Arts Marketing

Partners or Competitors? My Favorite Frenemies

2012-01-16T14:42:00.008-05:00

A little more than a week ago, the Washington Post in an extraordinary effort by a daily newspaper, published a series of articles on the state of theater in Washington, DC. As part of that series, Nelson Pressley, a frequent contributor for the Post, wrote an interesting piece on the financial status of the community. In it, he notes that in terms of capacity, the Washington theater community has grown tremendously over the past decade, while government funding has decreased significantly and according to theaterWashington, the annual theater attendance has remained the same since 1988. Mr. Pressley also cites that each theater that has expanded reports significantly increased audiences, and several have recently set all-time sales records.

In the Twittersphere, this article raised the same question that NEA Chairman Landesman asked in his now famous "supply and demand" speech given at Arena Stage in January 2011. Is there enough demand to support the increase in supply? This isn't a new question. It is something I questioned in this blog in 2008, and it is something that arts administrators discuss at every conference I have ever attended.

Setting aside for the moment the data from theaterWashington, on a positive note, I've seen some extraordinary things in the DC theater community in the past few years. I'd heard that the city can only support one or two major hits at any given time, however in the late fall of 2010, several theaters reported exceptionally strong attendance numbers for multiple shows running at the same time, including Oklahoma! and every tongue confess at Arena Stage, Candide at Shakespeare Theatre Company, Sunset Boulevard at Signature Theatre, and A Christmas Carol at Ford's Theatre. Well, there went that long held belief. When Arena Stage was considering a 13 week summer remount of Oklahoma!, I was told that the city could not support a long sit down production of a major musical in the summer as August was completely dead in these parts, and we couldn't succeed with Congress out of session and everyone heading to the beach. Surprise, surprise when not only Arena Stage experienced sold out houses at the height of the summer doldrums, but Woolly Mammoth Theatre Company did as well with their remount of Clybourne Park. As a community, I don't think there is anything we like better than being told we can't do something, and then proving that we can.

But to Nelson's point, we have a significant challenge ahead of us. In discussing his article on Twitter, playwright Stephen Spotswood asked me "how much do DC theater companies feel like they are in competition with each other?" Soon thereafter, Peter Marks, theater critic of the Washington Post, asked me to answer the question on the record. And this is my attempt...

Are DC theater companies in competition with each other?
Yes. In my opinion, to think otherwise would be naive. People have limited disposable income, especially during tough economic times. However, we are very lucky. Washington, DC is weathering the economic downturn better than any other city in the nation. Although we have had our challenges, we have a leg up on everywhere else, and perhaps this is why we have been able to expand during turbulent times. But in terms of how people are going to spend their leisure time, theaters are in competition with each other as much as they're in competition with movies, sports, other performing arts, museums, television, YouTube, video games, etc. To say that we aren't is simply untrue.

That being said, if I am in competition for discretionary spending dollars, I want it to be with another theater. Why? I can't get patrons to come to my theater if they don't see theater as an option in the first place. My primary responsibility as a theater marketer is to get people interested in the theater. To increase the stability of our community, we have to grow the base of theater patrons in our city. We don't have any other option, and to do that, we have to view ourselves as partners first and competitors second. If we focus on cannibalizing each other's audiences, it will be a losing battle. One theater may win one year, but inevitably it will lose the next. The only way everyone wins, including the city, is if we cultivate a growing audience for all of our theaters.

In responding to Stephen's question, I would also say that I tend to think that competition in the marketplace is good. When competition is stiff, it pushes everyone to do their best. To produce work of the highest quality. To provide the best customer service. To nurture the best local talent, and to present preeminent artists from around the globe. Please forgive the personal anecdote, but I know I have a more rewarding workout when there is a strong runner on the treadmill next to me. If there is no one by my side pushing the pace, I won't exert as much energy. I want to keep up. I want to compete. And because of our competitive spirit, DC audiences will get to experience the best efforts of all.

As I look into the new year, I resolve to elevate my gaze whenever possible from being exclusively on the theater where I work to the community as a whole. I hope that competition will improve us individually, and that working together will improve us as a whole.

Who are your best customers (and why many don't know)?

2011-12-15T20:48:00.008-05:00

Some time ago, I was at the box office when a major donor who lives out of town came up to the window. I instantly recognized her even though she hadn't visited us in quite some time. After warmly welcoming her back, I stepped away briefly to attend to another matter, and when I returned to continue our conversation, I was startled to see that she was being charged an exchange fee to transfer into another performance. When I inquired, the box office associate rightly told me that she wasn't a subscriber, and that waiving exchange fees was a subscriber benefit. In this case, the patron wasn't a subscriber because she lived thousands of miles away, however she was an incredibly generous donor, giving both to our annual fund and our campaign. Her giving over the years easily made her one of our most valuable customers, but because she wasn't a subscriber, the box office didn't grant her one of our entry level benefits.

This wasn't a human error, but a systemic one. At the time, we were operating a ticketing software that didn't reflect giving history, so there was no way the box office associate could have known the patron's lifetime value. And even if the ticketing system notified the box office associate of the patron's giving history, the associate would have had to override the benefits structure we had in place as complimentary ticket exchanges were a subscriber benefit, not a donor benefit.

We had a problem. Fundamentally, how we defined our best customers changed depending upon which department was asked, and the company as a whole had yet to identify our best customers in a holistic manner.

Two years ago, we took the first steps to address this issue. First, we replaced our antiquated ticketing software with an integrated database that housed all transactional data across our various departments allowing users to see an overall picture of each patron. Once in place, we had to develop a system for defining our best customers from the perspective of the entire company. We hired Target Resource Group to develop an algorithm that incorporated all transactional possibilities with our company, and then apply that algorithm to our database to develop a Patron Loyalty Index score for patrons in our system based upon transactions over the previous five fiscal years. The index scores allowed us to separate our database into four major categories, and today, certain overriding benefits are assigned to the higher level categories.

If the aforementioned major donor were to come to our box office today and request an exchange for a single ticket purchase, an associate would enter her information into our database, and the database screen would immediately turn red--our signal that we are interacting with someone with a very high Patron Loyalty Index rating. The associate would then know that an exception to the exchange rule would be in order as a result of the major donor's lifetime value to the organization.

The way the communications and development departments do business at Arena Stage has fundamentally changed over the course of the past two years. We view ourselves as full partners in building patron lifetime value. We work together to increase loyalty, reduce attrition and grow revenue. Subscriber renewal rates are at an all-time high, patron churn has decreased by 7%, the number of full season subscribers has increased 18%, and our membership program is pacing well ahead of last year.

Knowing who our best customers are has made all the difference.

Customer Service as a Competitive Advantage

2011-11-20T15:26:00.007-05:00

I’ve just returned from the National Arts Marketing Project Conference, the annual gathering of arts marketers convened by Americans for the Arts. I’ve gone to the conference for the past seven years to reconnect with colleagues, learn from case studies and catch up on new trends. As I return home this year, I am mindful that some arts marketers have limited control or influence over mission critical decisions, many of which affect audiences, revenue streams and branding. As marketers position themselves as growing agents of influence in their various organizations, I can’t help but think that perhaps our energies should be spent concentrating on the underperforming areas in which we can be the most impactful.

In this new environment of reduced resources, the ability for an organization to identify its competitive advantages is vital. Some of which, marketers have no responsibilities for. Others, we lead. In listening to Scott Stratten's opening keynote address at the conference, I was reminded that the general woeful state of customer service provides a prime opportunity for arts organizations to distinguish themselves. In short, Scott reminded us that we should always look for "opportunities to be awesome."

Some thoughts on how we can achieve awesomeness…

Awesomeness comes from humanness. We have our rules. Our policies and procedures. It is easy and efficient to train automatons. But the greatest value of human interaction from a transactional perspective is our unique ability to empathize, reason and trouble shoot. We have to encourage front line brand ambassadors to use their judgment. Empower them to solve problems. Reward them for breaking the rules when required because by design, rules are created for routine situations, not exceptional ones. Why hire smart and caring people if those attributes don’t influence operations? I left the conference thinking that if we all treated our customers like we would our mothers, our spouses, our best friends, that we might have lifelong relationships with them as well.

Awesomeness is unexpected. In the spirit of a random act of kindness, what if we asked our brand ambassadors to perform one act of unexpected awesomeness each day? It doesn't have to be a splashy show, as even an understated, thoughtful gesture can make someone's day. Imagine a scenario where a man calls the box office to get tickets to a performance for his wife to celebrate their anniversary, and the box office associate makes a note and leaves a few chocolates and an anniversary card waiting in their seats when they arrive. Wouldn't that be awesome? and don't you think they would remember that gesture for years to come?

Awesomeness doesn't wait for approval. Many times awesomeness is a derivative of authenticity. If corporate policy dictates that brand ambassadors need to get approval to provide extraordinary customer service, then the window of opportunity to be awesome disappears. Great customer service comes from authentic responses. If we hire caring and helpful brand ambassadors, managers need to step out of the way and let them do what they do best. Don't lose an opportunity to be awesome because you have to send it up the ladder for approval.

