Good afternoon, everyone. Welcome to National CineMedia's 2025 Investor Day. I'm Maria Woods, the General Counsel and Secretary. Before we begin, I get the pleasure of reminding everyone here, and also those on our live stream, that this presentation will contain forward-looking statements, as you can see from this lovely slide, as within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Other than statements of historical fact that we talk about today, our disclosures in the presentation may constitute forward-looking statements. As you probably heard before, at, you know, presentations like this, forward-looking statements involve some risk and uncertainties. There are important factors that could cause our actual results to vary materially from what we expect.
I ask that everyone then take a look at our risk factor section, which is in the Form 10-K that we filed with the SEC most recently last Thursday. What you might guess is that we are qualifying all of our forward-looking statements in their entirety by these factors. Our discussions will also contain some non-GAAP measures. In accordance with Reg G, the reconciliation of these amounts back to the closest GAAP basis measurement will be at the end of the presentation, or you can go to the investor website under Investor Relations at ncm.com. I would like to welcome to the stage NCM's Chief Executive Officer, Tom Lesinski.
Okay. Thanks, everybody. It's great to be here. It was back in 2019 when we did our last Investor Day, more than five years ago, and some of you are probably here. I'm Tom Lesinski. I'm the Chief Executive Officer, and we're really excited to have everyone here today. It's great to see long-term investors, new investors, and I'm looking forward to meeting anybody who's new to the story, particularly afterwards. Those of you who are tuning into the webcast, thank you for joining us as well. Our hope today is to really do three things. It's really to get you to know the unique position that we have, NCM, in the premium video category. The second thing is you have a really clear understanding of our growth opportunities.
The third thing is that you have confidence in our ability to execute on those opportunities as we drive value for our shareholders. In terms of today's agenda, I'm going to cover, obviously, the vision and strategy of the company. You're going to hear from Catherine Sullivan, our President, who will talk a lot about our ad strategy. Manu Singh will follow up the presentation, who's our Chief Data and Innovation Officer, who has a great story to talk about NCMX, which is our, you know, proprietary data offering. We'll have a panel of some of our great partners that Catherine will host. Finally, Ronnie, our CFO, will go through all of our financials. We'll have a fairly lengthy Q&A session for everybody. Feel free to start thinking about questions.
If any of you are new to our story, we are the largest cinema ad network in the United States. It's really unmatched in terms of its scale and size. Importantly, we connect the most highly sought-after young audiences through both our on-screen offering, our lobby, and what we do outside of the theater. We do this at scale nationally and locally, before, during, and after the movie. In addition, we have a very innovative self-serve and programmatic buying option, which is enabling advertisers to enter our platform even more easily than ever before to reach this compelling content. Just moving a little bit ahead, our big thing is really that we are effective for really performing against performance marketing in today's media landscape. It used to be years ago that all that mattered was reaching people and gaining awareness. We are now a modern media company.
We can promise our brands and our advertisers not just reach at scale, but also performance levels. Granted, they are reaching, all of our clients are reaching what they really want, which is this high-quality content married to young audiences. We have a great young audience. It's diverse that no one else can match. What we deliver is really an impressive amount of attention to that young audience. Importantly, at the end of it all, we deliver this very unduplicated high level of reach. We have a proven and reliable performance outcomes for brands. We are going to talk about all this today in depth. I think you'll find a lot of it really interesting and things you don't expect from a cinema ad company. Here's, you know, just part of our leadership team, decades of experience across this team.
You're going to hear from a lot of them today. One of the main reasons we remain the leader in the space is these people that work here at NCM. I want to take a moment to thank all the NCMers that are out there in our various offices across the country. It's your dedication and your execution that's really helped drive the company over the last few years. I'm really confident that we have the right people in place at the right time to achieve all the goals that we have. I'm excited to hear from most of these people over the course of the day. Before we dive into what sets us apart, I want to take a step back for some of you who might not quite know the history and just briefly let you know where we came from.
Back almost 20 years ago, pretty remarkable, in 2005, the company was started as a joint venture. It was the brainchild of Philip Anschutz. It was a joint venture between AMC, Regal, Cinemark, and what became NCM. It was the first unified ad platform across movie theaters. The company went public in 2007, with 52% of that ownership being controlled by the exhibitors. The exhibitors also controlled a significant amount of the voting rights at the board level. Ultimately, though, the governance and capital structure really limited NCM's ability to pursue strategic growth initiatives, and it really hindered our ability to attract new investors. Before we talk about the new structure, I want to talk a little bit about where we are today from what's going on from an industry point of view. As you know, prior to COVID, there were headwinds hitting the exhibition business.
I know a lot of you out there cover the exhibition world. It's worth noting that, obviously, the streaming business brought a huge amount of shift to the way consumers actually consume content. Simultaneously, the movie studios started testing new release models, including direct-to-streaming debuts, which really challenged the theatrical model and really shook it to its core. What we've learned, though, is those streaming initiatives have really failed to match the cultural and financial success of a traditional theatrical release. I ask any of you, can you remember the last time you can say, "I just saw a great original movie on one of the streaming platforms"? Just doesn't really happen. That was pre-COVID. I just want to highlight sort of the impact of COVID, even though it's been pretty well documented.
Clearly, the pandemic and the lockdowns and all the social distancing had a huge impact on the business. Following that period, social distancing continued to impact attendance and really disrupted the whole movie-going experience, as well as the cinema industry to its core. Studios delayed and canceled productions, resulting in all kinds of attendance impacts. Due to those original headwinds, plus what happened in the pandemic, NCM took action, as many of you know, to strengthen our financial position. We entered a court-supervised restructure back in the second quarter of 2023. NCM today is a much different company. We have reduced $1.1 billion in debt, all of our debt. We significantly reduced the control of the company. It is now controlled by the shareholders completely. The exhibitors do not have a board seat at our company anymore.
Importantly, though, during all this, we retained all those long-term valuable contracts that we have with AMC, Cinemark, and 50 other exhibitors. We kept the core value of the asset, but we gave ourselves a lot more control from a board point of view. More importantly, during this time, we really improved our efficiency, reducing our fixed costs and really building a sustainable capital-light business model. When I, in 2019, about a year after I started, we had 632 people at NCM. We have less than 300 today. I can tell you, you know, we maybe are going to add some people to that, but we're running very efficiently. Part of that was just looking internally during that period. What did we learn during all of this?
You know, between pandemic, the headwinds, the restructuring, we know that one thing is true, that people still love going to the movies. It's really remarkable what a resilient industry it is. More importantly, these big events that happen in the world, besides the Super Bowl, these big cultural things still happen in the movie theater. This once disruptive streaming model has failed to match the attention that you get from a big hit in a movie theater. The studios are getting business back. They're supporting theatrical releases like never before. Just this past week, Amazon announced 12-16 movies coming out in movie theaters. That's more movies than Paramount had, for example, last year. There really is no better way to watch a movie on a big 50-foot screen, immersive environment with this high-quality content.
If you watched the Academy Awards, you might have remembered the best director, winner, Sean Baker, who said in his acceptance speech, "We're all here because we love movies." Where did we fall in love with movies? At the movie theater. Don't just take my word on it. Look at these clips.
The first film I saw in the theater, it was E.T.
My eighth birthday, we saw Beaches.
King Kong, the Jeff Bridges, Jessica Lange version.
सबसे बड़ा INR 100 with my dad.
Do you remember the first movie you saw in the theater?
The Pink Panther. My mom took me to watch Jurassic Park.
Do you remember the first thing you saw on TikTok?
Nope.
Often the memories you make in a movie theater stay with you for a long time, and they're significant. Sometimes for, you know, 20, 30 years later.
Cinema actually has a societal role to play in bringing people together on those shared experiences.
You can be sitting next to a perfect stranger in a movie theater and have the same emotions together. That's powerful.
Bridesmaids, I was thinking even earlier as I commented, I remember watching it in the theater. There is no way that movie would have been as enjoyable had I just been watching that at home.
Even if you've got a 60-inch TV, it's not quite the same.
People need human connection. Great storytelling is just a wonderful way for people to join together.
It's a special experience. It always has been, and I think it will be for many, many years to come.
As you just heard, you know, long after the credits roll, the cinema experience stays with people, and it has for over 100 years. For that reason, NCM always will have a significant and powerful place in the advertising market. Now I want to talk a little bit about NCM's strategy. We are, as you know, in a very unique position to grow as the box office continues to come back, and we're well positioned to win. I want to talk about the four pillars today of what drives our ability to keep winning as a company. The first one is we have an unmatched competitive edge, which I'll talk about in a minute. Second, we have really attractive industry dynamics in both the advertising business as well as in the movie theater business.
Third, we have a premium audience and a premium product making NCM the advertising partner of choice for America's smartest and biggest advertisers. One of our biggest advertisers, a tech company, recently said to me, "You know, Tom," I said, "I really want to do something nice for you, take you to dinner." He goes, "You know, if it didn't work, given all the engineers in our company, we wouldn't do it." I have always said, "Well, can I quote you on that?" He said, "Of course not." I can tell you this is from one of the big, you know, tech companies in the United States and who analyzes everything. He proves out that, you know, cinema is a good investment. The fourth thing, which Ronnie will get into later, is really our incredible financial position that we're in now.
No debt on our balance sheet, attractive free cash flows that really will drive the successful execution of our growth strategy, which we're going to talk about, and the continued value generation for our shareholders. Let's dig into each one of these. First of all, our most important competitive edge is really having this dominant platform with long-term agreements. Cinemark, AMC, Regal, 10-year agreements or more with each of them. In addition, we have 56 other agreements with other exhibitors, including Marcus, top five player in the industry. That creates approximately 70% market share that we own, uncomparable to any other player in the industry. This breadth of the network that we have is a formidable barrier to entry for anyone and establishes an incredibly really prominent, well-rounded moat around our company. The second thing is our show structure.
What you see here is this is actually what happens in a movie theater. Going from left to right, here's the movie. And what's interesting about this is back in 2019, I renegotiated our agreements with most of our key exhibitors to add premium advertising content after the advertised show time. In the old days, all we had were ads before the movie. Now we have a ton of inventory after the movie. Importantly, our premium spot runs just before the second to last two trailers. It is probably the most valuable inventory that's available today in the media business. We also provide a very comprehensive set of buying tools for our clients, which makes it easier and more accessible than ever to buy movies. Movie advertising, excuse me. Okay. Let's talk a little bit about where we compete and how dominant we are in the biggest markets.
