'Transformers' loses GM torque

By Claudia Eller

April 6, 2009 12 AM PT

Detroit’s not the only one reeling from the collapse of General Motors. There are a few executives bummed out on the Paramount Pictures lot as well.

Eleven weeks before the release of its expensive summer sequel “Transformers 2: Revenge of the Fallen,” the studio can’t count on its key promotional partner to support a marketing blitz that helps drive mass awareness of Hollywood’s big popcorn movies.

The struggling automaker, whose new Chevy Camaro is one of the stars of director Michael Bay’s action film in which vehicles morph into giant robots, has sharply throttled back its contribution to the advertising campaign tied to the sequel’s release June 24.

The reduced spending by GM comes at a tricky time for Paramount, which needs all the promotional backing it can muster for “Transformers” in what looks to be one of Hollywood’s most competitive summers ever. A dozen big-budget “event” films, including “Star Trek” and sequels to “Harry Potter” and “X-Men,” will be elbowing one another into theaters.

“There’s so much competition out there for the entertainment dollar that studios and filmmakers really can’t open big, $100-million movies without the assistance of partner alliances that can help generate awareness and sell movie tickets,” said Norm Marshall, chief executive of NMA Entertainment, a brand marketing firm that’s been involved in movie “tie-in” campaigns for “Mama Mia!,” “Iron Man” and “Matrix Reloaded.”

For the Hollywood studios, which are under pressure to keep a lid on marketing costs, a promotional tie-in can spell millions of dollars of advertising underwritten by consumer giants like GM or fast-food chains McDonald’s and Burger King.

The tie-ins take various forms, including advertisements of the company’s products alongside the movie, in-store promotions, direct mailings, product placement and online campaigns.

“It can be extremely valuable,” said Adam Fogelson, president of marketing and distribution for Universal Pictures, whose upcoming June release “Land of the Lost,” a sci-fi adventure comedy starring Will Ferrell, has a “huge” media and in-store campaign with promotional partner Subway.

Studios can spend more than $100 million to market their “franchise” movies around the world. But as the studios try to rein in marketing costs, the tie-in campaigns with big advertisers become more important.

“Major media promotions can exceed $10 million,” Fogelson said. “All of our media budgets are under pressure, and having substantial media money coming from a promotional partner can reduce the sheer amount of dollars you spend.”

Still, Paramount, which spent some $180 million to produce “Transformers,” will lay out more than $150 million to market and distribute the film.

The studio has other major tie-in deals for the sequel, including Burger King, wireless phone company LG Mobile, retailer Kmart and a yet-to-be-announced candy company and convenience store chain -- all footing extensive media buys.

“Our marketing partnership campaign on this movie is already bigger than the first ‘Transformers’ with or without GM,” said LeeAnne Stables, Paramount’s executive vice president of worldwide marketing partnerships.

On the original film, Paramount had five partners: GM, Mountain Dew, Burger King, EBay and Kraft, which collectively spent more than $40 million on TV, print, radio and online advertising.

“The reason we do these partnerships is not to defray our media spending,” Stables said. “It’s like a delicious gravy on top of the studio’s marketing campaign that connects us to audiences in places traditional media can’t buy -- like inside a car dealership or Burger King.”

Given the huge success of the first “Transformers” -- the sales of $708 million in tickets worldwide and 14 million DVDs in the U.S. -- the loss of GM’s ad dollars may not affect the box-office sales of the sequel because it is largely “pre-sold” to audiences. Nonetheless, the pullback may hurt the studio’s chances of reaching out to car buffs it might not otherwise reach through ordinary marketing.

In the upcoming DreamWorks-produced film, starring Shia LaBeouf and Megan Fox, five of Chevy’s cars are characters -- including the one known as “Bumblebee” -- known as Autobots, which are good robots battling evil Decepticons bent on avenging the universe.

Officials from GM said the company’s financial crisis prompted a change in plans. For 2007’s “Transformers,” GM backed a massive tie-in campaign, which even included TV commercials directed by Bay.

“We’ve pulled back on all of our marketing and advertising for obvious reasons, and spending is down dramatically,” said Terry Rhadigan, communications director for Chevrolet, GM’s biggest division. “It stands to reason that ‘Transformers’ would fall under that umbrella.”

The timing couldn’t be worse for the carmaker since its 2010 Camaro is just now rolling off assembly lines and being shipped to dealers. Rhadigan said although the relaunched Camaro was only a concept car and not available for sale when the first “Transformers” opened, its association with the film was highly beneficial. “It translated into awareness and boosted the overall image of Chevy,” he said. “It’s cool to be associated with a hot movie.”

claudia.eller@latimes.com

(BEGIN TEXT OF INFOBOX)

GOING ALL OUT FOR TIE-INS

Hollywood studios, facing constraints on movie marketing budgets, are enlisting the help of various companies to help them promote their upcoming summer movies. Deals announced so far include:

HANNAH MONTANA: THE MOVIE

Studio: Disney

Opens: April 10

Promotional partners: BP, Procter & Gamble, JC Penney, Sargento cheese

X-MEN: WOLVERINE

Studio: Fox

Opens: May 1

Promotional partners: 7-Eleven, Schick, Papa John’s pizza

STAR TREK

Studio: Paramount

Opens: May 8

Promotional partners: Burger King, Esurance, Kellogg, Nokia, Lenovo computers