Awesomeness often results from a mistake. We all make mistakes, even the best of us. Even when we have the best intentions. What really matters is how we respond to our mistakes. Mistakes must be viewed as opportunities to provide great customer service. An extraordinary response to a mistake can provide for a lifelong memorable experience for a customer. In 2008, Arena Stage had to cancel a performance due to a substantial snowstorm, and although we contacted all the patrons we had contact information for, we didn’t get through to everyone. Prior to leaving their house in Philadelphia, one particularly adventurous couple called the sales office, and were informed the performance in question was still scheduled to perform. When they arrived, and discovered the show was canceled and the weather had deteriorated, not only were they disappointed, but they were stranded as well. We should have canceled earlier to give our patrons more notice. But before us was an opportunity to be awesome. Without being asked, our sales office worked with a partner hotel to arrange a room for them free of charge that evening using some trade rooms available to us from a previous cross-promotion. We reseated them into the following day’s performance, and the couple headed back to Philadelphia with a fond memory of their visit to Arena Stage. The moment immediately following a significant mistake is crucial. Don't hesitate. Own the mistake, and resolve it above and beyond a customer's expectations.

Arts organizations are charged with building communities. Communities are centered around relationships. We are in the relationship-building business. As such, we should approach each patron interaction from a position of "yes" rather than "no." Policies and procedures should be built with a focus on deepening our relationships within our communities. And each day as we go into work, we should look for opportunities to be awesome.

Rebranding the Traditional Box Office

2011-10-23T17:16:00.011-05:00

In a previous post entitled Subscriptions Dead? Maybe Not, I discussed various strategies Arena Stage employed in order to significantly increase its subscriber base. One of the most important was systematically identifying the best subscriber leads in our database, and then developing and implementing strategies to increase the number of similar leads.

Like many others, we traded lists with other performing arts organizations during the acquisition portion of our subscription campaign. However, in doing so, we experienced an incredibly high cost-of-sale for each new subscriber. Even when factoring in the value of each new subscriber over multiple years, returns from mailings to traded lists didn't justify the cost. Our strategy was flawed, and it was time for a change.

Data showed that our best leads were in our own database, with the best of the best being single ticket buyers who purchased tickets to multiple productions during the previous fiscal year. Instead of trying to attract new subscribers with no prior transactional history with us by sending direct mail campaigns to traded lists, we shifted strategy by focusing on building multi-buyers during the 2008-09 season. The new strategy was simple--if multi-buyers were the best prospects for subscriber acquisition campaigns, then the more multi-buyers we had, the better off we were for the following year's subscription campaign.

Instead of trading lists for subscription mailings, we traded lists for our most popular productions. Transactional data showed that by luring in new patrons via our most popular programming, we had a much better shot of cross-selling them into other productions soon after they had their first great experience at our theater. If new patrons purchased tickets to just one additional production during the season, they were exponentially more likely to subscribe than a lead with no prior transactional history with us.

Our focus was now clear--in order to grow our subscriber base, we must first focus on building the number of multi-buyers throughout the year. And the most critical component of that strategy was refocusing our ticket sales operations by shifting our box office to a sales office.

The prevailing feeling at the time was that our box office associates were "order takers." They were expected to pick up the phone and process each order in a courteous and timely fashion. They were evaluated on efficiency instead of effectiveness. With the beginning of the 2008-09 season, we rebranded our box office (now referred to as a sales office), and made it clear that associates were expected to function as sales consultants. They were now responsible for up-selling, cross-selling and proactively soliciting annual fund donations. To prepare the office, I promoted an exceptionally entrepreneurial minded manager to lead the division, and she in turn, brought in several experts to train our staff. We adopted a mantra of sales through service, and in doing so, viewed each opportunity to cross-sell as a moment to provide excellent customer service.

Three years later, I am very pleased with our results:

From FY08 to FY11, new-to-file households (those that had no previous transactional history with Arena Stage) increased by 90%, but even more importantly, multi-buyer households increased by 44%, giving us a much larger "best prospects" pool for new subscribers. In this fiscal year alone, that pool was converted into more than 5,100 new subscribers. Despite what some viewed as aggressive sales techniques, our 2011 customer satisfaction survey revealed that satisfaction levels were at an all-time high, and our attrition rate decreased 6% over the last two years.

Today, our sales associates up-sell seat locations, cross-sell buyers into similar programming, solicit various levels of annual fund donations, offer to make reservations at our cafe, suggest pre-paid parking, and will even arrange for a car service with a preferred provider. In addition, during slower sales cycles, our associates also provide support to our group sales office, and participate in outbound calling. By doing so, we maximize revenue, while growing the number of multi-buyer households and providing premium concierge service to all patrons.

Subscriptions Dead? Maybe Not.

2011-09-18T13:22:00.016-05:00

When I joined Arena Stage in 2007, I came to my new job with a couple of preconceived notions about subscriptions. Perhaps it was in part a reflection that I am on the Generation X/Millennial cusp, but I was certain that the subscription model was outdated and ineffective. Many mature organizations that had developed their business models on subscriptions were seeing significant declines in subscriber numbers, and were literally caught between a rock and a hard place -- should they dump their subscription model and leap into the unknown, or keep putting band aids on a failing and timeworn strategy? Reports from major performing arts organizations at the time seemed to indicate a trend of declining returns, forcing a feeling that immediate change to a staple in our business model could be warranted.

In early 2008, Arena Stage along with a few other LORT theaters, began to test subscription alternatives in focus groups. In doing so, I was absolutely certain that the results would show at least one, if not several, attractive alternatives to subscriptions. I was wrong. Our work indicated that each option we put forth was less attractive to target single ticket buyers, multi-buyers and current subscribers than what we currently had. I was so surprised that we conducted a second series of focus groups with similar results. Amazed and confused, after a few months, I concluded our market research indicated that the subscription model wasn't outdated, but that our execution was flawed.

With the help of Target Resource Group, we conducted a thorough audit of all subscription related practices, and started making significant changes in mid-2008. Since our 2008-09 season, Arena Stage has experienced substantial growth in subscriptions, increasing our subscriber base by 57% and revenue by 73% in three fiscal years, beginning 1.5 years before the opening of the Mead Center for American Theater at the height of the global economic crisis and during a time when we were performing in transitional spaces throughout the metropolitan area. Even more surprising, during the same time period, our subscription related marketing expenses decreased, which along with increased revenue, effectively doubled our return on investment (ROI).

Below is a brief summary of major tactical changes:

Simplified Pricing. Our previous subscription pricing strategies were incredibly complicated. I remember spending hours poring over pricing strategy, and at the end thinking that one would have to be a CPA to understand how our pricing model worked. We decided that in order to create an effective value proposition, subscription pricing would have to be clear and easy to understand. We worked for weeks to develop a simple pricing structure that could be messaged easily, such as "buy 6 plays, get 2 plays free." The new pricing structure allowed us to easily communicate a value proposition and to eliminate complicated order sheets, replacing them with order forms that could be filled out easily. Clear, concise and transparent pricing was pivotal to effectively communicating the value of a subscription.

Introduction of Dynamic Pricing for Single Tickets. In 2009, Arena Stage introduced dynamic pricing for single tickets, and we immediately started to see an unanticipated outcome. Due to our new subscription pricing structure and the introduction of dynamic pricing for single tickets, we were able to guarantee subscribers "the best seats in the house at the best prices." Dynamic pricing eliminated last minute discounting on premium tickets, and rewarded single ticket buyers with a lower price for better seats if they were willing to purchase earlier. In turn, our patrons soon started to understand that the earlier they purchased, the better "the deal" they received, with the ultimate deal being given to subscribers. As we religiously track all customer service issues, we can say with full confidence two years later that dynamic pricing has not caused distress with our ticket buyers or donors, and in fact, from the moment we introduced dynamic pricing to current day, we have increased the number of single ticket buyer households by 84%.

Focus on Retention and Customer Service. We were allocating too much resource on subscription acquisition, and not enough on subscription retention. We developed a "say yes to the customer" approach with our subscribers, thereby earning us "industry leader" marks on our most recent customer satisfaction survey conducted by Shugoll Research. Year to year benchmarks for customer service have increased steadily as we focused on providing our subscribers the best experience possible. Given today's sad state of customer service at most establishments, we were determined that our customer service would be a competitive advantage. In addition, we allotted resources for special subscriber recognition efforts throughout the year, including a sneak preview of the upcoming season, complimentary artisan chocolates at specific performances and subscriber-only events. During the 2010-11 season, we introduced a concierge program for all new subscribers. Each new subscriber was assigned a personal concierge on staff, who was expected to make themselves available to answer questions, field requests or be helpful in any way. Concierges were reactive to inbound inquiries, but were also expected to be proactive throughout the year, offering new subscribers recommendations on local restaurants, parking, interesting tidbits about upcoming productions, and the like. By concentrating on customer service and retention, we were able to increase our overall subscription renewal rate by 13% over three fiscal years.

Eliminated Advertising, but Increased Direct Mail and Telemarketing. Prior to 2008, 25% of our subscription budget was allocated to advertising. After exhaustive efforts, we could not trace a single subscription purchase back to our advertising campaigns. Therefore, we cut all subscription advertising, and refocused those resources on direct mail and telemarketing. In doing so, we completely revamped our direct mail and telemarketing campaigns. In terms of direct mail, we would previously print hundreds of thousands of season brochures, and then mail them out in a few rounds of massive mailings. Our brochures were 28 to 32 pages in length, and functioned more as a branding tool than a sales piece. Today, we send out 30+ direct mail pieces during each subscription campaign that specifically tailor the offer to the target. We have eliminated our subscription brochure, cut our design costs by 60%, and have directed all of our resources to testing message and offer. For more information on our new approach to direct mail, please read "The Future of the Season Brochure." While retooling direct mail, we also invested heavily in telemarketing. If executed properly, many patrons actually view telemarketing as a service, as it allows them the opportunity to discuss the plays with a seasoned caller and to ask any questions they may have. As the economy worsened, we found that many potential subscribers needed personal interaction with a friendly and knowledgeable sales agent in order to make a commitment.