You all know that we have 18,000 screens, 1,400 theaters. What we really dominate is in the big markets. Why does that matter? Catherine will talk about this later. Big advertisers want to advertise where the people are. You know, we dominate the top 25 DMAs. In the top 10 DMAs, we have 71% market. On an opening weekend, we have 73% in that market. That generated 400 million people in our theaters last year, over 4 billion impressions. No other platform can compete with us on those key metrics. Let's talk about the industry for a minute. Much is talked about in the cinema business. A lot of the analysts who cover our stock and investors look at exhibition. I'm going to give you my two cents a little bit on what's happening in the cinema business.
2024 had a lot of records set. It was not even that good of a year at the box office. Just to highlight a few, Wicked was the biggest Broadway adaptation ever. Deadpool and Wolverine, the highest-grossing R-rated film, biggest summer opening ever. Inside Out 2, the biggest animated film ever. Beetlejuice, one of my favorites, the biggest movie in September. What makes this relevant is these records were set in a year where the box office was down 35% versus its previous peak in 2019. This demonstrates the continued resilience and momentum in the box office and consumers' deep, deep connection to the theatrical experience. Looking ahead, 2025, you know, most of the, you know, pundits are looking at this as what we believe will be the size of the business, up 10% year-on-year.
I think we're in line with that as well. Clearly, there's momentum growing in this industry. I think this increased attendance, the unrivaled scale that we have, it makes the box office and our business look very bright and we're well positioned for this ongoing recovery. I want to talk a little bit about the ad business for a minute. We've been talking a lot about cinema and exhibition, but we are really in two businesses. We're obviously highly dependent on the cinema business, but also really dependent on the ad business. What this chart illustrates is that the ad business has been growing consistently for 15 years. In 2025, it's expected to grow another 8%. What we're focused on is not just the overall ad business. We're really focused on what's called the connected TV segment of the business, which we'll get into in detail later.
Some of you know what CTV is. Those of you who do not, we will clearly explain it later. It basically allows an advertiser to do precision targeting, hyperlocalization, and all kinds of robust reporting to really make sure their investments are paying off. We have been investing in this business for almost three years. We are actively delivering on the promise of CTV right now. With all of this advanced audience insights that Manu is going to talk about, our premium inventory, our outcome-driven measurements, we can promise brands right now the same kind of sophisticated targeting that CTV can do. That is pretty much state of the art. We are happy about that. It is really an unmatched impact and scale on the big screen that adds up for NCM.
Okay, so our third pillar, and probably the most important thing, is let's just talk about who we really reach every day. The hardest to reach people are these under 30-year-olds who are, you know, basically unreachable in terms of most of the media that they consume. 62% of our audience, you know, is what we also call multicultural, also hard people to reach, but a very desirable, again, thing for advertisers. Most of these young people, by the way, have never had cable or who cut the cord. The traditional ways of reaching them through cable and broadcast TV is totally ineffective for reaching them. I think the most important thing about these cinema people is they literally spend three times as much money as the average consumer who goes into a store or goes to buy things.
All of those things make our audience super interesting and valuable to advertisers. I think the other thing that really we're talking about is we connect with these brands in a way that we're providing all kinds of innovative ways for there to be buying options for them. Here's a kind of a quick look at NCM and what we have to offer. Great. As you can see, these differentiated premium advertising formats provide flexible and innovative ways for our advertisers to run effective campaigns. You're going to hear more about this from Manu, who really is the godfather and the inventor of our NCMX data plan, our data program. We're way ahead of the game on this. Just to give you a little bit of an overview of it, I want you to be aware that NCM invented performance-based marketing in the cinema.
NCMX, which is our platform, it's really powered by the largest deterministic moviegoer data set that exists anywhere in the United States. It's really revolutionized cinema, transforming it into a performance platform versus just an awareness-generating platform. Now we can offer this big 50-foot screen, immersive environment, plus data-driven benefits of a digital platform. We have three products, Boomerang, Boost, and our newest product, Bullseye, which provide advertisers with highly valuable targeting, measurement, and engagement capabilities far beyond the movie theater. Through all these data partnerships, we can deliver strategic audience insights and performance attribution, driving value and measurable campaign outcomes for our advertisers. The last pillar is our compelling financial position. This is an important sort of end to my part of the presentation. As you know, we announced our 2024 results last week, $241 million in revenue.
This was despite the fact that the first half of the year, there was a meaningful strike that impacted the release schedule. EBITDA was $46 million, reflecting our commitment to driving operational efficiencies. And we generated $58 million in free cash flow. I think when you look at our new company, it's important, you know, and I touched upon this earlier, that we emerged from this restructuring de-risked and well-capitalized for the future. We improved our ownership and governance structure, bringing the interest of the company in complete alignment with the shareholders, which had never existed before. We recently announced a new credit facility, which Ronnie will talk about. Importantly, you know, our business continues to generate impressive free cash flow at a targeted EBITDA level of free cash flow conversions of 70%-80%.
Now with this greater control over our strategy, we have even more flexibility in our capital allocation. How are we, what are we doing with the money? I think this is an investor question that I'm asked almost every week. Right now, here's what we're doing with it. We're focusing right now on some targeted investments to improve our talent and technology, which we'll talk about in a little bit. Again, we're using some of this money to drive optimization and increase our monetization in the flywheel. This, in turn, obviously will lead to more revenue and profits. Given our capital-light model, which is really, really capital-light, you're going to see high free cash flow conversion, which will further enable us to invest in the business. I talked a little bit about the increased free cash flow and investing in tech and talent.
You know, the second thing is important. We plan to accelerate our $100 million share repurchase program. Today we're excited to announce the reinstitution of our dividend program for the fiscal 2025, which Ronnie will discuss in detail in a little bit. Together, NCM has really significant financial flexibility to pursue strategic initiatives, return capital to our shareholders, and drive results. This is sort of the wrap-up. Why are we well positioned to win? Just to really repeat myself a little bit, I'm going to do it anyway. The four pillars are competitive edge in the cinema, which we talked about, which is really fundamentally around these long-term contracts with exhibitors. Two is really we're focused on this ongoing box office recovery and the ongoing trends in the ad market, specifically within premium video.
We continue to outdeliver this premium audiences across all mediums and provide advertisers with differentiated premium options to drive successful ad campaigns. Four, and finally, we have a robust financial position, zero debt, strong cash flow, and a dedication to returning cash to our shareholders. With our unmatched competitive edge, attractive industry dynamics, premium audience and product, and a competitive theatrical position, NCM is very well poised for a successful value creation in the years ahead. Let me introduce Catherine Sullivan, who is not even a year in our company. She's our President. She'll tell you more about the average who needs to lie ahead for NCM.
Thank you, Tom. You're welcome. Welcome. Hello, everybody. It's so nice to meet some of you outside. I look forward to meeting you later.
For those of you online, I thank you for joining us. Just a quick minute on myself. Prior to joining NCM, I was the CEO of PhD, which is part of the Omnicom Media Group. Prior to that, I was the head of investment for North America within Omnicom, where we oversaw $18 billion of investment across all channels. I also had jobs, ran ad sales for ABC News and their digital assets at Disney. Prior to that, I started my career at NBC. I have had the opportunity to see the business from all different sides and shapes. I know what buyers need, what is happening in the publishing world. Most importantly, I understand what drives clients. It gave me a great opportunity when Tom and I talked about joining this company. It was very clear to me what the opportunity was.
Let's get into that and how we're going to drive some growth. It's a three-pronged strategy, right? We're going to get right into harnessing growth and opportunity. It was clear that our positioning needed to slightly pivot. We have the best screen, 50 foot, as Tom mentioned, with the most premium audience, the average age being 30, with their full attention in a brand-safe environment. We needed to compete where the money is flowing. Where that is, is really looking at the landscape right now in video. On the left-hand side, you will see broadcasting cable and streaming are roughly the same size. In 2025, the anticipation is that streaming will overtake broadcasting cable. As you look at the actual opportunity for advertisers, less than 15% of an ad opportunity sits within streaming right now.
I'm sure most of you have streaming subscriptions that do not have advertising in it. This is becoming a massive, massive issue for not only agencies, but for clients. This is where we come in. We provide the scale, the unmatched audience, and it is incremental because all these streaming services do not attract a 30-year-old audience. This is our average age week in, week out. Let's talk a little bit further about this media landscape. The significant growth is sitting in video, which we just started to talk about. 18% year-over-year growth. As Tom showed you, it has been significant growth year-over-year for the last 15 years. We do not anticipate that to stop anytime soon.
Retail media, you're going to hear a lot from Manu giving you examples about how we compete in retail media, which is growing very quickly and has 20% year-over-year growth. For us, we can target you in theater, but more importantly, we can retarget you after. We are going to spend some time talking about that later in the presentation. The creator economy is the fastest-growing segment right now in all of media. Influencers, creators, whatever you want to call them, they are taking over what used to be really beholden for brands to talk to, celebrities, athletes, all the big branding campaigns that you used to see. Most of that money right now is sitting in social platforms. We know those platforms have a lot of fraud. There also is an attention issue.
If you're on a screen this big, you're scrolling the whole time. Does a brand really get that attention? We know that we are the next distribution platform, and we're already starting to work with them. These are the pillars that we're really focused on as we're going to drive growth. We also then had to get ourselves, our own company, our structure. We needed to get our operations into a place and the way that we looked at our ad sales team to actually be able to compete in this space. We upleveled our talent.
We brought in some new talent from the outside that had varied experiences around content creation, around some really someone we just brought in from The Trade Desk who also spent a decent amount of time prior to that at NBC Universal, really trying to take a look at all the things I just talked about and make sure we have the talent that's able to talk about it. Within the capabilities that we're investing in, there's some technology that was needed to happen. In order for us to continue and actually look like CTV and the video landscape overall, we need to optimize our inventory and be able to forecast much faster because that's what's expected. Improved utilization, something that I'm sure all of you in this room are very keen on hearing about.
We can improve utilization when we have better forecasting tools that allow us to compete in a real-time fashion. We're going to talk a little bit in a little while about programmatic, and that will be a big piece of this as well. We had to streamline our ad sales and operations team. We have to actually look and feel like cinema. I can, I'm sorry, like video. What I mean specifically, coming from the buy side, cinema just looked a little bit differently. If you can make it from the minute you actually come in and RFP and say, "Oh, we have this particular flight and we're looking for this audience," the minute they see the plan, to the minute you bill them at the end, that whole life cycle needs to be consistent with the rest of the market.
That's what we're doing, and that's what we've been doing behind the scenes over the last 10 months. Reporting. Reporting is crucial. If you can't prove out what you did, you will not get them to return. That is a lot of the work that Manu and team have been doing with NCMX. We have the reporting to prove out the value of what we're doing. Lastly, self-serve and programmatic. Two big bets, places that we had not been playing in that require us to really think differently. Before the launch of programmatic this year, the only way to really access us was to do direct deals. Unfortunately, that is probably about 50% of the market. We were losing and not even having the opportunity to compete. In 50% of the way, agencies and clients were activating their media budgets.
