles, more than 50% of the purchases include merchandise!

Think of it this way. You could choose to release your movie on one of anonymous marketplaces. You then place a link to the point of sale on your movie website. After that, you do an email blast and let your fans know the movie is finally available. You would make sales. But at what cost? Since many new releases hover around 10 dollars per transaction – If you want to make 100 dollars in revenue, it would take 10 people.

This is where bundling merchandise with your movie is helpful. Let’s say you produced a movie about skateboarding. And since I am a rabid fan of skateboarding movies, I come to your landing page on Chill and quickly realize I can buy more than just the movie. On the high end, for $10,000 a top professional skateboarder featured in the movie will fly to my neighborhood and skateboard with me. The problem is, I don’t have an extra 10K – But by comparison, the $100 skateboard package suddenly looks very appealing. So as a rabid fan, instead of limiting my purchase to just the movie, I happily spend $100 dollars.

In one transaction, the filmmaker gets $100 dollars in revenue

But there is more. Because I’m a rabid skateboard movie fan, I am happy to Tweet and share my experience on Facebook because I’m super stoked that I got MORE than just the movie! And because Chill puts a trailer and a ‘Buy Now’ button inside a tweet and Facebook share, many of my skateboarding friends also watch the trailer – And from there, the process repeats over and over…

While there is a time and place to expand into anonymous marketplaces for added discovery, you miss a lot of opportunity by not providing your rabid fans with merchandise bundles. In other words, avoid closing the social window. For more information about Chill, go here.

Movie Distribution

When I put on talks about internet movie distribution, I am often asked if filmmakers should still consider finding a traditional theatrical or DVD distribution deal. My answer to that question is simple: If you have an offer and you’re happy, it’s a deal.

The problem is, most traditional movie distribution offers suck.

And the bigger problem is, most filmmakers don’t find this out until long after the festivals are over, the money has been spent and the movie is in the can, collecting dust. This is usually the time when people call me for a consultation.

During the call we discuss various movie marketing strategies, both online and offline. Our firm is interested in finding movies that have a definable hook and an established target audience. A good client is someone who has crunched numbers and has realistic expectations on how much money the movie can potentially recoup and how long this will take…

Many first time feature filmmakers believe (rightly so) that they have the most amazing movie on earth – and they cannot understand why nobody has “bought it.” While I cannot speak for prospective acquisitions executives, I can tell you two things that I see a lot with independent movies:

  1. The movie has niche audience potential, but does not clearly communicate to the appropriate audience.
  2. The movie does not have a clearly definable niche audience, which means the movie targets everybody.

Out of both of these scenarios, the easier one is the niche. Depending on how you pronounce the word, niche rhymes with rich. And I firmly believe that niches will make you riches. But most filmmakers fail to think this way. But targeting everybody is the same as targeting nobody (think about it) and YOU don’t have enough money to target everybody.

The other point is this, many filmmakers believe that marketing is magic. It is not… I mean, when marketing strategies work out, it’s time to open the champagne and brag about how awesome you are. But if marketing was a sure thing, movies would never flop.

My company bills $600 per hour for movie marketing consulting. Depending where you are with your own marketing and sales strategy, you may wanna forgo consulting and just grab a copy of my movie distribution guide. To add extra value to the package, I have now added a half-hour phone call BONUS.

You can find out more about the movie distribution guide here: www.HowToSellYourMovie.com