Delayed the Introduction of Smaller Packages and Concentrated on Upgrade Strategies. In 2009, we started to experiment with delaying the on-sale date of partial season packages in order to focus our efforts on upgrading subscribers to the full season. There was a fear at the time that our partial subscribers would become frustrated, and leave the company all together, but I was confident that our programming was strong enough that a delay would encourage subscribers to upgrade. The value proposition was clear -- the only way to guarantee the absolute best seats in the house for our most popular productions was to purchase a full season subscription. By focusing on full season subscriptions and postponing the introduction of partial subscriptions, we were able to increase the percentage of full season subscribers by 14% from FY09 to FY12. Expanding upon previous successes, in 2011 we launched a completely separate upgrade campaign alongside our renewal and acquisition campaigns. In addition to crafting and executing strategies that focus on renewals and acquisitions, we now also focus on upgrading subscribers throughout the year. These strategies have proven to be quite effective, and as of publication, we have upgraded more than 1,800 subscribers from smaller packages to larger packages in the current fiscal year.

Relentless Dedication to Monitoring ROI. In FY12, we will spend almost 20% less on subscription expenses than we did in FY08 despite the fact that the number of new subscribers has increased by 166% during the same time. I've always been taught that acquisition campaigns are expensive; that you have to "spend money to make money." In most cases, I agree, however if you aggressively monitor ROI on each campaign, in many cases, you will find efficiencies that will allow you to actually decrease your expenses in the middle of an aggressive acquisition cycle. Many marketers think that given limited staff resources, tracking ROI is too time consuming, however a relentless dedication to monitoring ROI will reveal where you should invest in the future, and more importantly, where you should cut.

In addition to the above, it should also be said that the most important ingredient to any subscription campaign is programming. A subscription campaign is both a referendum on the previous season and an indicator on the amount of excitement in the marketplace for the upcoming season. In my time at Arena Stage, I have been extraordinarily lucky that our artistic team has consistently produced and presented exceptionally high quality work, without which, the aforementioned tactics would have only resulted in minor successes at best.

Building a Budget that Empowers via Flexibility

2011-09-04T16:52:00.011-05:00

Each September, a great deal of my focus migrates to budgeting for the next fiscal year. Even while the current fiscal year is just getting its start, many senior managers at Arena Stage are focused on the following year, knowing that in just under four months, a new subscription campaign is set to launch. As summer comes to an end, and the new theater season begins, I find myself already thinking about how in many cases, budgets are created to restrict, rather than to provide, flexibility.

If there is one thing I have learned since 2008, it's that success is greatly dependent upon one's ability to adapt quickly to changing circumstances. I've always been fascinated by people who consistently make the choice to stick with a strategy that isn't working instead of leaping into the unknown. In doing so, many believe they are mitigating risk, however refusing to adapt when a strategy is clearing collapsing only ensures failure, and what could be riskier than that? Those that are change adverse often times use a rigid budget to fortify their position, but a good budget lives and breathes with an organization, thereby providing plenty of flexibility when needed.

When budgeting, common practice at many non-profit performing arts organizations allocates revenue and expense into two categories: contributed (development) and earned (marketing). In doing so, each department is assigned resources and given revenue goals with a simple charge--use the resources provided to generate the targeted revenues. In my career, I have observed that this system of allocating resources and establishing revenue goals for separate and distinct departments can lead to inefficiencies that reduce, rather than maximize, return on investment.

Let me give an example:
Organization X anticipates that a certain production will achieve a significant single ticket revenue target, and as such, budgets higher than average expenses for advertising. The production opens to less than stellar notices, and word of mouth isn't helping either. After several weeks of slow sales despite the considerable investment in advertising, management concludes that the additional expenses set aside for marketing aren't providing the necessary return on investment, and asks that you reconsider your strategy. Meanwhile, you've begun to hear from the development department that the first annual fund campaign of the season is substantially over-performing, although they don't have the additional funds needed to grow the campaign beyond what was initially budgeted for.

In these types of situations, many marketing directors would reallocate funds from the under-performing production to productions later in the season, even though those productions, if budgeted properly, should already have plenty of resources allocated to support them. Fearing that they won't receive adequate resources in future budgets if they "give back" money in their expense budget, marketing directors can feel like they are incentivized to ineffectively spend resources on a struggling production or to reallocate them to productions that are already resourced appropriately. Meanwhile, the development department has struck gold, and could desperately use an infusion of additional resources, but none will come.

To avoid situations like the above, I believe budgets should be created with minimal essential resources allocated to each revenue stream, ensuring that each is supported adequately. Resources traditionally budgeted above the minimal level for campaigns that are anticipated to do well, should instead be used to fund a reserve that is used to allocate additional resources to over-performing revenue streams based upon actual highest achieved return on investment. Why religiously stick to a budget that 10 months prior allocated additional resources to anticipated successful revenue streams when current reality indicates that the additional expenses aren't warranted? Wouldn't it be nice to be able to move resources across departments to invest in activities that are actually over-performing rather than those that we thought would over-perform?

In addition, chief development officers and chief marketing officers should share responsibility for the total revenue goal of the organization, thereby eliminating any territory related issues that may arise. Together, they should be charged with shifting resources on a regular basis to fund activities that reduce cost of sale, maximize return on investment and best position the organization to achieve the annual institutional revenue goal.

At the end of the day, performing arts organizations are having to use their limited resources much more wisely than in previous years, and that reality should force all senior managers to reexamine how resources are allocated and spent.

The Importance of Re-centering

2011-08-15T19:08:00.004-05:00

A professor of mine while in graduate school at CalArts advised us that if we could envision ourselves doing anything else, we should get out now. He was very blunt. Life in the theater was hard. Long hours, low pay and full of personal sacrifice.

The past couple of years have been very difficult for the arts. State arts commissions are being eliminated, Tony Award-winning regional theaters are going out of business, corporate sponsorships are drying up and nationally renowned arts education programs are disappearing. If life in the theater was hard ten years ago when I was in school, it must be damn near impossible today in comparison, given the new realities of the "post-global economic crisis" world.

Being now a decade into the profession, I have found that most of my colleagues have seriously debated leaving the arts all together (and several have). And who could blame them? In fact, I find those that have never longed for a more stable livelihood a little suspect.

Last week was personally trying for me. Exhausted and spent after several weeks of very intense work, I found myself doubting whether or not I could sustain a lifelong career in the theater. Having recently received a couple of tempting phone calls from recruiters about chief marketing officer positions at various institutions outside of the arts (and one not so tempting inquiry from a construction company), the doubt continued to linger. However, at the end of several long days, I didn't rush out of my office and head for home, choosing instead to stay behind and take in a few performances at my theater. And as Robert Frost once remarked, "that made all the difference."

Sometimes it is easy when your nose is to the grindstone to get lost in the day-to-day, and forget why it is you chose theater as a career in the first place. Your day gets gobbled by sales reports, revenue forecasting, pricing models, customer service issues, copy writing and media buying, and the next thing you know, it is time to leave (and you're probably hungry because you forgot to eat lunch). Let too many of those days go by without returning to the art that attracted you in the first place, and you will find yourself in trouble. You can do all of the aforementioned tasks for any non-artistic venture in the world. The skills are transferrable, you'll have a more stable career and lord knows, you'll make more money. But you chose to work at a theater because you have the spirit of an artist. Take the art away from an artist, and you steal their soul.

So if you find yourself lacking motivation, or a sense of purpose, take a stroll into the rehearsal room, visit a class full of young artists or watch an audience react to a performance. Doing so will allow you to re-center, and remind yourself why it is you do what you do.

P.S. for those theaters that encourage closed rehearsals, I would encourage them to reconsider, especially if they want well-informed, inspired marketers promoting their shows

The Effects of Social Media on Traditional Journalism

2011-07-24T17:40:00.005-05:00

In my role as Director of Communications at Arena Stage, I supervise media relations in addition to marketing and a few other areas. As originally intended, this blog was developed to discuss arts marketing, however from time to time, I stray a little and write about topics that affect media relations, as will be the case today.

A couple of weeks ago, I found myself participating in a very interesting discussion via Twitter with Howard Sherman, Peter Marks, Trey Graham, Nella Vera, David Loehr and Kris Vire. This impromptu panel discussion was centered around the affects of social media on traditional practices in arts journalism. With both publicists and journalists recognizing that the traditional media landscape is changing, it made me think about what's next. Below are my thoughts that formed in the weeks since.

For a primer on the subject, may I suggest the following articles:
"Should Theater Critics be Allowed to Tweet an Opinion Before Writing a Review?" Washington City Paper, 10/20/2010
"Hey, Broadway-Based Spiderman Boosters: Twitter's Not a Supervillain" NPR, 12/1/10
"Will the Embargo Hold?" 2amt, 7/12/11
"Stop Telling Me What to Think About Your Show" The Craptacular, 7/12/11

From my point of view, the affects of social media on...

