News article

Scarily effective: Blumhouse Productions’ low-cost lessons for your referral marketing

I love horror.

That might be a strange statement to most people. Generally speaking, the vast majority of us don’t particularly enjoy being scared. In fact, I have it on good authority that most go out of their way to avoid feeling any sense of terror, fright or overall unease.

But not me, I love it. Especially when it comes to movies.

My colleagues in the office here at The Yardstick Agency know that I’m a regular cinema-goer, and it’s fair to say that the majority of films I go out of my way to see are the kind that really make you not want to turn out the lights when you go to sleep at night.

When it comes to horror I’ve seen it all; killer clowns lurking in storm drains, haunted houses, demonic possessions, and everything in between. I even watched a movie about a haunted swimming pool back in January (I wish I was joking).

And, as a horror fan, I’ve come to see two words fairly often at the beginning of most movies I watch: Blumhouse Productions.

The noble house of Blum

Blumhouse Productions, founded by Jason Blum in 2000, has revolutionized the horror film industry by demonstrating that you don’t need a blockbuster budget to create a smash hit.

The studio is known for producing films with modest budgets, which then achieve horrifyingly high returns on investment.

Some notable examples of their successes include:

  • Insidious (2010) – With a budget of $1.5 million, it earned $99.5 million.
  • The Purge (2013) – This $3 million budget film grossed $89.3 million.
  • Get Out (2017) – Made for $4.5 million, it earned $255 million globally.
  • Halloween (2018) – With a budget of $10 million, it grossed $255 million worldwide.

To a horror fan, these movies are household names. They’re not just success stories, they’re landmarks of the genre, and they cost next to nothing, speaking in terms of today’s average Hollywood budgets (I’m looking at you Avatar 2…), to produce.

Given their low-cost production, you’d be forgiven for thinking that the movies must be really bad.

But no, you’d be wrong.

The movies produced by Blumhouse are often well-received. At the 2018 Academy Awards, Get Out (listed above) won director Jordan Peele an Oscar for Best Original Screenplay. It also received three further nominations; Best Director (for Jordan Peele), Best Actor (for Daniel Kaluuya), and Best Picture.

However, among their greatest success stories as a studio, one film stands head and shoulders above the rest when it comes to pure return on investment: Paranormal Activity.

Prior to 2009, the horror box office was dominated by the Saw franchise. The slogan “If it’s Halloween it must be Saw” was emblazoned across most of its marketing campaigns every year, and it was essentially an annual tradition for horror fans to buy a ticket to see the latest instalment of this increasingly gruesome and nonsensical saga (in 2024 we’re currently up to Saw X, the 10th movie in the franchise, with Saw XI due next year).

Unfortunately for Saw, fatigue was setting in. Box office numbers were dropping year-on-year, and horror fans wanted something fresh to watch.

What they didn’t know was that, lurking beneath the surface like the shark in Jaws, a new franchise was about to emerge and steal their horror crown.

Paranormal Activity made its debut at the Screamfest Horror Film Festival in North America on October 14, 2007, followed by screenings at the Slamdance Film Festival on January 18, 2008, and the 36th Annual Telluride Film Festival on September 6, 2009. The film was produced, written, directed, filmed and edited by Oren Peli, and cost only $15,000 to create.

Its time in the festival circuit generated a lot of buzz, and it wasn’t long before it caught the attention of Jason Blum. Following Blum’s help, a newly-edited DVD version impressed a number of executives at DreamWorks, most notably a little-known director by the name of Steven Spielberg.

A test screening sealed the franchise’s future as, during the screening, people began… walking out?

Producers thought the film was bombing with the audience, until they learned that the viewers were actually leaving because they were too scared. Paramount Pictures, who acquired DreamWorks in 2005, therefore purchased the domestic distribution rights to the movie and worldwide rights to any sequels it may have in the future.

They knew they had a cash cow on their hands.

