NPR’s Claude Brodesser recently asked Wired Magazine’s Chris Anderson for his thoughts on the size and effectiveness of movie marketing budgets. Claude suggested that the new Indiana Jones movie was so highly anticipated, had such awareness and pedigree that despite opening to over $311 million worldwide, Paramount must have overspent in its $100 million plus marketing campaign. Right?

Nobody knows anything.

Oscar-winning screenwriter William Goldman’s famous dictum about Hollywood starts to answer the question, Chris Anderson completes it.

Chris pleaded ignorance in the specifics of the movie business, but his general assumption was spot on: marketing spends are the studio equivalent to taking out an insurance policy to cover the risk against the movie not opening.

Insurance is a bet. You pay upfront for protection in case something happens that you couldn’t predict. You’re betting against your ability to tell the future.

Because no one knows anything. Remember? Malcolm Gladwell, recounting Goldman’s line in the New Yorker, says:

“Not one person in the entire motion picture field knows for a certainty what’s going to work. Every time out it’s a guess.” One of the highest-grossing movies in history, “”Raiders of the Lost Ark,” was offered to every studio in Hollywood, Goldman writes, and every one of them turned it down except Paramount: “Why did Paramount say yes? Because nobody knows anything. And why did all the other studios say no? Because nobody knows anything. And why did Universal, the mightiest studio of all, pass on Star Wars? . . . Because nobody, nobody—not now, not ever—knows the least goddamn thing about what is or isn’t going to work at the box office.”

Gladwell articulates this best in his piece on box office predictions, but the point is that forecasting box office success is ridiculously speculative. Traditional research and tracking companies like NRG, OTX and MarketCast are notoriously inaccurate, leaving studios in relative ignorance as to whether they have a box office winner until the Friday numbers come in.

Because box office predictions are so speculative, marketing spends become bigger gamble. As digital distribution and technology innovation continues to disrupt and reform the norms of consumer behavior, marketing costs have risen. The studios are forced to make bigger bets partly because they don’t know where or how to engage audiences.

Sometimes bets pay off and everyone keeps their jobs, sometimes they don’t and heads roll.

One of the problems is that because the current tracking services are ineffective, there’s an inherent conflict in the studio marketing philosophy:

Spend on media and marketing, but don’t throw good money after bad. If your movie is tracking in the dirt , cut back your spend wherever you can. Sounds easy enough, but at what point do you know if your product is a lemon if your tracking metrics aren’t giving you good information?

You don’t really know until you open.

So you have to make a bet and take out an insurance policy. How often do you feel like you’ve overpaid for insurance?

In hindsight, Indy’s success might be a no-brainer, but until positive reviews started to come out of its first screening at Cannes, no one knew what to expect. By the time the film’s word of mouth was clearly positive, the marketing budget had been spent. Studios run their media spend up until the movie’s release. If the film does well, they may push a modest second week boost campaign through with updated messaging (#1 Movie in America!), but for the most part marketing is a sunk cost.

On the other hand, Warners put almost $250 million into making and marketing Speed Racer. The movie opened to only $20 million. My friend at Mattel tells me they’re going to sell more in licensing and merchandising than the studio will ever gross domestically. Probably not what they had in mind at Warners or Village Roadshow.

Movie marketing is a gamble measured against the unpredictability in box office forecasting. The more unpredictable your movie, the higher the risk. That’s one reason studios like to mitigate risk by greenlighting relatively safe commercial fare.

It would seem reasonable that the opposite were true. As Claude pointed out, the more predictable your success, the less you should have to pay to insure against failure. However, the studios have a gambling problem and as anyone in the insurance game knows, you pay a premium for risky business.