New Play Development
The days of developing new work under the watchful eyes of millions of New Yorkers may be over. And the Broadway tryout in major metropolitan areas could be as well. Why anyone would make the choice to develop new work directly on Broadway itself baffles me, as there is no room for error. I couldn't imagine a worse place to develop work. To be extraordinary, one must be able to take risks. With the rise of social media, every risk taken (and failure made) is a potential headline in the now influential blogosphere. In the past, producers and publicists had to concern themselves with crafting stories for professional journalists and preparing for traditional reviews, but in today's world, before the first review hits, public opinion can be persuaded by millions of tweets, Facebook posts and blogs. In some cases, by the time the impartial and professional critic walks through the doors of a theater, the verdict in the court of public opinion has already been rendered. As information travels at the speed of light to every corner of the world these days, it would not surprise me if the major development work for high profile, Broadway-bound productions starts to occur at smaller and smaller venues in more remote areas of the country. Even major regional theaters in large metropolitan areas may become too "exposed" to be able to shelter the development process of new work. My prediction: Places like Virginia Stage Company, a LORT D theater in Norfolk, VA which just recently produced a highly acclaimed pre-Broadway run of Bruce Hornsby's SCKBSTD, will become the new go-to places for development of high profile projects.

Preview Performances
A production is never fully complete until it is performed in front of an audience. Preview performances used to be a testing ground that allowed creatives the ability to make adjustments to a production and then try them out in front of an audience. Previews are handled differently depending on the company. I have worked for companies where previews were very rough, often times being obvious that the creatives and the cast were still in the process of creation. However, I have also worked for companies where in most cases, the first preview looked as polished as opening night. As marketers, we know the most powerful marketing tool is word-of-mouth, and social media allows for the development of instant word-of-mouth campaigns. These days, artists and administrators have to be prepared that the first preview will bring instant feedback, and that feedback will have a direct impact on sales. Some administrators, as mentioned in the aforementioned article entitled "Stop Telling Me What to Think About Your Show," try to appeal to audiences to halt or slow social media. However, as a paying member of the audience, patrons have every right to say what they think to whomever they want using whatever means they want to. Trying to control social media is a waste of energy, and asking audience members not to discuss the play is like telling a teenager not to do something. Even more ludicrous are the producers that are charging $150+ for previews, and then asking patrons not to share their experiences. Whoever advised them to do so obviously has very little understanding of the value of transparency which drives so many social media mavens. My prediction: Producers will forgo long preview periods, and will in turn rely more heavily upon the developmental runs as discussed in the previous paragraph.

Embargoes
In his excellent blog referenced above, Howard Sherman predicts that the embargo "has begun to crumble and that erosion will only accelerate as every single person who cares to becomes their own media mogul and true stars of the medium begin to achieve influence akin to that afforded by old media." I couldn't agree more. As of today, traditional journalists are expected to hold back on reviewing until a producer settles on an opening date and then invites the critic to see the production. In the meantime, "citizen reviewers" are blogging, tweeting, posting on Facebook and Yelping, thereby allowing everyone except the professional critic the opportunity to weigh-in. However, to pull a line from Spiderman, with "great power comes great responsibility." Professional critics are expected to act with journalistic integrity and to honor embargoes as they are the arbiters of culture for, in some cases, millions of readers. But there are grey areas. What happens when the same producer that requests an embargo from professional critics invites Oprah Winfrey to attend a preview, and then Oprah tweets her thoughts to her 6.7 million followers weeks before critics can? or when an advertising firm uses pull quotes from comments on Yelp or Twitter to promote a show in ad campaigns weeks before a show is officially open to review? My prediction: The use of embargoes between producers and the media will change in the next few years as social and traditional media will compete directly with each over for prominence.

Reviews
For some reason, when Washington City Paper theater critic Trey Graham tweeted a response to a show that he was reviewing from the theater, it caused a little bit of a brouhaha. To get the facts straight, he was an invited reviewer attending a production that was open to review at the request of the theater. I guess a couple of actors who normally like to avoid reading reviews encountered the tweet, and were upset because a review caught them by surprise as it was delivered via social media, thus leading to a complaint. From a publicist's perspective, Trey was well within his rights to tweet his thoughts. Theaters can (as of now) embargo reviews based on time (when shows are available for review), but it is amusing to think that any institution would expect to be able to embargo based on delivery method. Social media is just a delivery mechanism, just like a newspaper is. Critics have every right to deliver their criticism via whatever mechanism they like. Journalism is a very competitive field, and often times being able to weigh-in first, or before others, creates a competitive advantage. As such, I am not surprised at all that critics are now sending immediate, albeit 140 character, responses. Although I disagree, Howard Sherman developed a well reasoned argument as to perhaps why critics should not tweet responses in his previously mentioned blog. That being said, as a publicist, I would argue that whether we think critics should or shouldn't tweet their responses is a moot point, as it isn't up to us. The fact is, they are doing it and we don't have any logical reason to ask them not to. My prediction: Many more traditional critics will start tweeting immediate critical reactions so that their responses are competitive in the fast paced environment of social media.

The Nonprofit Variant of Dynamic Pricing

2011-07-08T16:53:00.013-05:00

I think for most of us that work in the nonprofit theater, our dream is to create exceptional art that is accessible to everyone. Speaking for me specifically, this is the reason I decided to make a career in the nonprofit resident theater, rather than some of my peers who opted for the commercial theater. There are times when I am envious of the visual arts, particularly in Washington, DC, which due to their funding models, many of which can provide exceptional art free of charge to the public. The predominant model for visual arts institutions in DC is based on uninhibited access. Wouldn’t it be great if the performing arts were the same way? The nonprofit resident theater model developed in a completely different manner however. In fact, Arena Stage was founded in 1950 as a for-profit entity, and thrived for years as such. From the very birth of resident theaters, patrons were charged to access the art, and we have had to fight to keep funding models in place that support accessible fees. With the development of the nonprofit model, it allowed previously for-profit resident theaters the opportunity to raise contributed funds (private donors, government entities, foundations, etc) in an effort to keep ticket prices as accessible as possible. Most resident institutions took advantage of this new found opportunity to improve access for all and to provide educational programs, however there were some that did not. Still to this day, in our community (not to mention on Broadway itself), nonprofit theaters and for-profit companies compete all the time, which seems to be somewhat unique to the theater world (do you know of any for-profit symphonies?).

Prior to 2008, few companies had experimented with dynamic pricing, primarily because the technology wasn’t readily available to operationalize what had previously been a well thought out theory. The idea was relatively simple -- if your house was playing to less than 100% capacity, it was symptomatic of the failure to determine an optimum price. If an optimum price could be determined, which perfectly aligned demand and supply, every house would be at capacity. The first use of dynamic pricing by a nonprofit organization to my knowledge was at the Chicago Symphony Orchestra. In 2003, Deborah Rutter joined the symphony as their new president, and introduced the idea of dynamic pricing (resident theaters would experiment with dynamic pricing much later). Tessitura, an advanced new database system developed by the Metropolitan Opera, had entered the market in the early 2000s, but was so costly that only major symphonies, operas, presenters and commercial entities could afford it. However, Tessitura was robust enough to handle the operationalizing of dynamic pricing for those institutions that could afford it. From 2003-2008, most marketing directors at nonprofit resident theaters were aware of a new “dynamic” pricing model, but we didn’t have access to the technology to implement it. While very large nonprofits were experimenting with dynamic pricing, so were commercial entities. The Producers broke records in 2001 by establishing an unheard of top ticket price of $480 (which by the way, The Book of Mormon just surpassed on June 16 with a top ticket price of $487). I immediately began to notice a difference in how for-profit and nonprofit entities were applying the principles of dynamic pricing. From my observations, Broadway producers did not consider accessibility in the least when establishing ticket prices. They had responsibilities to their investors, and would charge the maximum price they could for every seat in the house. On the other hand, I noticed many nonprofit companies increased their top ticket price when demand warranted in order to keep a significant portion of their houses at very accessible prices. And even the top “dynamic” prices at nonprofits didn’t get anywhere near $480 (I wonder if this is what Diane Ragsdale meant when she said that "nonprofits are expected to leave money on the table?"). Whereas both nonprofits and for-profits were using the same pricing theory, it has been applied and operationalized very differently.

A tipping point for nonprofits occurred in 2008. By that time, Tessitura had been on the market for almost a decade. Competing database products were being developed and tested, and the pricing for Tessitura had decreased to a level that most nonprofit resident theaters could now afford it. In addition, the world experienced the beginnings of the global economic crisis during September of 2008. That fall, I gave a couple of speeches at national conferences, and the predominant question on the minds of arts administrators was how a crisis at such an enormous scale would impact organizations. We had models from 1987 and the 1970s, but all indications were that this crisis would far exceed anything we had ever weathered.

Some organizations cut back programming and reduced expenses in a hope to ride out the storm. Others recognized the crisis as an opportunity to reexamine business models. Most correctly identified that contributed revenue sources would be heavily impacted. As nonprofits operate on two revenue streams (contributed and earned), in order to maintain the same level of artistic excellence, maintain living wages for artists and offer extensive educational programs, many organizations looked for ways to bolster earned revenues. Nonprofit resident theaters became very good at maximizing revenues from non-ticket sources in order to maintain accessible ticket prices. New sources of revenue were popping up everywhere from real estate ventures, event rentals, restaurants, parking, corporate visibility opportunities, summer camps, bars, consulting services, and partnerships with for-profit ventures. However, new earned revenue streams took time to develop and decreases in contributed revenue were coming quickly. In order to maintain accessible ticket prices for a significant portion of the house, many nonprofits had to seriously consider a dynamic pricing model that allowed for an increase at the top pricing levels when demand warranted it. With a decrease in contributed revenue, organizations had a choice to make:

1. They could reduce expenses, cut programming and lay off staff in an attempt to resize themselves to match the new levels of contributed revenue available.
2. They could increase ticket prices at all price levels to make up for lost contributed revenue, however in doing so, making themselves less accessible across the board.
3. They could increase top ticket prices according to demand, and keep a significant portion of their inventory at accessible prices.