Let's talk a little bit further about self-serve and programmatic. Self-serve, for those of you that may not be as familiar with it, we've recently just launched our new self-serve product. We had one. It was a little bit clunky. This one, super easy. If you're a local business owner that wants to advertise in cinema, you literally go right in, click onto our platform, you put in your requirements, and you literally right there and then use your credit card and pay for that plan right there. You can then optimize it throughout its flight. It is massive. The small, medium business category is driving tremendous growth at many, many big media companies. They've launched their own self-serve products over the last few years, and some of them are seeing it to be actually 20% of their total volume of media dollars flowing into that company.
Programmatic is another way. Right now, advertising agencies, the big six holding companies, are activating about 50% of their media programmatically. Most of them are predicting by 2027, they want to activate 70% of their deals programmatically. Why? More control, less waste, all the things that we consistently talk about, the benefits of programmatic. Happy birthday. We have to, since our advertisers' needs are shifting, we're going to shift with it. I really do want to wish that person a happy birthday. Anyway, we think about the fact, as I just said, we were only doing deals directly. We were missing a big part of the market. We have now much more flexible models to meet advertisers where they want to meet us.
Meaning that upfront used to be a word that if you missed that market and you did not price it right and did not sell your inventory at that time, your year was over. The upfront used to be 70%-80% of total dollars that were spent for media companies. Now in the video space, what you are really seeing is a 50-50 mix between upfront and scatter. Quite frankly, the reason why this is happening is outside of the NFL and some big tempo events, there is no scarcity in video. There is no scarcity in entertainment. There is a plethora of it, and it requires you to be more flexible. It is why programmatic is becoming such a big piece of the overall puzzle.
For us, when I think about the lobby and our overall ability to create experience, this audience of an average age of 30, I want our lobbies to be game day. If you like college football like I do, I love ESPN's college game day. They own it. You know, Home Depot comes in. They're owning that whole entire thing. We have that same opportunity. Who else gets dressed up like Barbie to go to the movies or Wicked or Gladiator? We see it all the time. How do we take brands? You saw the hologram outside. That hologram we have sold over and over again, creating experiences that get people excited to get to the theater early, to own the experience, and then drive it into the big screen. Measurable outcomes. Everything has changed from branding, as Tom mentioned early. Branding is obviously still awareness is huge.
What I saw when I was at Omnicom is so many of our clients were so desperate to prove out that what they were spending their money on actually was driving ROI. We can do that with our campaign planning, our retargeting tools, and our measurement and attribution. There are many that say they can do it. I can tell you from sitting on the other side of the table for the last seven years, it's not true. In addition, we're creating new partnerships. Going back to the fact that we want to meet advertisers where they are. Equative is an ad tech company that's going to help us drive demand specifically with our programmatic pipes. AdGreetz is an AI creative. By the way, how can you have a presentation in 2025 and not say AI? Again, here we are.
It is an AI creative tool that allows us, and I'll give you a perfect example. State Farm has a big on our 50-foot screen, a beautiful branding campaign, but they have 10,000 local agents. This product that Manu is going to give you a little bit more to talk about in her section momentarily, this will allow 10,000 creatives to be actually done within 24 hours with the local agents in that bottom right-hand corner for them to be able to drive directly to. It is literally collapsing the funnel between national and local and driving performance. We are, without a doubt, the largest performance platform. Ampersand will help our local and regional teams to have data-driven results. Again, data is the key in the underpinning of what all clients need in order to justify their marketing budgets.
Lastly, our partnership with Influential, which I find, oops, sorry, I meant to go back on that. I forgot they moved that. I'll skip it. The reason why I say this is that what I was going to show you were two current things that we're doing with Influential. One is with Walmart, and the other one was with Rizzler. The results that we're seeing, thank you. The results that we were seeing with these are fantastic. In what they were doing, they came to us, Influential. We did these two deals with Walmart and with Rizzler. Quite frankly, what we were seeing in results were three to four X the conversion with the QR codes than what they were seeing on CTV. It was 8X to 10X of what they were seeing on YouTube.
Again, our ability to actually drive conversion and using influencers on our platform, that is the right audience. Talking about all this, why do I feel like we're positioned to win? This is a slide that you'll see consistently if you follow media in any capacity. Usually, it's entertainment on linear, and it's 97 out of the top 100 telecasts are dominated by sports. Guess what? When you put it up against cinema, it's roughly 50-50. We are the only platform that can compete with the NFL and live sports. It's not just linear where we're winning. On 18 to 34, you go from YouTube down to Paramount. You add them all up, and we still have the largest audience collectively. This idea that CTV is killing and crushing the marketplace, no, actually it's us.
We have an audience that then gives you unduplicated audience at scale. What I mean by unduplicated is if you look from Pluto all the way over to Prime Video, the average age of any of those platforms are somewhere between 47 and 60. They are not hitting our audience. It is why when you do watch any one of the CTV platforms with ads, you see the same ad over and over and over again because they cannot figure out the frequency. You can buy these ads in so many different ways, shapes, and forms. They cannot control what is happening. You actually move any percentage of your budget to NCM, and you will get incremental reach unduplicated at scale. We are young, average age 30. I mean, look, Instagram's 34, but I would say that we are a better platform than Instagram.
Not that it's not great, but it's a scrolling platform. You don't really, as an advertiser, you're not getting any real attention. All the way to the NFL, average age 55. No one matches us. As Tom alluded earlier, 62% of that audience is multicultural. Why do you care? Because our audience can spend up to $1 trillion in 2025. Brands need to have audiences that can afford their products. Our audience can. 41% of our audience will go and shop or go out to eat. They will do an activity where they will spend more money than what they just did at the theater. This audience is 3X more likely to spend than the general population. Attention. This is a word that comes up over and over again. Adelaide and Lumen had done these studies for us. They're a third-party company. They specialize in attention.
In the fragmented world that we live in, attention is the hardest thing for an advertiser to actually get. Our platform has the highest attention metrics of any other platform, 25 all the way down to podcasting at 13. Look at linear live sports, 17.7. I mean, you think you have an attention, but the problem is when you're home, just you've got your phone, you've got your iPad. You don't really have anyone who has your full attention. Then our ad recall, 2X and 3X of any platform on 30s and 60s. If they don't recall the advertising, they're not going to actually buy the product. This is all in a brand-safe environment.
It's why we're so bullish on the creator economy because we know how much money is being spent on social media platforms where they don't have our scale, they don't have our brand safety, and they certainly don't get the attention. We are incredibly, incredibly bullish on our outlook and where we're going. Again, average age 30. If you remember nothing else about this presentation, average age is 30. Our attention score is an 83, and our adult 18-34 rating is a 6.8. Don't take it from me. Listen to our clients. Attention is so hard to get. 4,000-10,000 ads are estimated to be seen every day by the average person. The competition that you have going up against just people scrolling in feed is wild.
In juxtaposition of that, you have people in theaters who put their phones away and aren't paying attention.
You're now actually impacting that micro segment or that target audience at the physical location that they've chosen to be at.
When you go to the theater and you sit down and you're kind of in that big screen environment, you're really leaned in. There's nothing like watching video on a giant screen with the best sound around you.
We've typically seen as folks are laser-focused on the big screen in front of them. They're not on their phone.
They really are choosing to be engaged and choosing to be part of the experience.
They are going to see a story. They are intent on being enveloped and immersed.
It is so unique to be in an environment where you are reaching the consumer and you have their full attention and their full focus. It is less about wide reach and rapid frequency the way you would look at digital marketing, but more about how are you really building that emotional connection with audiences. That is what Cinema delivers in spades. We have worked with NCM as OMD and Omnicom Media Group for many years, and it has been an incredible partnership. I think it is because of the openness and the collaboration that we have.
NCM has been very good at providing research that shows advertising recall. We are actually able to see what is the lift when we use that media mix, whether that is in-store sales, whether that is online sales, whether that is foot traffic attribution, whether that is sentiment lift or brand lift, ad recall.
What NCM has been doing from a measurement and an attribution standpoint in helping to prove out the performance of the campaigns is phenomenal.
They're experts. Like NCM has been in this business since the beginning. They know the space very well. They were the first people that started selling in-lobby posters. We created a 60-second Super Bowl spot. Right after that, we were able to leverage that 60-second spot that was very emotional and very kind of epic. We were able to put it in theaters, which was the perfect venue for that. Old Navy and the holiday campaign. It had Jennifer Hudson. It was like Love in the Air. You saw the kind of connection between understanding how do you pull brand relevancy in the cinema, and then you connect that creative through to the stores and the screens within stores.
We have real estate on their screen year-round. In October, because we also have an IP relationship with Wicked, we ended up doing a Wicked-themed courtesy message. NCM, they have a captive audience, right? You are able to sit down in the cinema, and you are excited about putting your phone away and being in a dark environment and really just giving in to the storytelling.
Thank you. It is now my pleasure to bring up Manu Singh, our Chief Data and Innovation Officer.
I felt like as the godfather of data, which actually works well. I do live in Jersey and take the Lincoln Tunnel. Just putting this out there. All right, I am going to talk about data. Like any self-respecting data scientist, I have 100 slides. Get ready, buckle up. I am joking. For the folks online, for no particular reason, camera adds £10.
Just saying that for no particular reason. All right, let's talk about data. Before we do that, you've heard the old adage, content is king. I would argue, yes, content is king. Who has the best content weekend after weekend, weekday after weekday? Our screen. We would say that audience is key. You just had Catherine and Tom talk about the elusive, unreachable audiences you find on our screen, in our theater, in our family that you can't find anywhere else. Nothing works if you don't have the data. Data is the box office king. Why does data matter? Data matters today because talk to any marketer. You have approximately 11-13 devices in each household. How many of you watch television, if you do, and you have your phone in the hand? Raise your hand. Great. Yes.
I would have asked the same thing about movies, but do not raise your hand. You do not. You put the phone on the side. That is the reality of the marketplace. Marketers are now struggling with breakthrough messaging, get their brand to break through clutter, because on an average, a consumer is receiving 4,000-10,000 marketing messages in half a day. This is the clutter that exists over there and is becoming untenable. Data helps a marketer today better understand who they are talking to. Is the connection real? Is there brand resonance? Can they prove out ROI? Are they able to go to their CFO and say, "Every dollar that I spend for you, there was a return on advertising spend?" Finally, how do you break through the clutter and stand out? That is what we do.
