1. P&A 3.0: New Approaches for Financing Movie Marketing Steve Soffer Copyright 2016 Media Funding Partners, LLC  Sources  How much is enough?  Does it Pay?  Future

2. WINNER FOR BEST SUPPORTING ROLE in P&A FINANCING Is…

3. P&A 3.0: THERE’S A NEW ENVIRONMENT FOR INDEPENDENT PRODUCERS “There might not be a more daunting challenge than opening a major motion picture: Create an internationally recognized brand name that lasts a lifetime, and do it in a couple of weeks with no second chances to course-correct.” Larry Gerbrandt, Industry Analyst at Media Valuation Partners

4. FAST FACT BASICS: 1.Typically the largest expense in film financing is the P&A or Print and Advertising budget --“P” represents non-advertising expenses, better known as the marketing side of the equation, like digital prints, PR, social media and creative… but the main part of the P&A tab is the “A” side or advertising. 2.The cost of television is the biggest advertising line item. TV can make up half of any marketing budget, despite the fact that U.S. television viewership is under attack on multiple fronts and is being fragmented. 3.The typical P&A budget today, can be equal to the film budget, if not significantly higher. 4.A P&A lender is always “last in, first out” (senior debt) and typically receives 20% ROI for financing the P&A budget. P&A 3.0 P&A Basics 81% 65% 61% 50% 46%

5. The Film Daily Yearbook (1929) is aimed at cinema owners, and it’s full of innovative ”tricks” for marketing every possible sort of film. P&A 3.0: A little marketing history http://hideandseek.net/2010/09/09/cinema-advertising-tricks-from-the-1920s/ TODAY: China is already ahead of us on this one: their home-grown box office blockbusters rely primarily on social media for their marketing, since the entertainment conglomerates there have direct corporate tentacles into their customers' mobile devices. They are not even bothering with physical film posters anymore! -- Colin Brown, Editorial Director, Slated

6.  In 1980, the average cost of marketing a studio movie in the U.S. was $4.3 million ($12.4 million in today's dollars).  By 2007, it had shot up to nearly $36 million.  If the MPAA still tracked spending on P&A, that number would be north of $40 million today for medium-size studio films.  Studios now are shelling out as much as $200 million per movie to market the summer big tentpoles internationally.  A major independent release can look at spending about $25 million domestically. P&A 30: THERE’S A NEW ENVIRONMENT FOR INDEPENDENT PRODUCERS Digital Prints – DCPs (2,000)$100,000 Digital Advertising2,500,000 Newspaper Advertising1,400,000 Television, Radio, and Outdoor17,500,000 Trailers and Shipping250,000 Ad Materials, PR, Publicity (Social)3,000,000 Contingency250,000 TOTAL$25,000,000

7. P&A 3.0: P&A Return on Investment MARKETING WORKS FOR BIG MOVIE RELEASES: For every million dollars spent on P&A, the multiplier shows what the film returns base on domestic grosses Max ScreensNegative CostP&A SpendBox OfficeROI on P&A 4,000 +$157$85$2613.1 2,000 – 4,000$52$30$642.1 500 -2,000$19$11$151.3 > 500$7$3$1.3 In millions rounded Source: Baseline Intelligence Hollywood Reporter 6/10/2010 by Larry Gerbrandt, Media Valuation Partners and AP

8. Somewhere between 90-95% of independently financed films never get a domestic distribution deal and go on to be seen in theatres, meaning that the vast majority have a hard time making back their investment. Typically these films: Don’t merit commercial release Lack a clearly-defined and big enough audience Lack a well thought out marketing strategy Competition for good release dates Producers unable to raise P&A money P&A 30: THERE’S A NEW ENVIRONMENT FOR INDEPENDENT PRODUCERS

9.  Distributors  P&A Funds  Banks that supply P&A Senior Debt  Comerica and Union  Wealthy Individuals  Crowdfunding Alternatives P&A 3.0: P&A Funding Sources

10. RELY MORE ON FREE ADVERTISING:  Target a genre with a built-in audience and leverage social media  Word of mouth publicity, viral ad campaigns, innovative guerrilla marketing  Narrower marketing window schedules  Cast talent with large social media followings and are frequently showcased in the celebrity world in order to increase free publicity  Consider new funding platforms P&A 3.0: How to minimize the high cost/risk of P&A

11. P&A 3.0: Innovative Approaches to Financing Movie Marketing Crowdfunding:  Rewards-based platforms allow producers to raise money through donations, usually in exchange for: a copy of the film, some branded merchandise, or other swag, but not for an investment in the production itself  KickStarter: AKickstarter project does more than raise money. It builds community around your work.  Indiegogo: Keep all money raised past 9% cut, funding goal hit or not. Much less media buzz.  Spark&Seed: Filmmaker oriented, including a focus on distribution for finished films. Small core of investors  Rockethub: Rockethub offers the chance for the startups to become stars on A&E’s Project Startup!  Peer-to-peer match-based platforms provide debt and equity from accredited investors  Slated (Production financing only – not P&A)  Title III of 2012 JOBS Act, Equity Crowdfunding with Non-Accredited investors  IndieCrowdFunder allows for a maximum to be raised of $1 million per year.

12. MEDIA BUYING AGENCY / P&A FUNDING

13. We focus on advertising campaigns for independently released theatrical feature films distributed by reputable companies with P&A budgets from $1-$30 million.

14.  MFP provides media planning, media placement, traffic management, tracking and analytics  The media buy consists of traditional forms of media: Network TV, Syndication, Spot TV, Radio, Print, Web and Out of Home advertising.

15.  We provide media funding for 50% of the Advertising side of the P&A equation  The investor still provides the full P side.  Our media funding investment comes in the form of traditional media buys using a combination of  Inventory that we own  Inventory that we contractually control  Media buying relationships with favorable terms

16. Traditional P&A ModelP: MarketingA: AdvertisingTotal15% Agency Fee Division of P&A $ 2,400,000 $ 9,600,000 $ 12,000,000 $ 1,800,000 MFP P&A ModelP: MarketingA: AdvertisingTotal P&A Investor $ 2,400,000 $ 4,800,000 $ 7,200,000 MFP Recoup in Waterfall $ 4,800,000 Total $ 2,400,000 $ 9,600,000 $ 12,000,000

17. MFP works with the distributors marketing team to develop:  Media plan based upon:  target demographics  media mix  release window pattern  budget  research  The buy is the same targeted media as with any media plan -- NOT remnant or late night media  The media plan is subject to client approval  Affidavits, tear sheets and proof of performance are provided to validate every media placement

18. The investment model provides unique advantages for the Producer and their P&A Investor.  The model matches 50% of the cash investment on the A side of the P&A equation.  The advantage for the producer is that the cash funding required is significantly less.  The benefit to both the producer and investor comes from the fact that MFP recoups its 50% balance from the waterfall, thus mitigating risk if the movie does not perform as expected.

19. www.mediafundingpartners.com/eff