Not surprising to me, many nonprofit resident theaters went for option #3. To my knowledge, almost all the nonprofit resident theaters in the DC metropolitan area now utilizing dynamic pricing, and none so far have seen the negative ramifications as forecasted by some experts.

In today’s debates concerning for-profit vs. nonprofit incorporation, I am mindful of something Arena Stage Founder Zelda Fichandler said in a speech she gave in the 1960s: “while we are gathered here in the name of the nonprofit corporation (and, indeed, without the nonprofit income tax code, our American theater would simply not exist), being nonprofit does not really define us—our goals, our aims, our aesthetic, our achievements. What defines us, measures us, is our capacity to produce art.”

Ultimately nonprofit resident theaters should be measured by their capacity to produce art, and to make that art as accessible as possible without sacrificing excellence or their ability to compensate artists at reasonable levels. Given today’s new realities of reduced contributed revenue sources for many nonprofit resident theaters, the development of new revenue streams and the implementation of dynamic pricing allows institutions to make up for lost revenue without sacrificing their ability to be accessible to their communities.

Untapped Talent

2011-06-27T19:38:00.005-05:00

Over the course of the year, I have been fortunate enough to attend several gatherings of artists and marketers, from the National Arts Marketing Project Conference to the #Newplay Convening at Arena Stage to most recently the Theatre Communications Group's National Conference. From these gatherings, a clear theme has emerged. Many artists feel that institutions do not use them to the best of their abilities, and they question why they are not approached to help with planning, budgeting, marketing or other traditionally "administrative" functions. In fact, as it relates to marketing, many artists went a step further by saying that they feel unwelcome by marketing departments.

At the TCG conference during a session entitled "The State of the Artist," sound designer Cricket Myers questioned why she isn't utilized more to promote productions she is working on. This echoed cries from playwrights that I have heard throughout the year asking why marketers don't seek out a playwright's assistance in the promotion of their work.

I think in some cases there is a serious disconnect between the marketer and the artist, which leads to situations of untapped talent on both sides. Why are artists not sought out during the marketing process, and why are marketers not sought out during the creation process? From the stories I have heard from playwrights, it sounds to me like several of them have legitimate reasons to feel like they are unwelcome when it comes to designing and implementing marketing campaigns. Those of us that spend a significant amount of time marketing new work might not understand the exclusion of artists in the marketing process, as outlined recently by Alli Houseworth's comments in "A Theater Marketer's Rant." Marketers that reject any collaborative environment with artists make it difficult for those that invite collaboration. I fear that some marketers are considered guilty by association.

If involving artists in the marketing process is beneficial (as I believe most of us agree it is), I question if involving marketers in the creation process could be as well? Theater is a collaborative art form, and it seems to me that the highway of collaboration should feature two way traffic. In my career, I have seen marketers locked out of rehearsal halls, denied access to draft scripts, and be uninvited to workshops and readings, yet they were expected to understand and promote the work. To those playwrights who question why marketers never seek their opinion, I would like to ask them if they have ever sought the opinion of a marketer?

Marketers and playwrights are both specialists, highly trained and very experienced in their perspective trades, but they are both creative beings as well. Good ideas come from a variety of sources. To assume that a marketer has no value in an artistic decision, or that playwrights have nothing to contribute to a marketing plan is foolish. Both sides lose, and when paired, they lose together.

What if...We Cast Off our Non-Profit Status?

2011-05-21T12:22:00.021-05:00

In honor of Theater Communications Group's 50th Anniversary, the performing arts service organization solicited "what if" manifestos for their upcoming annual conference. In that spirit, I decided to point the "what if" in the direction of the the non-profit business model by asking what would happen if resident theaters abandoned up their non-profit status.

I am by no means the first to address this topic. On Tuesday, May 17, Thomas Cott featured the three great articles addressing this issue in his "You've Cott Mail" that day:

L3C Cha, Cha, Cha by Diane Ragsdale
Questioning Old Dogmas by Colin Tweedy
Revenue Means More Than Business Models by James Undercofler

The Assumed Argument: Mitigating Financial Risk by Relying Less Upon Volatile Funding Sources
I assume that the proponents of reexamining the reliance upon the non-profit business model by our resident theaters comes from those who feel that theaters could mitigate their operating risk by relying less upon volatile funding sources. In a previous post entitled The Funding Conundrum: A Marketer's Response, I discussed tactics an arts marketer could take in light of major government funding cuts. Coming from an advocacy background, my first instinct was to look at ways marketers could become better advocates. In doing so, I was trying to find ways to maintain status quo in a time of dwindling support. However, I now find myself asking what would happen if we found a way to develop an artistically valid and sustainable model that didn't rely upon any government funding? Would that allow us to create our own destiny? Would it eliminate our reliance upon a funding source that at best is dubious these days. We wouldn't have to consult the tea leaves to see if we were going to get our rationing of government funds or face the devastation that comes when those funds are cut at the eleventh hour. I hear many organizations discuss risk management these days. I wonder if eliminating a volatile revenue source and replacing it with revenue that is more dependable could become a very attractive option to companies that want to mitigate financial risk.

The idea of leaving behind the only thing most resident theater administrators have known their entire lives is daunting. In briefly contemplating this issue, a few questions immediately came to mind:

Would we jeopardize the artistic product?
As Ms. Ragsdale pointed out in her well written article on this topic, Arena Stage covered all of its expenses for its first fifteen years from box office revenue. In reading Zelda Fichandler's personal speeches to the original investors of Arena Stage, they don't reveal a particular concern about needing to sacrifice artistic integrity due to the financial pressures of having to meet expenses solely from the box office. However, I do not believe that resident theaters can depend solely on box office revenue if they eliminated their non-profit status, and doing so, would in my belief, inevitably lead to artistic sacrifices. That being said, as contributed revenue sources have declined, many organizations have had to look for new revenue streams so that the box office didn't become the sole method of revenue generation. New sources of revenue are popping up everywhere from real estate ventures, event rentals, restaurants, parking, corporate visibility opportunities, summer camps, bars, consulting services and partnerships with for-profit ventures. As long as there are other substantial revenue streams that prevent the box office from becoming an organization's sole source of revenue, the artistic product should be protected. Check out these articles about popular sources of new earned revenue:

Arts Centers and Real Estate: Sustainable Business Model? Createquity
New Jersey Arts Center Sets Real Estate Venture The New York Times
Lincoln Center to Consult on New Arts Center in China Forbes
Atlanta Symphony Orchestra Purchases Telemarketing Firm Artful Manager

Would we have to sacrifice the revenue currently generated by contributed sources?
Most annual fund campaigns track revenue from individuals, board giving, corporations, special events, foundations and government support. This isn't my particular area of expertise so my thoughts might be naive or worse yet, impossible, however below are my guesses at what might happen to these sources if theaters were to drop their non-profit status:

Individuals: Perhaps the largest loss of contributed revenue could be from major donors, who benefit significantly from the tax breaks received from philanthropic giving, although politicians are debating reducing the tax deductibility of charitable gifts. However, I don't believe that revenue from lower level donors would be significantly impacted. Research indicates that lower level donors primarily give to receive benefits designed to improve their experience while attending the theater, and not due to a value-based philanthropic reason. If theaters were to continue to offer experiential benefits in exchange for an additional fee, regardless if they were a non-profit or not, I believe they could maintain the revenue they receive currently from lower level donors.

Board Giving: I wonder if non-profit board members could be transitioned into investors in a for-profit model, serving in a similar capacity to a limited partner. That could allow an organization to maintain partial revenues from board members, while offering them an opportunity for investment returns.

Corporations: Corporate giving via truly philanthropic avenues has steadily decreased in the past decade. Most corporations now have moved their sponsorship dollars out from under philanthropic officers and into the hands of their marketing departments. Corporate sponsorships are primarily about visibility and client entertainment. I would guess that marketing officers aren't going to care if a theater is a non-profit institution or not when deciding where to spend their sponsorship dollars. They care about the value of the opportunities the theater can provide.

Special Events: Why not look at special events as one night, for-profit productions? By programming in-demand talent, pricing tickets at fair market value and controlling expenses, special events should be able to still generate significant revenue.

Foundations: Many foundations only give to non-profits because the IRS provides certain tax benefits to those that give 5% of their assets each year to organizations with 501(c)3 tax exempt status. For several theaters, this would be a substantial loss in revenue. I wonder if this could be resolved if the IRS offered to count grants given to LC3s in the same manner as those given to 501(c)3s.

Government Support: For many organizations, government funding is either non-existent or so volatile that it cannot be included in operating budgets by prudent organizations. Arts organizations close regularly because they lose municipal or federal support. Many well-governed organizations have already learned to treat government support as icing on the cake, and nothing more. Those that haven't, risk total insolvency if the political climate shifts.