No matter which KPI, which performance indicator, which metric the brand is going after, the category is looking at, we have consistently shown in the past two years that we can deliver against that. Whether it's as simple as foot traffic, you're looking for upper-funnel metrics on awareness, brand engagement, or you want attribution right down to incremental dollar spent. We today have the ability to provide measurement across every KPI. Let's talk about the moviegoer journey. The prevailing wisdom is the moviegoer journey starts in the theater. No, it doesn't. It starts at least 12-18 months out. Like him or hate him, and I mostly don't, you're talking about Timothée Chalamet and the Kardashians. We are picking up on that data.
We are pulling those social learning insights, listening insights in our data set, NCMX, so that we can start better understanding who's engaging with that title, that content, that genre. It does not stop there. The trailer drops. You have 200 million, 300 million views. Again, you're creating enough metadata for us to start pulling in in NCMX. That journey continues. Every interaction and engagement a moviegoer has across the entire moviegoer journey, from 18 months out to after they leave the movie theater, that is all going into NCMX and helping us better understand who these people are. Support brands are not only the planning piece, but also how their campaigns perform and how they can optimize against that. The other thing that we've done is we've democratized cinema data.
While everyone is investing in walled gardens because, frankly, they don't have scale, there's a lot more to hide because there's a brand safety issue, not an issue for us. We are working with best-in-class vendors in the marketplace, data partners in the marketplace. Are you looking for only upper-funnel audience measurement? Do you just want to understand what is the profile of consumers who engage with your brand in the theater, or do you want to get into attribution? Are you looking for incremental reach? Are you looking for incremental spend? Are you looking to retarget these unreachable, elusive audiences? Let's up the game. Are you looking for clean room data matching? We are one of the only media companies amongst a select few who are able to provide you this repository of skills and abilities to connect with audiences and better understand the performance of your campaigns.
We truly are experts in how moviegoers engage and how they perform. Let's talk about these insights. This is my minority report slide. I wish it worked like that, but you can imagine me, Tom Cruise. This is not about buying age and gender anymore. That is, unfortunately, what the traditional media company will want because that's all they have to sell. For us, it is more about that. We are doing a consultative sell. We are sitting down with our partners and telling them who's engaging, who's coming in the theater, and what do they look like. This is an actual profile of moviegoers who are going to be anticipated to be in the theater for Superman, opening weekend and the week after. What do they look like? What categories are they engaging in? What brands are they engaging in? What's the affinity score across the board?
Those are the insights we are taking to most of our brands in the marketplace and telling them and guiding them on how to work with us. Again, taking it beyond age and gender. The engagement, as I said earlier, does not stop in the theater. Once the moviegoer leaves the theater, and that window is incredibly important. Anytime you talk to a media platform, ask them about the last-click attribution. We'd like to call it the last-touch attribution. That is the window of opportunity where you know the consumer would be with the wallets out. You know the consumer is walking past perhaps your POI, place of interest, and may decide to go spend some money on that. Cinema sits right in the middle of the attribution window. Why?
Because once you're leaving the movie theater, you're either walking past a mall or you're out and about with your friends to the point that Catherine made, 41% go out to an actual shop. A large percent of consumers go out to eat. Yes, the bucket of popcorn and soda doesn't cut it. We're out and about right after watching the movie. These insights and then how much they are spending, all of that powers what we are doing from an attribution perspective. All of that powers what we are doing from a planning perspective. All of that powers our ability to demand a seat at the table with the brands in the marketplace. Just to think the consumer spending power, this is a trillion dollars. Projected 2025 NCM moviegoers' spending power is a trillion. Who wouldn't want to tap into that? That's exactly what's happening.
Brands are tapping into that. As attribution and measurement is becoming critical to prove out value, we've started to see brands come in and ask us to show performance across a wide variety of metrics. I'm going to walk you through some examples and why not all attribution is created equal. Everyone is out there telling you or telling whoever they can provide attribution. What we do is best in class. The reason we do it as best in class is we have the scale. We're not fragmented. You don't know who's going to go in and watch what show tonight. On any given weekend, we know 8 million-10 million consumers with their wallets out are coming to the movie theater. The ability for us to tap into that scale, to do feasibility assessment, as well as provide measurement, is what sets us apart.
Here is an example for an automotive client who was looking for national reach on the big screen, but wanted to drill down to four dealerships and drive foot traffic to those dealerships. They wanted us to not only do upper-funnel metrics, tell me what the awareness, recall, engagement look like, but also help me drive traffic to the specific dealerships I'm trying to actually engage and support. We were able to do that. We were able to track the households. Mike, I talked to you a little bit about it, but we can do that later. We were able to track the households who were exposed to the creative in the theater. We were able to then drill down to the ones that were associated with those dealerships, close to those dealerships, share it with a third party, and provide these metrics to the brand. Result?
Happy brand, happy client, happy NCM. Large beauty retailer, different problem. I need not only do I want foot traffic to the store, but I also need to drive traffic to my e-commerce site. Holiday time, peak season, 3x spent for our moviegoers in general becomes 6x when it comes to holiday time. They are out there ready to spend. For this brand, we needed to, A, come up with a solution that was just not driving to the store. We also needed to apply an instant interaction as well as push to the e-commerce side. QR codes come in really handy. I'll walk you through many of them. We had geo-targeted message. We had QR code scan-through pushing to the e-commerce site. We also were supporting a national reach campaign pushing to the store.
You can see the results over here, 2x the scan-through rate for this particular site. Again, incremental visits that we drove. QSR, as I said earlier, popcorn bucket and soda does not cut it. We are ready to eat out after the movie. QSR is one of the most successful categories in terms of providing attribution reach. Again, sweet spot within the moviegoers as well as the last-click attribution. 23% foot traffic lift. Most importantly, it is the incremental revenue. This is not about going in and the total spend. This was what was the incrementality that came from NCM moviegoers. That goes back to that cord cutters. That goes back to the age group that we have. You cannot find these consumers anywhere else. That is why you see incremental impact no matter which category you are in.
Travel brand, looking to drive promotional value as well as revenue impact for several sub-brands within its portfolio. Not only were we able to provide them everything they were looking for in terms of impact, but we were able to provide it at a speed that we had not done before. Normally, when a campaign runs on any platform, you wait for the campaign to end, and then you provide metrics. For this time, for the first time ever, we were able to provide a monthly readout to how was the campaign doing. Was there a need to optimize? Could we do that? Again, very happy client. My personal favorite, condition-based targeting. Pharma. Have you turned a television, any show on, on broadcast, on cable, and 9 out of 10 ads are from pharma category? Yes. Thank you. That is the answer I was looking for.
Whoever did not say that, you're in. This was my personal favorite. The brand had flooded broadcast and cable for 18 months. They were out there pushing the type 2 diabetes solution, rhymes with, I won't say, we'll get in trouble. Maria Woods is looking at me. Their pushback was, "I'm not sure if you can drive incremental condition-based. You keep telling me you have a median age of 30. I'm really not sure if you can connect me to my prospect that I'm looking for." We're like, "Yeah, why don't you give it a shot? Let's give it a shot." Back to the A, moviegoers come in all shapes and sizes. Most importantly, the consumer media landscape is changing. People are cutting corn. People are not tuning in and watching ad.
For us to be able to provide an incremental conversion, incremental visit to a specialist, as well as to prove out the quality of audiences for this category, for again, a brand that had flooded the marketplace with an inordinate amount of dollars on broadcast and cable was breakthrough for this category. Pharma has become a breakthrough category for us. How do we take this to the next level? Catherine walked you through where the money is going. The money is going to measurable platforms out there, retail media networks. We are looking at CTV and as well as Influential. What does that mean for us? We are going to be strategic about it. One of the big things that we are looking to do is democratize, as I said earlier, democratize our data.
For any brand that is out there buying across various platforms, we now make it very easy for them to include cinema in their measurement plan. They're able to pull in our data no matter which partner they're working with in the marketplace and be able to see what the reach looks like across all the portfolio. We're not sitting in a side bucket anymore. We are part of the CTV discussion. Cross-reach was a big breakthrough for us from that perspective. No more wall gardens for cinema. We have enough data to be able to share with you. Real-time insights. The promise of CTV is they can provide real-time insights. The truth to that is, don't have skill to do that. This is where we come in. You want real-time insights? We're able to do that.
We now have a dashboard for both foot traffic as well as sales spent that we are able to provide to our partners on a weekly basis. The experiment for that hospitality tourism company where we provided data on a monthly basis, we have shortened that window. Now our brands can start tapping into those insights on a weekly basis. A big push for us this time in the marketplace. Guaranteed outcomes for the past two and a half years, three years, one of the things we have done is really dig into what the moviegoer behavior looks like, the affinity with categories, create benchmarks across various categories, what is the frequency of our consumers when they go to a QSR or a retail location. That today gives us the ability to provide some guaranteed outcomes.
To be able to walk into brands and demand a seat at the table and say, "We know we can give you a guaranteed outcome across these critical metrics." That just gives us the power to have that discussion and again, demand a seat at the table. We're not walking away from this. We're here to stay. Another thing that pushback we used to get was the frequency. Moviegoer came in, saw the unit. This is great. But I did my model. And the optimal frequency for conversion for my brand is, let's say, three. We launched Boost last year, seeing tremendous success in the marketplace. Boost is sort of our experiment to expand the unreachable network where we are doing it very scientifically. This is just not retargeting or programmatic.
This is retargeting by matching the households that were exposed to the campaign in the theater, which we are doing with NCMX weekend after weekend, and then finding them across the entire World Wide Web or CTV/OTT portfolio, wherever they are, and giving them the right message at the right time. The ability for us to extend that reach, add frequency to it, and do it all within the realm of the same households has been a big boost for us in the marketplace, no pun intended. Boomerang. Back to the last-click attribution window. That is critical for brands to be able to activate consumers when they are out and about with their wallets and get them to redirect to the destination, to the store, to the website. Boomerang is a solution to that. You saw the ad. There is a QR code on it.
Now we can set up a reminder. This also got into interactivity with our screens. That is the other promise of CTV. It's more interactive. We can be, too. Oh, by the way, our scale is dramatically better than what you can deliver. Boomerang now gives advertisers the ability to reconnect with the consumers after they leave the movie theater. You can do it right there and then. You can do the next week. We're talking to a streaming shop about, "How about I set a reminder to when my show is going to launch later the month?" Yep, we can do that. Do you want to run a different creative and do sequential messaging? Yep, we can do that. Anything that you are thinking of, and mostly these innovations are not being driven by other platforms, we're now driving in the marketplace.
