April 2009 – Cover Story: Hot Ticket

Fandango’s Mitch Brody discusses how the online movie ticket company’s promo code business has helped brands and retailers extend their marketing message.

By Vitisia Paynich

For nearly a decade, Fandango has been the site that offers avid moviegoers a hassle-free alternative. Forget waiting in long lines for the latest blockbuster, or even camping outside the theater to be among the first to purchase tickets for the midnight showing of that highly anticipated sequel. Fandango enables consumers to forgo such headaches and reserve a guaranteed seat in the theater–all this with a click of the mouse.

What some marketers may not be aware of, however, is that Fandango has stepped beyond its early consumer-based roots by building a promising B2B enterprise. Mitch Brody is Fandango’s director of promotional sales and integrating marketing business who oversees the company’s promo code division on the West Coast; while his counterpart, Jim Rowins, handles the East Coast business.

Electronic Retailer spoke with Brody to find out how Fandango’s B2B side can serve as an effective channel for marketers and advertisers looking to enhance their brand profile.

THE EARLY DAYS

In 2000, seven of the 10 largest U.S. movie exhibitors partnered to form a company with the objective of offering two things to the consumer: convenience and fun. Nine years later, the site has become the nation’s leading moviegoer destination. In April 2007, Comcast Interactive acquired Fandango.

The bag puppets appear in many of Fandango’s TV spots, which have become synonymous with the brand.

Many consumers may be familiar with the Fandango brand from watching the company’s creative TV ads, which feature memorable bag puppet characters.

“When Fandango started out, it was basically a utility,” notes Brody. “It was just a way for people to look up show times and buy tickets; it was pretty much an e-commerce site without much sticky content.”

He adds that over the years, the company has worked hard to create a better user experience for consumers by speeding up the process of purchasing tickets and giving them an incentive to surf the site even after completing their transaction.

Today, people use the site as a research tool to check out film credits, view trailers for upcoming releases, as well as read celebrity interviews and post movie reviews. Fandango has posted nearly 400,000 user reviews from film buffs. In fact, the 2008 mega-hit “The Dark Knight” garnered 51,000 reviews on the site–a rarity for a single film.

While Fandango’s entire revenue was once dependent on that $1 convenience fee for buying the ticket online, it has since then modified its business model to include CPM media on its site such as banners and other integrated ad units. The company also saw the potential of an additional revenue stream–database marketing.

Brody explains that the company has a plethora of consumer market research easily at its disposal. For example, Fandango captures various data on the types of movies certain demographics are drawn to, such as the “Harry Potter” franchise. When the latest “Harry Potter” movie is about to hit the big screen, Brody notes, they are able to e-mail those who opted in–alerting them to the release date and encouraging them to buy their tickets in advance.

“At one time, it was only movie studios that were interested in advertising to moviegoers. But other companies–like consumer packaged goods companies–started realizing that these are people who are high-end consumers and are spending hard-earned cash to see films. These are people they want to talk to,” contends Brody.

PROMO CODE BUSINESS DEBUTS

In 2004, Fandango ventured further into the B2B side with the launch of its promo code business. Promo codes are 14-digit alphanumeric unique codes that translate into movie awards. They can be arranged as ticket-denominated, which means that they could be set up to redeem one or more tickets or as a “buy one, get one free” offer.

“They also can be set up for what we call dollar-denominated, which means they can be $1 off, $5 off or for $20 in value, etc.,” Brody explains. “Often, I sell these codes to third parties–companies that often use them in a variety of ways that range from using them as a gift with purchase, secondary prizing, or for CRM uses like providing an incentive to opt-in to an e-mail newsletter or complete a survey.”

He adds that since the promo-code business began, it’s opened doors to many vertical markets, including the automotive, food and home improvement categories. Brody says the advantage for marketers and advertisers is merely in the value proposition.

On the consumer side, the value proposition is that for the average of an extra dollar, consumers can bypass the box office line and guarantee a ticket. The B2B value proposition allows marketers to leverage that consumer value proposition while benefiting from the cost-savings. How?

According to Brody, marketers only pay for the promo codes that are redeemed. For example, the perceived value of an average movie ticket is around $10. However, there is a breakage, meaning a larger percentage of the people who don’t redeem. And since the marketer or advertiser is only paying on codes activated, the redemption rates tend to be less than 25 percent for one ticket.

“So, you’re probably paying about $3.50 per distributed code relative to a $10 perceived value,” Brody points out.

FANDANGO GAINS HIGH-PROFILE PARTNERS

Another market that Fandango has been able to attract is the financial services sector. In July 2008, American Express wanted to promote opt-ins to its Entertainment Access® Email Newsletter. The offer targeted AMEX cardholders in which they would receive one Fandango promotional code redeemable for a complimentary movie ticket when they subscribed to the newsletter. The campaign proved to be very successful.

Brody says that while most clients offer promo codes good for any movie, others prefer to attach their promotions to a specific movie–generally, one that is high profile. When Disney’s “Bedtime Stories” starring comedian Adam Sandler was released in late December 2008, Home Depot wanted to tie its promotion to the movie. If a customer purchased a store gift card with a minimum $25 on it, he or she would receive two free Fandango codes to see the Sandler film.

“With the B2B business, we think there’s a lot of upside,” contends Brody. “It contributes to a minority of the total income relative to the consumer side, but as a percentage of Fandango’s total revenue, that’s growing year-over-year.”

ROLLING OUT NEW PRODUCTS

To ensure its B2B growth, Fandango will be unveiling several new enhancements this year. One product that the company has rolled out is a Fandango-branded Visa Prepaid Card, which is essentially a universal movie ticket. What makes this so unique?

Fandango’s promo code divison includes Mitch Brody (left), who handles the West Coast business, and Jim Rowins, who handles the East Coast business.

“We realized there were segments of the population that don’t live near a Fandango theater,” notes Brody, “they tend to be in more rural areas.” The prepaid card can be used in any theater that will accept Visa; however, it can only be used for tickets or concessions, not for gas, groceries or other merchandise not intended by the client.

Another product that the company is currently marketing is an Activation Step. Marketers can send a promo code out that’s deactivated and requires activity on behalf of the consumer to activate the code. There are three specific activity modules: 1) A demographic module for customer data capture; 2) a survey or questionnaire module in which the marketer can send Fandango multiple choice questions, open text field or a panel data format; and 3) a password module in which a consumer needs a passkey to unlock the code. The Activation Step enables marketers to capture critical data at the time that consumers are activating the promotion.

CONSUMERS WANT TO GET AWAY

Why are these companies so attracted to this type of marketing? Brody believes the fact they’re able to leverage entertainment to drive sales or increase brand engagement. Another factor is the economy.

Brody cites a Fandango survey that found that during an economic downturn, 67 percent of the site’s users are more likely to go to the movies. Ticket sales at Fandango are up 15 percent for the first two months of 2009, while traffic for the same period jumped 25 percent, according to Nielsen//NetRatings.

“We actually out-index the industry in that we had double-digit growth year-over-year from 2007 to 2008 in terms of ticket sales,” he explains.

Yet, while movie ticket prices may continue to increase in the future, Brody doesn’t believe his business will feel the pinch. As he puts it: “If you look at it from an entertainment-per-minute cost, movies are the cheapest form of out-of-home entertainment. It’s cheaper than a ballgame, a play or a concert. And I think during these tough economic times, people are looking for an inexpensive form of escapism.”