So, What's Next?
For now, it seems there is a lot of talk. These days, there is very little certainty in or agreement on anything, including the best business model for a resident theater. I am mindful though that Arena Stage was founded in 1950 as a for-profit entity, and thrived as such for several years. Could it be that to go forward, the field [5/31: replaced the word "we" with "the field"] must go back? It seems fitting to end with a quote featured from Zelda Fichandler in Ms. Ragdale's article: "I bring this up simply to point out that, while we are gathered here in the name of the nonprofit corporation (and, indeed, without the nonprofit income tax code, our American theater would simply not exist), being nonprofit does not really define us—our goals, our aims, our aesthetic, our achievements. What defines us, measures us, is our capacity to produce art.”

It's Time to Pay Your Age

2011-05-08T18:47:00.004-05:00

The predominant method of pricing to attract young audiences involves the last minute discounting of available inventory, usually resulting in what is commonly referred to as a "student rush." At Arena Stage, we had a similar system called our "30 and Under Program," which allowed patrons 30 years old and younger to access $15 tickets beginning at 10:00am on Monday for that week's performances. The $15 ticket price represented a 75% off discount from our typical average ticket price, so these tickets were in high demand. With such a popular program, you might be asking why are we trying to fix something that is "working" by launching a "Pay Your Age" program specifically designed to replace the previously popular "30 and Under" program?

Well, if you dig a little deeper, you'd find that it wasn't working because...

We were losing them at 31. Imagine if you had spent ten years paying $15 for a good seat to the theater, and on the day you turned 31, you received a birthday card saying "congratulations, in order to attend your favorite theater from now on, you must now pay 75% more than you have been." As an organization, in some cases, we had spent more than a decade teaching young adults that a ticket to the theater was only worth $15, when in fact we should have been reminding them that they were receiving a $60 ticket on a substantial discount because we recognized they were in school or were just starting their careers. The jump from $15 to $60 overnight was just too steep, and after paying such a substantial discount for so long, the value proposition was completely distorted.

We were encouraging late buying behavior. I have been to countless conferences where experts have blamed decreases in subscriber bases on younger patrons who are not willing to commit in advance. Well why should they? For years, we have been giving them great seats at the best prices at the absolute last minute. If you eventually would like younger patrons to become subscribers, you must develop pricing systems which encourage earlier buying behaviors. They need to be taught early on that in order to get the best deal on the best seats, they need to commit early. I always found it funny that the same theaters that forced younger patrons to purchase via last minute rush systems where the ones that complained they couldn't attract younger subscribers to offset the attrition of their older subscriber base.

We could not fulfill demand. In many ways, our inaugural season at the Mead Center for American Theater has been a banner year for Arena Stage. Performances sold out weeks and months in advance, and when that happened, requests for access to any held inventory and house seats for sold out performances flooded into our Artistic Director's office. By requiring 30 and under patrons to wait until Monday to purchase tickets for that week's performances, we found that in many cases, we had very limited, if any, inventory available for such an important program. That being said, I know how hard it is to tell a major donor or VIP that we can't sell them a seat because the seat in question was being held for our 30 and Under Program. Imagine--"I'm sorry Mr. Ambassador, the performance you would like to attend has been sold out for weeks, except for the tickets we have held for the 30 and Under Program. You aren't by any chance under 30 are you?"

The Fix
So we developed a new system called "Pay Your Age (PYA)." The premise: for our patrons who are 30 years old and younger, they can purchase PYA tickets starting two months in advance of the first public performance by calling the box office and simply paying their age for their ticket. Tickets will be held at will call for pickup, and box office associates will verify age upon check-in. We have guaranteed that 3% of the inventory for each performance will be held specifically for this program. In the case of our upcoming summer revival of Oklahoma!, this means that on Monday, May 9, 1,800 PYA tickets will go on sale in a first come, first served format.

I anticipate that demand for these tickets will be very high, and they will sell out quickly. This in turn will underscore the importance of buying in advance if a 30 and under patron wants to get the available discount. Wait too long, and we'll be sold out. In addition, by paying just $1 more per ticket per year, we hope to gradually adjust each patron year by year, so that when the time comes, there isn't tremendous sticker shock.

The Funding Conundrum: A Marketer's Response

2011-04-23T19:38:00.015-05:00

Nothing can take the wind out of your sails and make one reassess current strategies quite like an unexpected and critical loss of funding, which is what happened to 24 major arts organizations in our nation's capital two weeks ago. Shortly after the federal government averted a shut down, it was revealed that a part of the budget compromise was 74% reduction in the allocation to the National Capital Arts and Cultural Affairs Program.

Many do not realize that the District of Columbia is a federal territory under the complete authority of Congress, and as it is not a state, it does not receive voting representation in either the House of Representatives or the Senate. However, DC residents pay some of the highest federal taxes in the nation and their city's budget is established by Congress, leading to a cry of "taxation without representation." At a moment when Congressional representatives were trying to make substantial cuts to the nation's budget without affecting their districts, the District of Columbia became an easy target, the results of which saw a relatively reasonable and proportionate cut of 7.5% to the National Endowment for the Arts and a crippling, disproportionate cut to the National Capital Arts and Cultural Affairs Program.

As a marketing professional working for one of the affected institutions in the District of Columbia, it caused me to think about how marketers view their role, and how a marketer could respond, keeping in mind that John Kennedy reminded us all that there are always moments of opportunity in crisis. I came to the conclusion that marketing professionals are going to need to reexamine traditional beliefs about our job responsibilities.

Arts marketers are very good at audience development, selling tickets and promoting their products, however maybe we should be thinking about the following as well:

Marketers as Advocates
Last weekend, I was listening to Ric Edelman's radio show on WMAL as I was driving. Ric is a very well known local financial advisor, and he sits on the board of Wolf Trap National Park for the Performing Arts. He took about ten minutes to discuss an upcoming proposed Congressional funding cut to Wolf Trap's STEM program, where he described an e-mail he received as a board member asking him to contact Congress to voice his objection to the cut. He shared with his listening audience that he decided not to contact his congressional representative, because he thought given the economic crisis Congress was facing, that he couldn't in good conscious ask them to protect the arts. In defense of Mr. Edelman, he did go on to say that he would increase his personal contribution to Wolf Trap, and then asked his audience to give as well. However, it made me think that here is a very intelligent man who is prone to supporting the arts and who makes his living off of maximizing return on investment for his clients, but he doesn't understand that arts funding fuels the economy and provides one of the best returns on investment of any public funding avenue. In 2007, Americans for the Arts released Arts and Economic Prosperity III, the most comprehensive study of the economic impact of the arts and culture sector. It revealed that the arts industry is responsible for $166 billion in economic activity, almost $30 billion in tax revenue and 5.7 million full time jobs. So why is a financial advisor advocating cutting an investment that has such high returns on investment? My answer -- arts marketing professionals aren't doing enough to educate their boards and audiences. If Mr. Edelman had all the facts, I am sure he would view the arts as a solution to the problem, not a burden on the system.

Marketers as Community Builders
Among arts professionals, there is a very familiar story often told about Sir Winston Churchill's time as Prime Minister of Great Britain. As the story goes, during the height of the second world war, Churchill's finance minister recommended cutting the arts to help support the war effort. Churchill responded with "then what are we fighting for?" Obviously, Mr. Churchill viewed the arts as vital to the daily lives of his constituents. Can the same be said for us? I would argue not. In the past, the arts organized communities. Today, in many of our nation's preeminent arts organizations, they only organize the wealthy and the elderly. As such, it is easy to see why some view the arts as frivolous. Arts organizations should be community centers, and marketers should work to constantly lay out the welcome mat to every member of their community, rich or poor, young or old. As government funding revenues dry up, we have before us even a greater challenge, as many arts organizations look to earned revenue sources (i.e. ticket sales) to make up for lost ground, but in doing so, could be sacrificing accessibility, ensuring that only a slight portion of their community is able to be served. I must commend organizations like Signature Theatre Company in New York, which leveraged a major philanthropic gift to provide $20 tickets to all seats for all performances. They boast sold out houses for every performance, and serve a maximum number of people in their community as ticket price is no longer a barrier. As marketing professionals, in a time where there is more and more pressure on earned revenue, we must work to make sure our organizations are community centers and accessible to all.

Marketers as Educators
I started out my career as a public school teacher. I went to college and received a Bachelor of Science in speech and theater education from Missouri State University. Soon after graduating, I decided to go to graduate school for producing, partially because I saw my peers struggling to find teaching jobs as arts education positions were being eliminated statewide. Today, many states have eliminated the arts in their curriculum entirely, as funding has become closely linked to performance on student achievement exams set forth by No Child Left Behind. As a nation, we are in our second decade in which a majority of public school students will have received no formal arts education. Soon, arts marketing professionals will face situations in which we will become responsible for educating prospective patrons on artistic offerings as even the most famous of artists will be unknown to a large portion of young adults. The time in which a marketer could reasonably expect the general population to know who major artists is coming to an end. We will become the front line educators.

Marketers as Fundraisers
I am continually amazed at the number of large arts organizations that function with marketing and development departments operating as silos. In some instances, the two departments have their own graphic designers, printers, mail houses, event planners and the like. When budgets are tightened, arts administrators must do everything in their power to get the best possible return on each dollar spent. All to often, the artistic product suffers because of the inefficiency of management. Combine resources and as a team, look for ways to reduce expenditures and maximize return. Make judgments together on where resources should be allocated, and eliminate redundancy. Marketers have to reassess their metrics of success. No longer is it good enough to make a sale. We must strive with each and every transaction to secure a sale and a donation. I challenge marketers to view themselves as having as much responsibility for hitting contributed revenue targets as they have with earned revenue targets. Only then will we be looking for the highest return on each dollar spent and on each transaction achieved.