The movie went on to gross more than $194 million dollars globally. If you just count the production costs of $15,000, that’s a modest 1,293,233% return on investment.

So, it didn’t do too badly really.

But how did Blumhouse Productions and Paramount achieve this? Quite simply, they let the audience sell the film for them.

The terrifying power of referrals

The marketing campaign for Paranormal Activity relied heavily on viral marketing and audience referrals. The studio released the film in limited locations initially, in September 2009, and then encouraged fans to “demand” it be shown in their cities via an online campaign.

Paramount promised to distribute it nationwide in the United States upon hitting 1 million “Demands” for the movie.

Through their website, they had options for audiences to share the “Demand it!” call to action with those they knew via email, Facebook and Twitter. They then used preview footage of the audience reacting to the movie in cinema screen rooms as the basis for their trailers, rather than showing much of the movie itself.

This sent horror fans into a frenzy. Everybody wanted Paranormal Activity to come to a cinema near them. By October, the movie was showing nationwide in the United States, and by November it was showing in cinemas globally.

Speaking about the marketing campaign for the movie, Megan Colligan, Co-President of Marketing for Paramount, said: “The fans have really made this their film and they are doing the bulk of the work [to market the film]”.

Josh Greenstein, another Co-President of Marketing for Paramount, added: “The film is selling itself”.

The marketing costs for the film totalled around $10 million. For comparison, Get Out, mentioned earlier as one of Blumhouse’s biggest critical successes, had a $30 million marketing budget.

The astronomical level of success achieved by Paranormal Activity, despite its fairly limited marketing budget, highlights the power of referrals and recommendations as part of your marketing strategy.

Nielsen says that people are 90% more likely to trust, and eventually buy from, a brand recommended to them by a friend. Furthermore, the Journal of Marketing says that customers referred to your business create larger profit margins for you than other customers.

As such, referrals and recommendations from existing clients are, generally speaking, the best type of new enquiry source. Enquiries gathered this way have a high conversion rate, a low cost of acquisition, and they’re likely to more closely match the target audience you’re seeking to attract (especially if you’re ensuring you have effective conversations with clients about recommendations).

Despite this, many firms, especially in our experience within the financial services sector, are not taking advantage of the opportunities presented by referrals and recommendations.

We typically find that:

  • Advisers or planners often neglect basic practices, such as discussing recommendations with clients properly (research from VouchedFor indicates that 85% of clients have never discussed recommendations with their adviser or planner).
  • Proactive recommendation strategies are not commonly in place among larger firms.
  • The essential foundations of a recommendation strategy, such as client surveys and enquiry recording, are frequently absent.

This lack of focus on referrals and recommendations leads to two problems.

Firstly, firms who neglect this area of their strategy will inevitably spend more on their marketing efforts through alternative, more costly methods of finding new leads.

Secondly, they will find that they’re not converting potential clients as well as they could be, as other enquiry sources tend to convert less frequently than those gathered through client referrals.

So, if there’s anything you can take away from this article (apart from a new-found appreciation for horror movies), it’s this: don’t be scared to ask clients for referrals and recommendations.

You might find it hard to have these conversations, but they’re a crucial cornerstone to any effective marketing strategy. Take a page out of Blumhouse Productions’ book, and get your clients to sell your services for you.

And go watch Paranormal Activity, but maybe avoid its six (yes, six, they made six more of these) sequels.

How can we help?

If improving your referral and recommendations strategy still seems daunting (or even a little bit terrifying!), The Yardstick Agency can help.

We can assist with:

  • Client surveys – Running, analysing and capitalising on the results of a bespoke survey
  • Enquiry recording – Streamlining your enquiry recording process and ensuring your marketing efforts are on the right track
  • Referral and recommendation conversations – Coaching you to make the most of the opportunities you have in gathering new enquiries through client referrals.

Get in touch today and learn how our expert team can support you – just email or call 0115 8965 300.

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