It gives us the ability to demand the dollars. Scan the QR code, please, if you would like, and see if this works. I know some of you are on the Sephora website based on the data I saw. Thank you for scanning. I have your IP information as well as the contextual signal. There will be some advertising coming later. Joking. Talk about interactivity and click to shop. No more steps from the ad to the store. Promote your product, and you can click and shop it right there and then. Let me know what you guys end up buying. I might have a commission. We are going step by step and going after what the promise of CTV is, which it is not delivering and essentially delivering from our platform with the data that we have.
Expanding the same concept now to location. Your marshals, you want to make sure, "Hey, can you make sure that they can find my store?" Absolutely. We have a way to do that. We API directly to your website. We have the geo signal tapped in. You can now run your creative and remind them about the sign them up for a reminder or an offer, and they can find your store so they can stop by and save the directions. We have a partner who's looking for, "Can you push for a real-time weather update?" Why not? We have the API tech. We can plug and play with whoever you want us to. Back to the interactivity, making it real-time, making it engaging, and giving brands immediate feedback is sort of in our suite of what we've been doing.
Feel free to scan again if you'd like to buy allergy product and send me the data signal again. We're now taking this up with the machine learning algorithms and API, taking it to the next level. Why stop with just providing basic interactivity when I can build a data product around it? I have the ability to tap into publicly available data, pollen counts. I can create a pollen tracker and push it in the marketplace with Bullseye that I'll walk you through wherever the pollen count is high. Scan the QR code. The creative runs in, but it's only running in the marketplace where the pollen count is high. Same thing with the lottery. If you scan the QR code, the numbers are not going to match with the image over there because the numbers are real-time, whatever the jackpot is.
Feel free to buy the tickets. And if you win, we'll share. Again, keeping up with the theme of what's the high-intent data signal in the marketplace? How does it help us in terms of our local footprint? Can we optimize what we are doing from that perspective and amplify what we are doing in the local space? Another high-intent signal exclusively available to NCM today is real-time construction permit data. We're pulling it in on a regular basis. It gives us a drill down to not only residential construction but commercial construction and right down to what type of activity it is. I'm able to pull that in via NCMX, apply to the NCM theater footprint. You can do a one-mile, two-mile, three-mile radius. What's my pitch?
Hey, Home Depot, are you looking to identify the high-intent consumers who are in the market looking to get construction done in the next three months or the six months? Yeah, I want this to be very relevant. That's what we do. All of these signals are going to feed into the products that Catherine was talking about, into self-serve. They feed into programmatic. It essentially starts amplifying what we are doing across our entire ecosystem but making a lot more data-driven conversations with our clients. Finally, Bullseye, our latest trilogy of the B products. I'm slowly taking everyone to Bollywood. Just wait. We'll get there. Boost, Boomerang, Bullseye, Bollywood. It's right there. Bullseye, what do we do next? We're an 800-pound gorilla national. We're a 1,000-pound gorilla when you start looking at the local footprint.
What we've started to see from the client base is there's a demand for hyper-local signals, hyper-local creative. The example that Catherine gave you, State Farm is looking to promote their agents in the DMA and the market along with the creative. Automotive is looking to promote their franchisees and the cars they have in their lot. QSR is pushing for the LTOs that they have in the marketplace. Retail is asking for, "I want to test some different offers." Bullseye gives you the ability, leveraging AI, to run the same creative, but we overlay on that any kind of DMA, geographical, local offer that you want to push. It can be the agent name and contact number. We can API to your website and show the cars in your lot. We can show the offers that you'd like to push, any customization.
No overhead and effort from the operations perspective. All happens within the tagging of the creative. The system sees one creative come in. It triggers on the local signals within the theater, and different creatives are served across the board. We are getting tremendous engagement on this product that we launched recently. Let us walk through some examples. If you are Xfinity, you are trying to push a different message because you have a different offer in Scranton and a different offer in Philadelphia. Now we can do that without any change on you. Brands, you do not have to put in the effort. We are doing that for you. All you tell us is, "What is the offer you want to run in which marketplace?" If automotive clients, Chevy, running different creatives, again, you see the differences in QR code on one side, pushing a different lot on the other one. My personal favorite.
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Any number of iterations updated on a daily basis, API to the information you're looking for, no lift at our end from our operations perspective, no lift at the client end, yet you get to see a completely national campaign become absolutely local with a flip of your finger. What is data doing? Data is driving the growth across a wide variety of categories. Today, around 50% of our campaigns are supported by what we are doing from data perspective.
That will continue to grow because every brand that we are talking to is asking for proof of performance or walk us right down from audience profile, tell me if I'm doing this right. That is now starting to get us a seat at the table. We have the story. We got the goods. We have the seat at the table. As my 15-year-old says, "We are low-key cooking it. We are low-key cooking it, fam, like Tupac." With that, I'm out. Catherine is going to be doing a panel. Before that, we'll take a 10-minute break. Thank you, everyone.
All the cylinders were kicking in.
I was just smoking. OK, you're on.
We are on. OK, we are going to do a panel now. I am thrilled to have two incredible partners here.
Just to sort of high level, the panel and what we'll be discussing is just really talking about cinema at the forefront of culture and how we're going to reach and align audiences and really actually create the maximum impact and ROI for advertisers. Then we have to prove out the data. You've heard a lot about that from Manu just now. We rocked it. We're going to continue talking about that. I'm really thrilled to have Sarah Light and to have Chris Poydenis with me. I'm going to let them introduce themselves.
Sure. My name is Sarah Light. I have been working in media and advertising for almost 20 years. I spent about 10 years on the media agency side, actually working primarily on studio business. I am very familiar with the workings of studios.
The last 10 years, I've been on the client side at various different companies, including Discovery, Fox Sports, AT&T. I am now leading paid media planning in the U.S. and LATAM for the Expedia Group. Thank you very much.
I'm Chris Poydenis. I'm the Chief Revenue Officer and one of the two founding partners of Influential. I started my career pushing a mail cart at William Morris as an agent trainee. I then went over to Imagine Entertainment and worked in the movie business with Ron Howard and Brian Grazer. Spent some time at iHeart Media and doing celebrity endorsements at Premier Networks. About 12 years ago, I founded Influential with my partner, Ryan Dieter. Jumped onto the influencer marketing train. Became the largest company in the space by revenue over the last 10 years.
Did about just under $500 million last year, comprised of about 70% of the Fortune 500. We were purchased by Publicis, the largest holding company in advertising as a result of that. Really excited to be partnering with NCM and exploring all the cool opportunities and capabilities that they bring to the table to enhance what we offer.
OK, I'd be remiss if I didn't ask you both. Favorite movie or favorite movie experience, whatever you want to go with.
Mine is kind of funny. I grew up in Wisconsin in a town of 25,000 people. When I was in seventh grade, the movie theater caught fire and was closed for nine months. It was tragic. It was devastating because there really wasn't anything else to do.
I made sure that my parents drove me 20-plus minutes two towns over so that I could see Titanic in the movie theater. Never regretted that decision.
No.
Worth it.
Yep,
100%.
There was room.
Yeah.
Anyway.
Great call.
Yeah.
Scream in seventh grade for me as well. The resurgence of the horror movie, but also my first time kissing a girl. I took advantage of the chaos that was going on around us.
You never know what you're going to get in front of everybody. Here we go.
You know I've never gone back. I'm still kissing girls in movie theaters today.
Oh, I love that for you.
Yeah.
Here we go.
All righty. All right, switching gears a little bit. Sarah, you have been a longtime partner with us at NCM.
When I think about the relationship, why is cinema such a key channel for the brand and actually the category? For those in the audience that do not know, one of our biggest categories is actually travel and tech. As Tom alluded to in his opening comments, they also are the ones that have the most first-party data. That first-party data allows them to see in a much faster way what is working and what is not.
Very true. We have consistently utilized cinema, the cinema space. Our target audience over-indexes at indices of 140-155 in terms of finding new brands at the movie theater. These are our people that are going to the movies. Expedia, especially, obviously Expedia is a very, very well-known brand. We also advertise Hotels.com. Our challenger brand is Vrbo.
That brand awareness and brand discovery is really important. In 2023 to 2024, we deepened our partnership by doing an always-on, year-long plan in that really premium courtesy/slash silence-your-cellphone spot, which allowed us to feature a bespoke 40-second creative. The audience was not going to see that anywhere else, even if they saw an Expedia ad, and really connect our brands to this really wonderful movie-going experience. Like I said, our target audiences find new brands at the movies because they go at least once a month all the way up to at least once a week. I wish I had time to go once a week. We got to capitalize on this premium space, the premium screen.
We got to have, in the courtesy spot, a 100% share of voice in the travel category, which is just not something we could achieve on any other media channel. It can be a very crowded space. In 2025, and this is really a credit to you guys, we have made a very conscious shift in our marketing to be more of a performance-based strategy. You guys were able to meet us in that place. There was a time where we thought it was not going to work. We did not know when we started, literally week one. It was like, hey, Expedia, we are kind of having a problem. One of our top five advertisers. I was like, welcome to NCM. Because it is, and we will talk more about this later, it is a great brand play. We were truly shifting into that more performance space.
The way you guys were able to come along on that journey with us has been a true testament to our partnership. Great. Thank you. Yes, that was a tough time, but a really great outcome. Yes. If I think about all the campaigns that you've run with us, is there one that stands out or that had something that you're like, wow, that really just resonated and worked for us? For those of you who might not be aware, Vrbo is a really big college football sponsor. We're actually the name sponsor of the Fiesta Bowl. For the college football 2024 season, we featured the famous or infamous former Alabama head coach, Nick Saban, in our ads as a, I guess, curmudgeonly vacation rental host who not only refused to leave, when his renters came in, he made them adhere to his strict rules.
It's very funny. I highly recommend that you watch it. I still laugh every time I see it. It was a true 360 campaign. What was great was we were able to create that bespoke 40-second spot for cinema for you guys. We had audiences experiencing this campaign on phones, on tablets, on desktops, and laptops. Most exciting, the big screen, 40 by 40 out there. To me, that really helps hammer home the idea that all of these touch points matter and this brand and this campaign hit you wherever you are consuming content. Hopefully, people took away that Vrbo vacation rentals never have hosts at home. You will never run into Nick Saban at your vacation rental, maybe just a college football game.
Fantastic.
Thank you.
All right, Chris, you and I have spent a lot of time talking over the last several months based on our audience and the scale. When you think about what's happening in the creator economy, the growth of it, I'm curious in terms of its growth within branded content, where it's going, and how you're leaning into it.