I would like to conclude this post by alerting readers to an excellent blog post entitled "The Top 10 Reasons to Support the Arts" written by Randy Cohen, Vice President of Research and Policy at Americans for the Arts. For those interested in up to the date information on all issues facing the arts, the Americans for the Arts website is an excellent resource.

The Devil (and the Details) are in the Budget

2011-03-27T18:38:00.013-05:00

All major decisions that an organization makes are made during the budgeting process. In many cases, the budgeting process is informed by a strategic plan or multi-year proformas. However, the practical and strategic decisions that are necessary to put a strategic plan into play are primarily discussed and decided upon during the budgeting process.

Ideally, an operating budget is created and adopted by an organization’s senior staff, thereby ensuring that each department is represented. For senior managers that represent marketing and are responsible for earned revenue streams, the following are some important questions to ask during the budgeting process:

1) How accessible does your organization desire to be?
• Average Ticket Price and Percent Paid Capacity. In major organizations, earned revenue can come from a myriad of different sources including ticket sales, fees, parking, restaurants, concessions, event rentals, merchandise, advertising, classes and summer camps. However, for most performing arts organizations, the majority of earned revenue comes from ticket sales. When adopting sales figures for tickets, a manager must consider two variables: average ticket price and percent paid capacity. When a budget is being developed, the higher these two variables climb, the less accessible an organization becomes. For example, if an organization adopts a budget with an overall average ticket price of $60 and an average percent paid capacity of 80%, it will be forced to enact pricing and marketing strategies to fulfill its budgetary requirements, meaning that only 20% of its inventory can be sold at less than $60 (and this includes all complimentary tickets).
• Complimentary Tickets. All earned revenue budgets should include a well thought out complimentary ticket budget. In many cases, organizations will find themselves with competing interests. Economic pressures can force an organization to increase its percent paid capacity and average ticket price, but doing so will also force a change to how an organization uses complimentary tickets. Many organizations use complimentary tickets for charitable donations, community outreach, publicity, donor cultivation, staff benefits and artist relations. However, only the budget will determine the amount of tickets available to use in any given year for these purposes. It is the responsibility of marketing representative to remind the budgeting team that no matter what current standard operating procedures are or what the desires are of staff members, the higher the average ticket prices and percent paid capacities go, the fewer tickets, especially for prime seat locations, will be available for complimentary tickets.

2) How much risk are you willing to take? The budgeting process can be pressure filled. After several rounds of budgeting, the pressure mounts on the marketing representative to increase his earned revenue forecasts. In doing so, there is only one question the budgeting team needs to ask—how much risk are we willing to take? A couple of bits of advice:
• Let the Data Do the Talking. A marketing representative should have years of data at his disposable, and he should use that data to produce the most accurate earned revenue projections he can. In projecting ticket sales for individual projections, one needs to do two things: 1) study the micro sales patterns of similar productions in recent history (3-5 years), and 2) study the macro sales patterns of all productions in recent history (5-7 years). The sales patterns of similar productions should give you a good indication of what is both possible and probable. I try to select at least three similar productions: one that under-performed, one that performed as expected and one that over-performed. Using the data from all three gives you a statistically probable figure, with room to do better than your projections. The macro sales patterns gives you an overall sense of standard operating revenues as well as outliers. If you notice during your budgeting process that you are forecasting that each of your productions will perform in the top 10% of all productions in your recent history, you might want to leave a little more room for failure. If the organization you are working for is taking the appropriate amount of artistic risk, you will need it. Final word of advice—no matter how much you are encouraged to do so, never go with your gut or “a feeling.” Decisions like these are should be left to the data.
• If You Are Uncomfortable, Say So. Marketing representatives have one primary responsibility in the budgeting process—they must be honest and transparent. If a budget makes you uncomfortable, voice your opinion. Ultimately, the budgeting team and the executive staff have final authority over the budget, but as part of the budgeting team, you must tell people when you are uncomfortable. That doesn’t mean you shouldn’t pass a budget that makes you a little nervous. All of us have passed budgets in the past that have kept us up at night, particularly in the past few years during the global economic crisis. However, you should never support, present and defend a budget that is irresponsible and dishonest. I am fortunate that I have never been placed in the position where I have been told I must present a budget that is irresponsible or face the consequences. However, if am ever faced with that position in the future, I would immediately start my search for new employment.
• Tell the Truth No Matter How Uncomfortable. I am fortunate to have a close working relationship with the senior staff at my current position, which allows for open and honest discussion. However, even in the best of environments, it can be uncomfortable to tell the truth. As the marketing representative on the budgeting team, you are in your position because the organization requires your truthful analysis and opinion. To not provide it for any reason is tantamount to dodging your responsibility. That being said, you also must be open to hearing sometimes painful and uncomfortable analysis as well.

3) Do you have the capacity to fulfill the budgeted expectations? My boss at Arena Stage has a great way of phrasing this question during the budgeting process. He diligently asks throughout the process if we have the capacity and resources to match our ambitions. It is a succinct and direct question that focuses the entire budgeting process. I am afraid that too many times arts organizations extend themselves by having unrealistic budgets because this question wasn’t asked. In terms of marketing, even if demand warrants a high budgeted goal, one needs to ask if you have the infrastructure to execute, which can include a multitude of actors such as staffing, technology, and operating procedures.

The final question I like to ask myself in terms of revenue projections is the ultimate litmus test—do we have an equal or better chance of over performing on budgeted revenue goals as we do under performing? If there is evidence that a greater likelihood exists that an organization will under perform rather than over perform, then I encourage you to adjust expectations to mitigate your risk.

Is It Time to Re-Think the Way We Discount?

2011-03-19T17:12:00.004-05:00

It seems to me that there are two reasons to provide discounts:

To encourage and reward particular behaviors

To provide access to targeted demographics

Too many times arts organizations provide discounts that don’t encourage desired behavior, or that benefit patrons outside of targeted demographics. While exercised with good intentions, a quick examination of some common practices reveals that there can be some detrimental unintended consequences:

Rush Tickets. Many organizations have policies that place tickets on sale, sometimes to certain demographics like students, at the last minute at a steep discount. Unless your organization is selling at a high percent capacity, or has thousands of seats, by practice, you are guaranteeing a steep discount to relatively good seats in exchange for people exercising an unwanted behavior (late ticket buying). Many organizations bemoan the deterioration of their subscriber base, but continue to promote their rush ticket policies. Why would patrons buy several shows at once months in advance when they know they can get a better deal on decent seats at the last minute? Instead, I would encourage organizations to develop policies to reward desired behaviors. In order to convert a single ticket buyer to a subscriber, an organization usually must do two things: 1) convert them into multi-buyers so that they are purchasing multiple productions in the same season, 2) incentivize them to purchase their tickets earlier and earlier. By doing both, you establish behaviors that closely mimic a subscription, and therefore your conversion from single ticket buyer to subscriber should be much easier. Recommendation: If you would like to provide discount tickets to targeted populations such as students, then do so in a manner that instills early buying habits. Instead of incentivizing a last minute purchase, incentivize purchases that are done weeks, if not months, ahead of time.

Pay-What-You Can (PWYC) Performances. The intent of a Pay-What-You-Can performance is honorable. Most organizations desire the ability to make their products available to populations that simply cannot afford standard ticket prices. However, in practice, another reality presents itself. I am always amazed by organizations that continue this practice citing accessibility concerns, when all one has to do is stand outside and count the number of patrons who arrive for PWYC performances in expensive luxury sedans and fur coats. If you can afford a Mercedes, I am pretty sure you can cover the price of a regular ticket. What those patrons are doing is taking away inventory from the people you want to serve. They are taking advantage, but only because you are allowing it. Recommendation: Several organizations are now requiring proof of limited income in order to access PWYC performances or substantially reduced price tickets. Much like how students must show IDs, proof such as an EBT card or a tax return can ensure that you are serving the exact populations you have created these programs for.

Complimentary Tickets. A complimentary ticket represents the ultimate discount, yet too many times they are used for the wrong reasons. Consider the following circumstances:

Potential Donors. Many development officers use complimentary tickets to get donor prospects in the door and into a performance. We all know that first impressions are critically important, so I would ask what message are we sending to someone with obvious means when we have to give them a free ticket to get them in the door? If they are seriously interested in your work, or in becoming a major donor, shouldn’t they want to pay the same ticket price that standard patrons pay in the first place?

Board Members and Current Major Donors. Giving at certain levels should come with exclusive benefits, such as access to purchase house seats or the ability to purchase tickets before they go on sale to the general public. However, many organizations simply give away tickets to Board Members and Major Donors. In the case of Board Members, they should always be looking for ways to help an organization increase revenue, and by taking complimentary tickets, in many cases they are using inventory that can be sold. Major Donors on the other hand are often gifted tickets at certain levels of giving, however the ideal situation would have them purchasing tickets and giving philanthropically. By providing large amounts of complimentary tickets to Major Donors, all an organization is doing is moving revenue from the earned line to the contributed line. When trying to build revenue, both earned and contributed, an organization cannot rob Peter to pay Paul.

