The (Possible) Upcoming Recession Is Messing with Hollywood's Ad Budgets
The economy hasn't been great, and Hollywood is feeling the heat.
We're not economists, but when it costs $75 to fill up the tank of my tiny Mazda, you can tell something is going wrong.
And I can tell you Hollywood thinks there's something wrong. As we ease movies back into the theater and prices rise to make movies, Hollywood is trimming budgets and trying to cut corners to maintain the status quo.
The first thing to go? Advertising.
Bank of America analyst Jessica Reif Ehrlich wrote of the situation, “The recent macro volatility is starting to have an impact on the advertising market. While companies that spend [during] a recession often emerge stronger, the market is tepid due to advertiser concerns over labor shortages, inflation, and supply chain issues.”
This is a huge piece to pull from the Jenga set. Advertising is what drives butts to the theater and what draws eyes to your new streaming series. But times are tough. We're seeing places like Netflix dump tons of jobs, and it looks like the studios are next.
Even more interesting, with many streamers implementing advertising tiers, where people pay less but they sell spots to advertisers, advertisers may not buy spots if they're not... well... advertising.
There's a real ripple effect in all of these circumstances.
Here's why people who read our site should care—a lot of us make those advertisements. We're working in the art departments, we direct the commercials, and we write the ads. When those budgets go, so do our jobs. Plus, many people break into the biz via their recognizable work in advertisements. If those go down first, even if not solely in Hollywood, it blocks an entry point.
And advertisements are always the first to go. But it's never the last. If there is a recession, we could see the bubble of tentpole movies burst. It will be hard to justify spending $200+ million on one release when they'll need to spread the money around to ensure a return. That might be good for mid-budget movies, but we have to hope it actually goes that way. We don't want studios taking one shot with one big movie a year. Or streamers cutting movies and just shifting to taking shots at cheaper series.
Those are all tomorrow's worries. Today, we'll try to keep track of what's happening as it comes.
Let us know your thoughts in the comments.