Yeah, of course. It started as about a $100 million industry. This past year, it was $6 billion. This year, I believe, $9 billion is the projection. I think next year, they're saying $16 billion. That's branded content money into the platforms by creators. What we're seeing now is social media and influencer marketing was a meritocracy where the fans dictated whose content rose above the rest.
It's now gotten to a place where it is worthy of omni-media channels and different platform extensions or medium extensions, none cooler than the silver screen or the big screen. The idea of taking the smallest screen, not just for the brands, but for the creators, and now giving them an opportunity to be part of a culturally relevant tentpole moment with a captive audience. You guys beat us over the head with that. It's so true, right? The attention metrics. The biggest complaint about social and what we combat every day at Influential is that attention metric callout of, hey, I want to attach Moat, if you guys are familiar with Moat, to track attention metrics and then to benchmark against conversion. If someone is watching something for five seconds on social media, on TikTok or Instagram, are they buying that soda? Are they going into that restaurant?
Are they test driving that car? The answer is probably not. When we do see 30 seconds of attention metrics, the answer is they probably are. You guys are that solve. Of all the other mediums we've explored and we've tacked on, I'd say the most compelling and also at the same time the sexiest has been you guys. Right. When you think about the opportunity, what is it as we move forward in this relationship that you get really excited about? What's the opportunity that the creator, you think, outside of the fact that they're on this big silver screen, but what are you most looking forward to? I had an answer for this, but then I heard Manu talk. I'm like, there's like 15 more things that we could talk about and geek out about.
I do think something like the creator content series that we're talking about developing, which real quick, guys, like log line on it, having two creators that are super fans, a lot of fandom around movies, around pop culture, doing this pre-roll show, almost imagine like a mini podcast, but filmed, obviously, and weaving a brand into that content. Even on top of that, at Publicis right now, just some inside baseball, we're talking to a lot of brands about financing films, getting involved in and integrating their brand in a very bespoke way into the story. What if we were to create a comprehensive package alongside you guys where it's not only are you getting integrated into this film, Conagra with Orville Redenbacher, but you're also now creating a marketing strategy leading up.
You heard Manu talk about social listening being one of the first things you listen to or you look at to identify whether a film is going to be tracking or not. Social media is the largest crowdsourcing of public opinion in human history. To be able to harness that power and to steer people into the theaters, then have influencers potentially doing the red carpet, doing an event, doing an experience, holograms, everything that you guys offer. They get their butts in the seats, and they're exposed to additional messaging and an endorsement. That, to me, why would you not do that? That's the Holy Grail. Holy Grail. Right there. Oh, and then track it. Did it work? Right? That's awesome. It's all on you. It's all on you. Perfect.
Thank you. I love that. By the way, we're on the same path there.
You sort of hinted, Sarah, a little bit about the change and step change within your own organization from really using us as a branding platform to really your company being highly focused because of all your first-party data to a much more performance-based company. Can you talk a little bit about that evolution with us?
Sure. You know, as I mentioned in 2025, we have made a conscious pivot to make sure every marketing dollar is driving business performance. Cinema is a great brand awareness tool. We had study after brandless study pointing out the increased perception and positivity and consideration. We needed to find a way to make that translate in a tangible way that we could see to our business bottom line. Because we all know every ad exposure contributes to that eventual purchase.
Absolutely.
We just had to find the way or a way to show how cinema could help us do that. You guys, coming off of our near breakup, it was so sad. It was very sad, but avoided, because you guys were able to partner with one of our measurement solutions, iSpot. Now we are able to track via iSpot the conversion for every single spot that we run with you guys. We can not only track the conversions, but we can test performance across all of your different ad placement offerings. Eventually, we're going to be able to optimize to the top performing placements. What's very cool about that is what could be a top performing placement for us at Expedia is not the same as a QSR. It might not be the same as an insurance one. That's great, right?
Because then we can all find what works for our business and our audiences the best. You guys had mentioned programmatic. We are also taking advantage of programmatic. It can be within our ecosystem, and we can look at the performance of cinema as a channel head to head with our other channels and really see, are you guys going to be as good or, as we anticipate, better than some of the other channels? Lastly, we're working on building cinema into our proprietary media mix model, just so it's solidifying cinema's place in our marketing strategy and projected results. From where we were, which was nearly on the outs, to where we are now, I think we've come so far in such a short amount of time. We're really excited to see how the rest of 2025 goes.
Great.
I also just say this is a real-life example of the democratization of data, firsthand with one of our biggest clients where we met them where they wanted to meet. I just thank you for taking that journey with us and going through. I know we only have a few minutes left, but I would be absolutely remiss to not ask you about attention. Here in the creator economy, we know so much of it sits on social. Keep talking about attention and its importance. When you think about us as a distribution channel going forward, how does that excite you as it pertains to attention?
It creates a sure thing, right? There is no sure thing in the creator economy today on social platforms. It's actually the problem, right? And cover your ears.
I don't want you to hear this because I want you to use influencers. It is part of the problem, right? When the lights go down and the screen lights up and everyone's phones are off, as I've heard you guys say, you never have a more captive audience. You guarantee, and Manu mentioned frequency. For those of you that don't know frequency, most advertisers will say there's a rule of law is that you need to be exposed to a message at least three times before you actually convert and react to it in a tangible way.
To know that someone can wake up in the morning, see a TikTok, get in their car, maybe hear a message reinforced, some podcast or whatever, the advertiser also is in the media mix, but then know that that same high-valued custom audience member is going to be in a chair watching something for 30 seconds, for a minute, however long we decide to have that piece of content run, that just checks a box that we've never been able to check before. It is super exciting. Super. Thank you both so much. I hope that you've heard not only you listened to us at NCM, but now you're hearing from clients and partners in terms of how NCM is leading the way, not about just democratizing data, how we're leading at the forefront of actual culture. You are going to hear some more after this.
I think Ronnie is up next. I can't thank you both enough for your partnership and for taking time out of your busy day to join us today. Thank you very much.
Thank you.
You know, I'm tired. Good afternoon, everyone. I'm going to have to. Thank you for being here today with us. Before we wrap up and head into Q&A, I want to put a financial lens on today's conversation. Oh, it's over here.
Oh. Allow me to hand it to you. Sorry about that, Ronnie.
For the next 20 minutes, we'll cover four topics. First, we'll review our reinforced financial foundation as a result of the 2023 restructuring. Second, we'll go over our revenue expense drivers. Third, we'll update you on our capital allocation strategy and our new dividend program.
Lastly, we'll go over our outlook on the business and the framework to think about NCM going forward. To provide context, NCM has historically always generated a significant amount of unlevered free cash flow. Prior to COVID, the company on average generated revenue of $440 million annually and adjusted EBITDA of over $200 million. Given a capital-light business model, 80% of that converted to unlevered free cash flow. However, COVID significantly disrupted the cinema industry. With theaters forced to close across the country due to lockdowns for an extended period of time and the introduction of social distancing measures that limited attendance upon reopening, the movie-going experience was disrupted.
This, along with delayed or canceled production schedules that caused a shortage of new movie releases, severely impacted foot traffic in cinemas, resulting in advertisers pulling back ad spend, which significantly impacted NCM and its exhibitors, whose businesses are heavily reliant on the movie slate and theater attendance. In response, NCM took swift action. Since 2019, we reduced personnel by 52%. We achieved annual cost savings of $38 million and successfully increased our advertising revenue per sales employee, which is up 25%. Despite our best efforts, a comprehensive solution for the balance sheet was needed. Ultimately, NCM filed for Chapter 11 in April 2023 with overwhelming support from our secure lenders and key stakeholders. Through the process, NCM eliminated $1.1 billion of debt and over $90 million of annual debt service.
Coming out of restructuring, we also secured approximately $55 million of new capital in the form of an ABL facility. As a result of the Chapter 11 plan, NCM's secure lenders became the majority equity holders, and NCM's legacy shareholders maintain approximately 14% of the post-emergence equity, including Cinemark's current 4.5% ownership position. Today, NCM shareholders own 100% of the equity in NCM. The new structure provides us with improved corporate governance and greater operational independence, ensuring that decision-making is aligned with NCM's best interest and long-term growth trajectory. Since the restructuring, we've continued to focus on strengthening our financial position. On January 24, 2025, we closed a new $45 million revolver with U.S. Bank. The new revolver reduced our cost of debt by 200 basis points, eliminating our annual interest expense by $1 million.
Additionally, and importantly, our new revolver is a cash flow-based revolver versus an asset-based facility, indicating the credit market's confidence in our business and our ability to generate consistent free cash flow. Upon closing the new facility with U.S. Bank, we repaid the entirety of our outstanding debt with CIT. Thus, today, we have no debt outstanding. In addition to our balance sheet actions during and since restructuring, we have also taken two additional steps. We eliminated unprofitable contracts, which resulted in $5 million of annual cost savings with minimal impact to revenue. Secondly, we right-sized our organization by consolidating business units, resulting in additional $4 million in annual cost savings. These initiatives, combined with the previously discussed balance sheet actions, have helped us optimize our cost structure, enhancing profitability and further supporting our financial goals as an organization.
Now, I'd like to take you through what drives our revenue and expenses. There are many factors that impact our business. However, I will focus on two key factors: attendance and monetization. Attendance continues to be an important metric for NCM, and we remain optimistic about the continued recovery of the cinema audiences. In 2024, total attendees across the NCM network reached 391 million, which was approximately 11% lower than 2023, though expected due to the slate delays in the first half caused by the industry strikes. However, attendance rebounded in the second half. During our fourth quarter, we saw attendance of 101 million, up 22% year-over-year. While audience was impacted by weaker first half in 2024, we are still pleased with where our monetization and utilization are trending. Our CPMs are strong and ahead of 2019 levels.
Despite fluctuations in attendance year-over-year, our revenue per attendee has remained stable. As you heard Catherine discuss earlier, we are continuing to make strategic investments to improve our inventory utilization, which we think will result in meaningful upside to monetization. Together, attendance and monetization drive our revenue. Despite the 11% decline in audience, our sales team was able to optimize pricing and packaging, limiting the revenue impact to just a 7% decrease. These results were largely driven by lower attendance during the year, which resulted in higher revenue per attendee, up 4% versus the prior year. Additionally, in the second half of the year, we faced an unusually high mix of harder-to-monetize G and PG-rated movies in difficult year-over-year comparisons. Further, the election caused advertisers to delay ad spend decisions, ultimately impacting our top line for the year. Importantly, we see these trends as temporary.
