Please find below our annual media analysis of the Theatrical market.

Unless otherwise stated, the media spend figures quoted in this memo are based on recently available data provided by the Nielsen Company via the Ad Dynamix system, and are used as the media industry standard.

The figures are estimated costs based on a number of factors including media ratecard, assumed discount factors and reported viewing figures, but do not represent actual billings or spends and are not provided by either media agencies or the distributors themselves.

As a result the figures are by no means 100% accurate and are often over or underestimated, but they do provide sufficient information for an effective overview of the market and for like for like comparisons to be made.

It was a difficult year for UK cinema with box office takings suffering their largest drop since records began in 1991, the second annual decline in subsequent years. Despite some weighty established franchises (The Hobbit, The Hunger Games, Planet of The Apes, X-men etc.) releasing sequels, no individual release took more than £40 million within the calendar year. This is compared to four releases in 2013 surpassing this benchmark, and the same number in 2012 (all four of which exceeded £50m).

Perhaps due to an overriding lack of confidence in box office returns, or just a general tightening of purse strings, it was also the second year running that no singular release registered more than £4 million in regards to media spend either.

In the top spot, Interstellar aimed for the stars with a combined media spend of £3.9 million, £587k (18%) more than the next title.

Interstellar was one of three top ten entries for Warner (The Lego Movie and The Hobbit: Part 3) a number only surpassed by Fox with four (Rio 2, Book of Life, Exodus and Mr Peabody). Studiocanal, Lionsgate and Disney complete the top ten with one entry each.

In total 20 releases spent over £2 million in 2014, one less than the 21 releases that spent over £2 million in 2013. The number of releases spending over £1 million also decreased year-on-year from 75 in 2013 to 69 in 2014, an average of 1.3 per week.

Of those 69 releases that spent over £1 million on media and in terms of return on investment based purely on media spend (not total P&A spend), The Inbetweeners 2 was the runaway success. This release took over £33 million at the box office, for a registered £1.9 million media spend.

Interestingly just half of those in the top ten are established franchises, with Gone Girl leading the remainder. Oscar winner The Theory of Everything, reached an impressive £16.6 million box office from a registered £1.2 million media spend.

Bottom of the pile against this simple metric were Escape from Planet Earth, Walking on Sunshine and lastly Love Rosie.

The average return on investment across all 69 top spending releases was £6.72 for every £1 of media spent, marginally up on 2013.

For the first time since we began compiling this report, Fox have topped the chart as the largest spending distributor. As mentioned earlier it was a big year for the distributor, with four films charting in the top ten spenders. They also spent in excess of £1 million on a further nine releases.

Warner also had a strong year, moving up to second spot from its forth placed position in 2013. With three releases in the top ten spenders (including the top two), it also spent over £1 million on a further 5 releases.

Studiocanal saw the greatest year-on-year increase, with their registered media spend nearly doubling since 2013. Sony saw the greatest yearly decline, with their spend dropping by a third.

In total 14 different distributors spent over £500k in 2014, up from 13 in 2013.

After an incredibly evenly weighted year in 2013, 2014 saw a return to a more traditional media spend pattern. A solid start to the year peaked in May, before dropping off over the summer months. Quarter four then saw the three largest months in terms of collective media spend.

However in a break from the norm, October was just ahead of September in terms of being the most ‘expensive’ month. Usually we see September taking this accolade as the blockbuster season and the summer holidays both come to an end, whilst media prices begin to rise towards quarter four. This year October registered the second highest level of media spend of the entire year, but was only the sixth highest in terms of box office admissions.

December saw the highest level of media spend of just over £21 million, June saw the lowest with just over £11 million.

The film industry spent just shy of £189 million on Theatrical releases in 2014 across all five major media (TV, OOH, Radio, Press and Digital). This represents a 2% decline compared with 2013.

This decrease was marginally less that the aforementioned dip in Box Office revenue, which meant that it was the most ‘expensive’ of the past three years. Once again using the simple metric applied earlier, in 2014 £1 of media spend equated to £5.60 in box office return. The figures were £5.62 and £5.94 for 2013 and 2012 respectively.

Of course media spend is only one part of the marketing mix and by no means the sole driver of the box office, but this metric gives us an understanding of the wider trends when applied.

Due to the ever present issues of tracking digital media spend through ad spend monitoring systems, the figures provided by Ad Dynamix do not give an accurate enough picture of the breakdown of media spend by media channel to be deemed useful.

As a result this section combines data from both Nielsen and the bi-annual IAB/PwC Digital Adspend report, along with our unique understanding of the film industry to provide what we believe is the most accurate picture.

After a number of years of seeing its share slowly eroded, TV bounced back in 2014 with a sizable £97 million in revenue (9.6% up on 2013). This has reaffirmed its position as the dominant media of choice for the theatrical film industry, accounting for 42% of all media spend.

This increase in share appears to be largely at the expense of Outdoor, which saw its revenue drop 16.1% to just under £62 million, its lowest level since 2010.

Digital growth continued apace with a 14.4% year-on-year growth to exceed £46 million. From our experience, this has largely been driven by the continued growth of investment into Social Media, Video pre-roll and more recently a rapid uptake in the use of mobile.

Despite the relentless erosion of newspaper and magazine circulations, Press is seeing somewhat of a revival with a year-on-year revenue increase of 5.6% - a five year high.

Alongside Outdoor, Radio was the only other of the five main media channels to experience a year-on-year revenue decline. Radio saw its revenue drop 13.1% to an all-time low of £5.8 million, however in its defence Ad Dynamix does not track paid sponsorship or promotional activity – a favourite of the film industry and an increasingly significant proportion of its spend.

The industry is gearing up for a massive year, driven by an unrivalled slate of blockbusters; Star Wars: The Force Awakens, Spectre, The Avengers: Age of Ultron and The Hunger Games: Mockingjay - Part 2 to name but a few.

With potentially record breaking levels of media spend in support of these releases; achieving share of voice is going to be even more difficult, particularly in quarter four when we expect those media platforms traditionally used by the film industry to be in particularly high demand.

With a predicted overall increase in total spend for 2015, we expect all five key media to be up on 2015 in terms of revenue. With Digital and Outdoor seeing the greatest year-on-year increases.

Source: The Nielsen Company (Ad Dynamix), Film Distributors' Association, BFI (Statistical Yearbook), The Cinema Exhibitors' Association, Internet Advertising Bureau (IAB) and Price Waterhouse Coopers (PwC).