Watch this space: DVD marketing may be the next Big Thing. And some say it already is. With consumer sales and rentals growing quickly, marketers are hopping aboard the gravy train with efforts to cross-promote their products with hit DVD releases.

According to research by Toronto-based Solutions Research Group Consultants, DVD penetration in Canada has gone from zero to 48 percent in a mere five years – more than twice as fast as it took CDs to reach the same number. And in households with at least one person aged 12 to 24 years old, DVD ownership is close to 70%.

Marketers as varied as Rogers AT&T, Radisson Hotels and Pennzoil have used DVD releases to increase awareness, drive sales and even test new marketing channels. Media buyers estimate recent annual ad spend growth in the category at between 25% and 35%.

While cross-promotions and tie-ins with post-theatrical-run film releases are nothing new, the DVD medium is one that provides opportunities for more effective marketing. The key is the interactivity, which simply wasn’t possible with the VHS format. The consumer can customize his or her experience with the content. ‘From a pure marketing standpoint, it’s a great value proposition,’ says Kaan Yigit, partner, Solutions Research Group Consultants.

‘[Marketers could] have product placement deals [that include] bonus content that focuses on or highlights the product. There are a lot of possibilities there, especially on the basis of creating brand-friendly content,’ he says.

Some of the innovative ways in which DVDs and marketing goals merge include the LEGO Media direct-to-video feature Bionicles, an animated film created by LEGO and produced by Miramax Films to promote LEGO’s Bionicles action figures. There is also Tommy Boy Records’ Kung Faux DVD which depicts kung-fu in a hip hop-flavoured style, spiced up with videogame imagery. The series features several advertisers’ spots, with the commercial breaks (some developed specifically for the medium), set up to look like vintage TV.

‘It’s not the next big thing – it is the big thing,’ says Mark Workman, president of Los Angeles-based FirstFireworks Group, an entertainment advisory firm. Workman is the former SVP of the global strategic marketing group at Columbia TriStar.

He says the unique advantage of the DVD medium is that it lends itself to a high ‘pass-along’ lifespan (similar to magazines) because it can be viewed in many more places than just sitting on a couch – everywhere from airports and subways to the back seat of your car. Coupled with the extra content (such as outtakes) and the ability for viewers to move back and forth to see the scenes they want, it’s a can’t-miss proposition for studios and marketers alike.

‘Just about every advertiser we work with, that four or five years ago thought of DVD as ‘not up to our standards’ or ‘we’re not sure,’ suddenly puts it on equal footing with [theatrical film releases] because DVD has just added a hipness to rewatching the films,’ he says.

Houston, Tex.-based Pennzoil has been involved in DVD cross-promotions in the past, including The Mummy Returns with Universal Home Studios. This year, the company has teamed up with Universal’s The Fast and the Furious Tricked Out Edition. ‘I think it’s a very wise relationship – looking at The Fast and the Furious Tricked Out and an automotive product – to generate interest and excitement with the brand,’ says Bruce Hall, VP at Toronto-based agency The Mohan Group, which created the current cross-promotion.

The Fast and the Furious Tricked Out Edition DVD hits retailer shelves on June 3, three days in advance of the original film’s sequel, 2 Fast 2 Furious. Pennzoil will offer a special three-pack of Black Magic car care products containing a $5 mail-in rebate offer for the Tricked Out DVD.

Universal says that while there would normally be reciprocation in the form of messaging on the DVD to drive consumers to Pennzoil, there wasn’t enough time to get the material together. However, there will be prominent displays in major retailers like Wal-Mart and Canadian Tire, as well as a radio commercial and flyer buys linking the two entities.

Says Hall, ‘With this Black Magic pack going into the retail locations, we suspect that our sell-through will be quite rapid.’

Similarly, in an ambitious, three-way online promotion Rogers AT&T, MuchMusic and 20th Century Fox ran a contest in March for the Swimfan DVD release. Users were encouraged to visit muchmusic.com for a chance to win prizes. If you registered and had access to the Rogers AT&T short-text messaging system (SMS) service, you could opt to receive daily trivia questions related to the movie via your cell to win additional prizes.

Heather Gordon, sales manager at Toronto-based CHUM Television Interactive, says there were no benchmarks going in but that it ‘did exceed our expectations for participation.’ While she declines to reveal how many people entered, she does say 20% of online entrants signed up to receive the daily Swimfan trivia questions.

As for the costs, while the majority of deals are on a contra basis – 60% according to Kelly St. Onge, director, publicity and promotions at Universal Studios Home Video – Swimfan did have a modest cost associated with it as it included the purchase of air time on MuchMusic and a produced TV spot. Laura Turner, marketing manager at 20th Century Fox Home Entertainment, says the spend was between $50,000 and $100,000. (This compares to another 20th Century cross-promotion currently underway with The Transporter which has a media spend of about $50,000, including in-store P-O-P, spot production and TV.)