With the audience mix expected to regulate and a strong film slate expected in 2025 and 2026, NCM has substantial runway to recover in both national and especially in local. While we're not looking to build back our local sales team to the same size as pre-COVID, we are looking to build back in select markets with a concentrated, disciplined approach. Finally, a quick note on beverage revenue. Our most recently negotiated deal with Regal in 2023 now excludes beverage revenue, thus the year-over-year decline. Since the start of COVID, we have achieved a substantial amount of cost savings and continue to further optimize our cost structure from 2023 to 2024. First, looking at our exhibitor fees.
As I just mentioned, the new Regal affiliate agreement was simplified and is now mostly an attendance-based fee structure with a revenue share that does not apply until a higher revenue per attendee is reached. In return for the new agreement, we secured five additional minutes of post-showtime advertising, adding incremental value with a now doubled 10 minutes of post-showtime inventory. Additionally, in 2023, we also terminated certain network affiliate agreements, which were unprofitable. As a result, today, approximately 60% of our exhibitor fees are tied to attendance, which fluctuates. 20% are attributable to screen fees, which are mostly fixed, and the remaining 20% are mostly revenue share. Secondly, as I previously mentioned, we are committed to optimizing our operating expenses. We are doing this through targeted cost savings included in consolidation of select business units and reductions in headcount.
As you can see, we achieved a substantial amount of savings in 2024, including a $10 million reduction in SG&A. Full-year adjusted EBITDA for 2024 was $46 million. Total unlevered free cash flow for the year was $58 million, which significantly outperformed full-year 2023 levels due to the absence of restructuring expenses, the unwinding of working capital coming out of our 2023 restructuring, and approximately $12 million in the fourth quarter prepayments for 2025 advertising. Adjusting for the prepayments, we achieved an adjusted EBITDA to unlevered free cash flow conversion rate of approximately 100%. While we expect to continue efficiently generating cash, our goal is to maintain an unlevered free cash flow conversion rate of 70%-80%. As NCM moves forward, we are focused on prioritizing strategic investments in business growth while maintaining our commitment to shareholder returns. First is investing in the growth opportunities we discussed today.
Among these are the strategic data partnerships, which Catherine touched on earlier, sales and inventory monetization tools to improve utilization and monetization, new sales talent to effectuate our aggressive local sales plan, and self-serve and programmatic offerings to enhance advertiser experience and capture a greater share of national and local budgets. As such, we are making investments to streamline adoption by improving the user experience and increased sales productivity without meaningfully increasing the sales force. We plan to continue to invest in our self-serve platform and expect to see meaningful contributions beginning to ramp up in 2026. Finally, the investments in inventory management are expected to drive improved utilization in our programmatic offering. As we continue to invest in the growth of our core business, we remain committed to delivering strong returns for our shareholders.
Our $100 million share repurchase program running through 2027 underscores our confidence in both the current state of our business and its long-term prospects. This program is funded by operating cash flow distributions from NCM LLC. As of today, we have repurchased 3 million shares for $17 million, representing approximately 3% of outstanding shares. It is also important to remember that the pace of the repurchases is subject to blackout periods, daily limits, and the utilization of 10B51 programs. That said, as the business continues to improve, we expect to accelerate the program this year. In addition to the share repurchase program, as Tom previewed, we are extremely excited to reintroduce our dividend program today. We expect to allocate $11.5 million of unlevered free cash flow in 2025 to our dividend program, which equates to $0.12 per share annually for a 2.2% dividend yield.
This dividend will be paid quarterly and aligns with our high free cash flow conversion business model. The dividend program also provides a predictable baseline of capital returns for our shareholders. Additionally, NCM benefits from the long-term tax amortization of intangible assets, which creates a large tax deduction that puts NCMI in a tax loss position. As such, our dividend is tax-deferred. Now that I explained the steps we're taking to continue to fortify our balance sheet, our performance drivers, and our capital allocation strategy, I'd like to spend the remainder of our presentation discussing what you can expect from NCM in the future. We are encouraged by the continued recovery of the box office and the ongoing momentum of the advertising industry. With the domestic box office projected by Wall Street to grow 10% in 2025 and the core U.S.
Advertising market expected to grow 8%, we are well positioned at the intersection of two separate industry tailwinds. That said, I'd like to first reiterate our first quarter 2025 guidance, which we issued last week. For the first quarter of 2025, which is a seasonally slower quarter, we expect revenue to be between $34 million and $36 million. Along with our revenue guide, we expect adjusted EBITDA for the first quarter of 2025 to be between - $9.5 million and - $7.5 million. This said, we do not see first quarter revenue and adjusted EBITDA being indicative of our full-year results. As you can see, the first quarter has historically been the lowest and is not a true indicator of full-year performance. Our revenue typically builds throughout the year, with the most strength coming in the fourth quarter. Look at 2023.
While the first quarter was lower compared to the prior year, we finished higher compared to 2022. Looking ahead to 2025, we're encouraged by what we expect to shape up to be a strong year. Second quarter sales pacing is already well ahead of the prior year, signaling positive momentum for 2025. We expect this momentum to be driven by the improving content lineup, growing advertiser demand, and the continued expansion of our client solutions. With that said, I would like to provide some additional context on our expectations for 2025. First, we expect SG&A to increase in a high single-digit % range year-over-year. This reflects higher sales commissions from increasing revenue, investment in sales team and go-to-market initiatives, new sales technology infrastructure to better drive inventory utilization, and strengthening our operational infrastructure. Second, we plan to increase our capital expenditures by $2 million-$3 million in 2025.
This represents $1 million-$2 million of one-time investments in sales and operations tools, as well as network infrastructure upgrades, and approximately $1 million in delayed CapEx from 2024 facilities upgrades. Importantly, these are one-time investments that will support our future growth initiatives and are not expected to recur. Before we conclude, I'd like to share additional color regarding the leverage that we have within the business model. As you can see at the top of the graph or top of the page, if attendance only increases by 1 million, while advertising revenue per attendee was $0.58, incremental ad revenue would be $600,000. 65% of that would flow through adjusted EBITDA.
If you look at the middle of the page, if only advertising revenue per attendee increases at $0.01 and attendance was flat at 391 million, the incremental advertising revenue would be $3.9 million, with 90% of that flowing to adjusted EBITDA. If both levers were to increase, where attendance is up 1 million and advertising revenue per attendee was only up $0.01, the incremental advertising revenue would be $4.5 million, and 87% of that would flow through adjusted EBITDA. With this high adjusted EBITDA contribution margin, it demonstrates NCM's highly leverageable model. Looking ahead, we are confident in our ability to navigate a dynamic marketplace while strategically investing in our future. As a reminder, we are well positioned due to our competitive edge, attractive industry dynamics, premium audience and product, and compelling financial position. Thank you for being here today with us.
We hope this presentation provided you with further clarity into our business and the exciting opportunities that lie ahead. We will move to Q&A shortly, but first, let's preview some of the hits coming into the 2025 and 2026s late.
All we need is one moment. Just a little more time, a little more nothing. Got someone on my mind and I've chosen you. 'Cause you're looking like jazz, and you're looking for money. You got that something new, that sexy attitude. I've never seen it quite like that. You fit that like a fool, and I already knew. By just one look at you, I'm gonna find out before the lights out. All the good girls, go ahead and drop all your wings away. She's loving when you're pushing like a ghost. Violet from autumn. What the hell? There ain't no angels in the wrong place, girl.
All we need is one moment of you. I've been taking my time, but it's all about timing. I've been on Sixth Street working in the house all night. By just one look at you, I'm gonna find out before the lights out. All we need is one moment of you. There ain't no angels here on the dance floor.
Okay. Thank you for patiently sitting through that. I know everyone's got a busy day. I thought it was just over two hours. We have plenty of time for questions, and that's the only thing getting in the way of having a drink and a snack. We are open to all questions. I've always been forthcoming in these things, so feel free to ask me a question or any of my partners. They're going to give you a mic so we can get it on the webcast.
Just keep your hand up for a second and then.
Great. We're going to start with questions in the room. Please introduce your name and your affiliation, and then we'll move to any questions from the webcast after. We'll start here.
Awesome. Thanks, guys. Benchmark, Mike Hickey, thank you for doing this. Great, great presentation. Just curious on the media buyer perception of the theatrical medium for advertising. What do you think the biggest misperception is for media buyers? How you overcome that, obviously. The same question maybe for you, Tom, or Ronnie, from investors, maybe the biggest misperception they may have on your business and how you overcome that. Thank you.
All right. Catherine, why don't you handle the advertising question first?
Sure.
I think the biggest misperception is that cinema is sort of like your grandma's Oldsmobile, that it basically can maybe do just demographics that you can buy against. I think what you heard today from Manu, quite frankly, sort of eliminates that. What we have been doing behind the scenes over the last 10 months is, as you heard us talk about, the opportunity between video, retail media, and within the creator economy, it is that shift. It is consistently getting a very tight story, which is why we always say, elevator pitch, average age is 30, we have your attention, you are in a brand-safe environment, you are incremental at scale. We are consistently telling that story. I think what you are starting to see, or we are starting to see, I should say, in second quarter, is that story starting to resonate.
We have a lot of work to keep moving that along the way, but we have started and it is taking hold.
On the other side of it, I don't know the exact answer to your question, Mike, but I would postulate that we get a little bit of the black cloud of the exhibition business, which in fairness has had a rough go over the last few years. We've always positioned ourselves really as a media stock. That's really what the company is much more aligned with. There is so much coverage on the box office and on attendance and all the things that have happened in the industry over the last three or four years. I think there's still a perception. I can't tell you how many investors will say to me, "Tom, do people still go to the movies?" I actually will get that comment.
It's like, obviously, that demographic's not going, but it's really that 30-year-old, and most of them are not in this room, and most of them are not in the business of investing in public companies. I think that's the biggest issue. I think, candidly, we've done a really good job since coming out of restructuring, getting out in the community, the amount of roadshows we've done. We've gotten a really high conversion rate, honestly, in almost all the meetings I've been to pitching potential investors.
Hi, George Schultze, one of your shareholders. I just didn't quite understand you. I think, Ronnie, you'd mentioned the change in the beverage contract for one of your customers. Did that apply to all of them? What was the exact change?
Yeah. In 2023, we entered into a new REGO agreement.
As part of that agreement, there would be no beverage revenue associated with just Regal. We have that with our other two largest partners still. That is what I meant by when you look at from 2023 to 2024, why there was kind of like the step function down in beverage revenue, and that is the reason why.
Thanks.
Hey. Thanks, guys. This is Sriram from JPMorgan, a shareholder. As I am sort of thinking about your capital allocation strategy, sort of like two questions here. One, why introduce a dividend rather than just going with share buybacks? And then as a second one, would you at some point in the future consider releveraging the cap structure?
Yeah, that is actually an excellent question. As you know, we have this $100 million share repurchase program that we utilized $13 million of it or so last year.
