Friday, January 15, 2010

Avatar as an examination of marketing

According to BoxOfficeMojo, Avatar has grossed more than $1.4 BILLION, and counting! There is no definitive answer at the time of writing this, but production costs for the movie appear to be close to $300 million, and marketing costs close to $200 million.

So, here's a question (for which there is probably no answer):

How much would the movie gross if they had spent less on marketing? Or more on marketing? How much would the movie gross if they had spent less on production (presumably weakening the quality of the product)?

This is a very common question - one that we grapple with all the time. Will more marketing lead to enough sales to earn our money back? Is the product good enough on its own to be successful without extensive marketing?

And here's another thing business owners and marketers need to keep in mind: It's possible that the movie would have grossed, say, $1.25 billion with no marketing, putting them $50 million ahead of where they are now (saving $200 million on marketing but earning $150 million less). Would that mean the marketing was a waste? It's tempting to say yes, but think of all the awareness for the movie and for James Cameron and for Fox that was generated!

All marketing has benefits beyond its direct impact on sales.

Remember that as you consider investing in marketing.

Your turn: What's your guess about the box office sales with more (or less) spending on the product or on the marketing?

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