‘It’s got to be cost-effective,’ adds Turner. ‘We evaluate everything in light of reaching our target audience so it’s all kind of broken back to a cost-per-thousand kind of deal to see if it makes sense for us.’

Nonetheless, Rogers AT&T was also thrilled with the results, especially since its participation was a test of its SMS service as a new marketing channel. ‘We wanted to see what role SMS is going to play in becoming a marketing vehicle,’ says Upinder Saini, director, new product development for Toronto-based Rogers AT&T Wireless.

In Europe, SMS-based marketing is already well established but it has only recently begun to make inroads into North America. Saini says that, with Swimfan, one of the major objectives was to show and tell – to other marketers. ‘The goal was that, ‘Hey, SMS is here now and SMS can be used as a marketing vehicle,” says Saini. ‘This is the beginning of one program – there are going to be many programs that are going to be coming out in the future.’

Chris Campbell, CD at Toronto-based Interbrand, says the Swimfan arrangement makes sense. ‘The text messaging feature in wireless is kind of in its infancy and awareness building is what Rogers should be doing,’ he says.

In other instances, DVD cross-promotions are used as added value for consumers. That was Radisson Hotels’ approach when it teamed up with the Austin Powers: Goldmember DVD. From Feb. 6 to April 6 the DVD was offered in its couples-oriented Go Pack (a package guests can purchase at check-in that includes such items as travel mugs, snacks, luggage tags, etc.). Radisson would not reveal how many copies were distributed via the Go Packs.

But the choice of Goldmember was no accident. Radisson was looking for a brand that fit the image it was trying to present – fun-loving, carefree and a little naughty. ‘Our brand is sort of a young, very fresh, exciting sort of brand,’ says Diana Reichert, senior marketing manager at the Minneapolis, Minn.-based Carlson Hotels Worldwide (Carlson owns the Radisson chain). The movie was definitely one that a lot of people wanted to collect for their homes. So it just seemed to be a good fit for us.’

Campbell is more dubious of Radisson’s positioning with this offer, calling the brand more suburban than sassy. The racy Austin Powers isn’t an ideal fit for the mostly business-class traveller the hotel targets in its advertising, he says.

On the other hand, for consumer household products giant SC Johnson, hooking up with the DVD release of My Big Fat Greek Wedding in January was an extremely good fit for its Windex brand. The product plays a prominent role in the movie because the patriarch considers it a cure-all and sprays it to combat every ailment, including arthritis. It’s what senior brand manager Mark Bukovec calls a ‘home run’ and led to the company creating an ad specifically for the DVD release that appears before the start of the film.

Bukovec says the placement and the ad contributed directly to an increase in sales and awareness. ‘We are seeing double-digit growth and we did [see the same growth] through the back half of 2002.’ (The film’s theatrical release in Canada was last August.)

‘The product placement itself really did replace our advertising strategy. So we were not buying any conventional TV advertising at that time. We were running with both the movie and then with the video releases.’

Look for additional promotions and tie-ins in the future. Some of the bigger names include 20th Century Fox’s The Transporter, which was released to DVD on April 15 and is being promoted with wrestling’s WWE. And New Line Cinema’s Lord of the Rings will be paired up with a slew of brands including Dr. Pepper and 7-Up.

As the majority of these deals are brokered in the U.S., Canadian marketers face challenges in beating U.S. brands to the punch. It’s not uncommon for them to receive as little as two weeks’ notice about opportunities with American films. Another challenge is finding the right fit both in terms of content and channel. When Pennzoil cross promoted with The Mummy Returns last year, there wasn’t much specific thought given to demographics – the opportunity was to get increased exposure at leading retailer Wal-Mart. However, with this year’s The Fast and The Furious Tricked Out Edition, ‘we’ve looked at [demographics] a lot closer,’ says The Mohan Group’s Hall.

‘This second one we’re doing is definitely targeted to the car enthusiast consumer [which] is definitely a growing area of the market. And it just so happened that The Fast and The Furious Tricked Out coming out on DVD was in direct line with Pennzoil-Quaker State relaunching a line of car care products.’

SC Johnson’s Bukovec says aligning with the right image is crucial. ‘I’d be lying if I didn’t say there was some hesitation at first. You’re always concerned about how your product gets portrayed – not from it being misportrayed, but, ‘Do you want people out there spraying Windex on [their cuts and bruises]?’ Then we quickly realized that it’s such an over-the-top exaggeration of how the product is used that we got fully behind it.’

And they happened to ride the coattails of a sleeper hit that grossed US$356 million in worldwide box office sales.