We thought that this was a good time. By the way, just to step back, NCM has always been, you remember, a dividend payer. It is actually a very attractive dividend, right, because it is tax-deferred. There is not a lot of that out there, to be frank, because it is treated as a capital return. Now, what we thought was a good use here is giving a predictable base of shareholder return that you can easily, obviously, depend on. We wanted to start off on a level that was meaningful, but frankly, as the business does better, there could be more to be done. We thought a mixture of the dividend and the buyback was a great strategy, a two-pronged strategy to return capital to shareholders.
I think the other thing I would add to it is people focused on dividend stocks.
When the company was in its heyday and the stock was trading at a very high level, half of our equity shareholder base were index funds that were dividend-focused and/or dividend investors. We thought it would create a nice stability also in the company and bring new investors in. That was the reason to develop. Your second question was, would we ever leverage the balance sheet? Was that what you asked? I think we're not opposed to that. If the right situation came around, there was a reason to do that. Having said that, we've only been a little over 15 months coming out of restructuring. It is a nice moment to having had $1 billion in debt to have none. I'm still sort of relishing that as a CEO.
Having said that, we understand the opportunity that we have, both with our existing cash flow as well as with our balance sheet. It's a pretty desirable position to be in. There are very few companies publicly traded that have no net debt and who have a balance sheet that we could leverage if we choose to find the right opportunities.
Hi. Barrington Research, Pat Sholl. I was wondering if you could talk about the data efforts that you have and being better able to identify audiences and the ability to use that to better monetize some of the other genres that you guys have talked about as being under-monetized.
Yes. For the past, I would say, three or four years, there has been steady investment in building our data and tech practice. I think someone had asked me how we capture the data.
It's a combination of first and second-party data where we are able to actually track down to household level who was in the theater exposed to the ad. That gives us now the ability to prove out to brands what the exposure looked like, and then in turn, what was the impact of the exposure in terms of attribution. As far as its impact in the marketplace, we're already seeing significant revenue that is being supported by these data efforts. Our ability to build these data products, pull them out in the market really quickly, just gives us more confidence in being able to steer dollars away from the so-called real-time measurable platforms, which is where the dollars have been moving for the past couple of years.
It gives us a seat at the table that we didn't have, and we'll steer away the dollars because we have the scale and the ability to prove out value quicker than any other platform out there. Anything you want to add, Cath?
I think you nailed that.
Hi, Rick Reeds, Georgia Advisors. What are the logical external opportunities for you in terms of acquisitions, add-ons? What do you think makes the most sense?
I mean, what I would say is in our capital allocation strategy, right now we're very inwardly focused, which I think makes sense given where we came from. Doesn't mean our head's in the sand and we're not looking at possible things to do. Of course, we talk to people.
We have a really interesting platform that has a lot of potential, but I can't really respond to an M&A question on investor day. I am going to leave it at that before I get in any trouble.
Hi, Adams, Like Health Advisors. Happy birthday. Only. How did you know? Was it a data giveaway? She's already tracking you. She's sending you a birthday present right now. Anything else in the room? Yeah. On the call last week, you talked about Q1 having a little weakness in military advertising. Just curious, looking at the back half of the year as a comp, curious on how much military advertising you had in the second half of last year. Just thinking about comp in terms of military advertising.
Let me start with that, and then Ronnie will tell you the specifics.
Military happened to be unusually strong in the prior quarter last year, particularly the Army. That got put on hold, basically, given all the drama going on in Washington. Having said that, it is a relatively small category for us. There is other government spending unrelated to military that we still do a fair amount of. You can argue that lottery is government spending, but the sheer military part of it in the back half is actually really small. Ronnie might comment on that or Catherine.
Yeah. Just to give a little more context, last year, when we look at our total government pie, about half of that was really state and local and the lottery. Those are stickier businesses for us. Obviously, lottery is revenue-generating for states.
When you look at just the amount of dollars or how the dollars flowed in from the U.S. Navy and Army last year, we actually almost got no money in the second half of the year from those two entities. It is really just we're talking about a first quarter, second quarter impact.
It's Bill Kim, Presidio Asset Management. Just had a quick question on the ESAs. How should investors get comfortable with the terminal value of the business, given that the average life of these contracts is for 11 years? Now that the founding members are no longer large shareholders, what incentives do they have to continue these contracts with you versus a competitor? If you could just touch on plans for the TRA, that would be helpful.
I think at the end of the day, we're the only game in town when it comes to cinema advertising. I think regardless of the term on these agreements, there really isn't another good option. Now, certainly, people could try to do it on a standalone basis, but the network effect and the scale of our company, which was a very good idea 20 years ago, is still going to drive the most revenue for exhibitors. There isn't a major agreement that we haven't extended that we wanted to. I've been on the board and CEO for almost a decade. I have a high level of confidence that those will continue on, maybe well after I'm not here. I can tell you there's more exhibitors that would rather be in business with us than we pass on.
All of the big guys want to stay in business with us. I can tell you that it's a very meaningful part of the margin structure of the three big guys. If you look at AMC, Regal, Cinemark, that contribution we provided them is very important as a percentage of their overall EBITDA and cash flow. I think going some alternative route, of which there really isn't a feasible one, it would put a lot of risk on them. I think their shareholders would not appreciate it. In terms of actually quantifying the terminal value, I'm going to leave that to Ronnie because I'm not capable of doing that in the room. We can talk to you about that after if you want, maybe a little bit.
I used to do that for a living.
Now it's the investor's job to figure out the terminal value of any business. Look, just to clarify, we do have the weighted average, as you said, of all of our contracts, including our affiliates, is roughly a decade. If you look at Cinemark, that's a 13-year contract remaining. If you look at—oh, no, sorry, not Cinemark, but AMC. If you look at Cinemark, it's actually 18 years. It's definitely our major and most important contracts are long-term. Regal's nine. The TRA. Oh, yes. On the TRA payments, obviously, with certain parties, we're still subject to those TRA payments. I would just say this. The TRA payments, if we don't make them, it's a pretty cheap fund source of debt in a sense. Obviously, we like our partners as well. Obviously, when we have to make TRA payments, we'll likely do that.
Okay.
Anything else in New York City? Do we want to turn to any questions from the web?
Yes. Looks like we have a few.
The first is, can you tell me more about how you see the trajectory of the box office over the coming years? What gives you confidence that we'll continue to build back?
I mean, I highlighted this a little bit in the presentation. I mean, it looks like this year is going to be up 10% box office. I think the slate for 2026 is going to be even better than that. It's very difficult to get beyond that. I worked at two movie studios for 20 years, and I tried to predict individual movies. Trying to predict what an entire industry is going to do is almost impossible.
I think, as an interesting comment, none of the exhibitors do any guidance at all annually. I think right now we're at 65%-ish of 2019 levels. I do think the theater owners are healthier than they've ever been. I do think that the studios have now gotten out of a lot of the direct-to-streaming businesses, which was driving some of the lack of attendance. As I mentioned in the speech before, Amazon's now committed to 12-16 movies next year. That's bigger than Paramount was. I think everything that could be happening positively is. I personally have a lot of conviction in it. I still think it's a great platform, and people really do love going to the movies. It sounds like a cliché, but it's true. We had two more questions from the webcast.
First, how much of future revenue growth should we think about coming from programmatic and self-serve? How should we think about those as growth areas in general?
Catherine, why don't you talk about, in general, how big programmatic is on an industry level? Then you and I can talk about what we think it might be for us.
Yeah. As I stated earlier, right now, the big holding companies are—these are the big advertising agencies, if I'd say holding companies. The holding companies overall are activating about—so if Omnicom has $18 billion that they're spending in the U.S. marketplace, about 50% of that right now is being activated programmatically. Their goal, and not just theirs, but industry-wide, is to get that clo`ser to 70% by 2027. It is a massive activation piece.
I say activation because they still may do a direct deal with a Walt Disney Company or someone like that. At the end of the day, they want the controls. They want the waste to go away. They want to have a lot more consistency about their target. They may just activate it programmatically. Yes, it is a massive piece of the overall, and it is really what is driving the growth in CTV.
I would just say this. It is not only simply just meeting the client where they are, but it is also helping us drive efficiency, right? We are talking about self-serve programmatic. That just means every ad that we have, whether it is local or national, can just do more. It obviously helps with the margin of the business. It helps ultimately with the revenue per attendee as well.
We have advertisers that never were on the NCM platform until we made it available programmatically. I think that's important. I think I'm not going to give you a number, but I think in 2026 it'll be a material part of our business.
Just one thing to add because we all have to say something this time. Sorry. Programmatic is predominantly data-driven buying. It's just pipes that make it easy, but it's data-driven buying. The fact that we've built an infrastructure that supports it just puts us in a really good place from a growth perspective.
Great. Last question is about local. Specifically, what are you seeing in local markets, and how much room is there to grow revenue on the local ad side?
Before you give the specifics, I just want to say in the heyday, going back to 2019, I think we had over 100 local salespeople, maybe even more than that. I think at the time, we might have had the best local specialized sales company. As COVID hit, local took a huge hit. Part of the investment we're making back is on our local sales team. I'll let Catherine and Manu talk about it more from an advertising perspective.
Yeah. I mean, when I first walked in the door, I mean, massive opportunity. CTV really is having a tough time measuring on a local level. They can barely do it on a national level in any sort of really timely manner. Local is just a massive opportunity.
With the data products that Manu and team have built, it gives us that opportunity to still really bridge that funnel between national and local. Whether it's an automotive, if it's retail, if it's a QSR, they have that ability to really drive national and local together. It was the State Farm example that I gave with AdGreetz and our Bullseye product, where we're now able to do 10,000 iterations of creative at a local level. That wasn't possible before. The opportunity for local is substantial. Think about lottery. Right now, we're just doing it market by market. Working with Bullseye now, we can turn that on automatically and drive amazing revenue, really incremental revenue on the local side.
The work that has been done inside with our in-partnership, obviously with our local sales team, but with Manu's team as well, is really to arm them with the data that they need to go do their jobs.
I mean, the reality for our brands is, if you're looking in the sight-sound motion space, there's immeasurable fragmentation, very little ad-supported inventory. Everything is at upside for us. Has that it?
I really want to thank everybody for coming. I know everyone's got busy days, busy times. We really appreciate the support of people who have been with us forever. Those are with us today, and those are going to be with us tomorrow. It's a great company, a lot of upside. I'm particularly proud of what we came through over the last few years. Now we have this incredible opportunity, great balance sheet, really good management team.
I think a lot of upside over the next couple of years. Thank you, and we'll see you out at the cocktail party.