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Cinema Ads on the Rise in 2010

A ray of light for movie theaters struggling with a weak summer box office: Cinema ads are on the rise. The Cinema Advertising Council released a new report on movie theater ads. The crucial piece: Not only are ad revenues up by double digits in the first two quarters of the year compared to 2009, but the industry is seeing a "good beginning" to upfront ad sales for the next 12 months — which indicates to me, more double digit percentage increases.

The Ad Council also revealed to me which categories are driving this year's growth — retail, health & beauty, and automotive, both domestic and international. This echoes trends we've seen in network ad sales, and it shows that marketers aren't just dipping their toe back into the water — they're coming back in full force, investing more into the nascent but growing cinema ad business.

Cinema ads grew just 2 percent last year to $584 million, the slowest since CAC started reporting on the business. Back in 2007 growth was 19 percent. In-theater ads have proven far more effective than traditional TV ads — people can't fast-forward through the spots, and they're a captive audience. Plus, marketers can target based on demographics by film, and also zip code.

The return of in-theater advertising, is a win for all the major theater chains. National CineMedia — a venture co-owned by AMC Entertainment, Cinemark, and Regal Entertainment, the three largest US theater operators — has been a pioneer of this business, sending pre-screening ads to 17,100 screens across the U.S.

The theaters can use this good news, as the box office has been weak so far during the crucial summer season — down 24 percent last weekend from the year-ago quarter. That's not just lower box office revenue, it also means fewer people in theaters and less popcorn and soda sold. The theaters could use this boost. But at the same time, if the downturn in attendance lasts, companies like National CineMedia may have a harder time securing rate increases from advertisers.

Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.