In their essay Movie Marketing Strategy Formation with System Dynamics: Towards a multi-disciplinary adoption/diffusion theory of cinema-going, authors David Lane and Elke Hussman provide a thorough review of the adoption/diffusion mechanism and propose a model of “reinforcing and balancing loops” to explain the process. We discussed cinema-advertising as an example of adoption/diffusion during class, and this article is an in-depth study into how the general theory can be applied to a narrow, specific industry and marketing technique.

The authors begin their essay with the example of a basic model of disease transmission and infection. Although this example is not immediately similar to that of cinema advertising, it nevertheless features the same sort of feedback-loops that ultimately determine the spread of information (or, in the example, the disease). Furthermore, slight changes in the model’s parameters can have profound differences in the model’s output: in some cases, the disease spreads to infect entire populations, while in others relatively few individuals become infected. This directly correlates with the success of movie marketing: some movies are hits, while others are flops.

In both cases, diffusion requires a “patient-zero”. In disease spread, this refers to the initial infected person, while in advertising it refers to the first group of consumers to try a product (in class we discussed these groups and the use of “free-giveaways” to entice their support).

Ultimately, the authors find both similarities and differences between movie-marketing and traditional diffusion. First, the authors claim that advertising reduces the need for “free giveaways.” Next, they claim that the advertising produces consumers who are able to “act in a way which allows the reinforcing loop to operate.” Because advertisements can reach a sufficiently large group of consumers, the requisite feedback loops will have enough users to generate strong consumer sentiment either in favor of, or opposed to, the particular film. Third, the authors find that, after a relatively short period of time during which advertising is crucial, the “reinforcing effect” of the feedback loop becomes critical to a movie’s continued success. Finally, the authors find that, if a movie is unable to generate a positively reinforcing word-of-mouth feedback loop, it is virtually impossible to use advertising to stimulate sales.

This model can be used to create an “ideal” movie launch scenario. Ideally, a movie is advertised to a sufficiently large target audience (ie, the “tipping point”). This audience not only sees the film during its early release, but likes the film enough to create a positive reinforcement loop and recommend the film to those who might not have been interested enough by the advertisement alone to see the film. At this point, the filmmakers can stop spending money on new advertising and instead rely more heavily on word-of-mouth to generate new sales. The authors cite the example of Saving Private Ryan, a tremendously expensive project that was able to become profitable after only 3 weeks in theatres thanks to both its large initial advertising budget and its overwhelmingly positive feedback.