Media. Many organizations don’t take the time to properly credential media, and by not doing so, they are tempted to provide complimentary tickets to every request that comes into their press department. Professional journalists deserve a complimentary ticket if they can commit to coverage via a properly credentialed media outlet. If journalists request a complimentary ticket, but cannot commit to coverage or they represent an outlet that is less than professional, it is the responsibility of your publicist to decline the request. In many cases as a courtesy, organizations will also provide a second complimentary ticket so a journalist can bring a guest, however this isn’t obligatory. Many Broadway producers and major organizations will only provide a single complimentary ticket for a journalist in circumstances where there is incredibly high demand on inventory.

Complimentary Standing Room (CSR) or Standby Tickets (CST). Many organizations have very liberal policies for CSRs and CSTs. However, similar to rush tickets, unless you are selling out regularly, you are training those that use CSRs that they are available for virtually any performance, thereby guaranteeing that those who use CSRs will never purchase a ticket in the future. In many cases, CSRs are a self-fulfilling prophesy. The argument being that if an organization has unused inventory immediately before a performance, why not use unfilled seats for CSRs or Rush tickets? Well in many cases, CSRs and Rush Tickets are the reason why organizations have unsold inventory at the last minute. In my opinion, CSRs should only be used for customer service issues for longtime subscribers/donors or for internal artistic staff that need to maintain a production in a long run. Other than that, CSRs should be subject to your standard complimentary ticket policies and tracked as a complimentary tickets.

A final thought on complimentary tickets:
It isn’t uncommon for an arts organization to use 5-10% of its entire inventory for complimentary tickets. Usually these tickets are provided to people that could easily afford the cost of a ticket. At the same time, many organizations are desperately looking for ways to make their work more accessible to populations of people who simply do not have the means to purchase a ticket, even at a discount in some cases. I wonder what would happen if an organization adopted a policy that complimentary tickets would be reserved exclusively for patrons who had no other means to access their work? Hundreds, if not thousands, of complimentary tickets would become available to the people who needed them the most.

Oh, How We Like our Awards

2011-03-01T20:00:00.005-05:00

'Tis the season for award shows. Oscars, Emmys, Grammys, Golden Globes and the Tonys. We sure do enjoy our annual award shows. In Washington, DC, we have our own awards for theatrical excellence--the Helen Hayes Awards--which just announced their nominations last night. It reminded me that as marketers, awards present us with a significant question--how aggressively should we use these awards in our marketing campaigns?

You might be thinking that the answer to that question is relatively easy. Why shouldn't you celebrate your nominations and trumpet your awards? A few things to consider:

When you market an award...

you are willing building the brand of the award. It is said that smart lawyers only ask witnesses the questions they know the answers to. That way, the lawyer is in control of the situation, and there are no surprises. In my relatively short time in the DC market, I have seen numerous companies trumpet their large number of nominations and awards year after year until the inevitable year comes when they are left out in the cold. By building the brand of an award, performing arts organization's leave their perceived success in someone else's hands. They are no longer in control of their own destiny. When you say to a consumer over and over again that an award proves your artistic excellence, what does it prove when you are left out? were you artistically insolvent that year?

you are publicly endorsing the validity of the award. You should ask yourself if you have any serious misgivings about the awards process. If you do, then you should not prominently market them, as doing so implicitly gives your endorsement of the process. One cannot market the awards, and then second guess the process.

you are sending a signal to the artists who work at your organization. And what might that signal be? Is an artist's work not as important to the institution if it isn't recognized with a fancy award? Should an artist take less risk knowing that the results of the risk might lessen his chances for public acknowledgement? Is one artist more important to a production than another simply because of a nomination?

Awards are fickle. They will come, and they will go. And most of the time, you'll have no clue as to why. The one thing they are good for is bringing together the artistic community one time a year for a great big party. So if you are a winner this year, enjoy your glass of champagne, because if there is one thing I can guarantee, it will be that you will get screwed in the future.

You're Mad -- What Are You Going to Do About It? (Reflections on Landesman's Speech)

2011-01-30T14:03:00.006-05:00

Disclaimer: The thoughts and opinions in the post below are solely my own and do not necessarily represent the opinions of any institution I am employed by.

I count myself lucky to have been among the two hundred people that NEA Chairman Rocco Landesman addressed at the national new play development convening at Arena Stage on Wednesday, January 26, 2011. If you are interested in viewing the entire speech, it can be viewed here.

His speech caused a swift and emotional response from bloggers and media alike. Some of the more interesting responses are below:
Dear Rocco Landesman, We Don't Want Your Theater Death Panels, Arts Dispatch
Landesman Comments on Theater, The New York Times
Fighting Words from Rocco Landesman, Arena Stage Blog
On Rocco Landesman, Theatre Ideas

In his speech, Chairman Landesman said "there is a disconnect that has to be taken seriously — our research shows that attendance has been decreasing while the number of the organizations have been proliferating,” He continued by saying "You can either increase demand or decrease supply. Demand is not going to increase, so it is time to think about decreasing supply.” I must say that hearing those words spoken by the chairman of the National Endowment of the Arts initially struck me pretty hard, but then I decided to reflect upon them. Landesman isn't the first person to suggest that the arts are over populated. His partner on the stage that day, Diane Ragsdale, previously of the Mellon Foundation, had a few days earlier written a blog entitled "Overstocked arts pond: fish too big & fish too many" with a very similar argument. In fact, yours truly wrote a blog on the same subject matter on November 17, 2008.

A couple of hours after his speech, outrage over his comments took over social media platforms. The tone was frighteningly homogeneous--how dare the NEA Chairman say that we have too many theaters! However, I would challenge everyone to momentarily set aside your emotional reactions to a statement that rocks who we are as artists just long enough to look at the data and ask if his conclusion, although painful, might be rooted in logic. Study after study shows an environment where supply exceeds demand, from the National Capitalization Project to the Americans for the Arts National Art Index to local reports like this one from DC's Helen Hayes Awards.

The data shows that at this moment in time, there is too little demand and too much supply. That is fact, not opinion. Where I believe Chairman Landesman drew sharp criticism was at his suggestion that we have to decreased supply, because we can't increase demand. Many marketers, such as HowardW, immediately went on the defensive, stating that of course we could increase demand (it is the job of marketers to create demand for art, right?). I respond by saying if you could increase demand to meet the current supply, then why aren't you? This isn't an acute symptom we are discussing, but a chronic trend. Marketers are not super humans. We cannot on our own create an infinite amount of demand to meet the skyrocketing numbers of non-profit arts organizations. The data shows that we are out of balance, and whether we want to admit it or not, we can only live out of balance for so long before outside pressures will return the system to stasis. Don't get me wrong. There is nothing I want more than to prove Chairman Landesman wrong, but I wouldn't bet the farm on it.

From a motivational sense, what Chairman Landesman has done is remarkable. There is nothing that unites artists like telling them they can't do something. By nature, we are counter culture. We like to swim against the current. We need a challenge. Well, Landesman has thrown down the gauntlet. He has said that in his opinion supply will have to be reduced to meet demand. So, if you so passionately believe he is wrong, my question to you quite simply is--what are you going to do about it?

Perception is Reality: Managing Underperforming Productions

2011-01-22T12:50:00.006-05:00

A couple of months ago, I wrote a blog post about managing success. Since that time, I have received several e-mails asking me how to manage in times that are not so successful. Non-profit arts organizations should be taking risks, and sometimes those risks pay off, and sometimes they don't. In times they don't, a marketer's job becomes focused on managing perception. The truth may be that there is very little demand for your current product, however there are several techniques that can be used to create the perception that a struggling product is actually quite successful.

1. Avoid mass public discounting if at all possible. Nothing sends a message that you have an unpopular product more than a mass public discount. Not to mention, it also upsets customers who have purchased earlier often at a higher price. GroupOn, Goldstar, Living Social, TicketPlace and TKTS are all examples of mass public discounting outlets. There are ways in which these outlets can be used successfully, but you have to have a very well thought out strategy. At some point in time, every organization will need to discount for one reason or another. However, discounts are best applied in one to one communications with limited abilities to forward on. In this case, viral marketing campaigns are not your friend. Here are some one to one discounting methods that I have used successfully:

Cross-selling at the Box Office. Particularly in cases in which you have multiple venues, if one venue has a hit and the other doesn't, why not offer a very attractive discount to the less popular venue to all those who are purchasing tickets to the more popular venue? In this case, the discount offer is offered over the phone or in person and it cannot be forwarded. It also creates more multi-buyers which should increase the likelihood that they will respond to a subscription offer in the future.
Robocalls. Before I say anything else, make sure you have the permission of those you call before you attempt to use a robocall. However, a short (30 second or less) robocall from an opinion leader (artistic director, celebrity, etc) with an attractive offer can be very successful.
Direct Mail and E-mail. An organization can create a specific offer for a very segmented list, which will allow you to get an offer in front of people who are not subscribers, haven't purchased and are likely discount buyers with no history of purchasing full price tickets. If you are sending out an e-mail campaign, make sure to disable the "forward to a friend" option.
Reward Sponsors. Offer a special discount to the employees of an important sponsor. The discount has to be significant enough to feel like a "reward." Often times, your primary contact will post the discount on a company message board or forward to department heads for distribution. This technique will help you fill the house, and will engage corporate sponsors.

2. Make sure you properly dress the house. When you place single tickets on sale, make sure you hold back certain inventory so that the house dresses itself from front to back, and from bottom to top. That way, when patrons take their seats even in a house that isn't full, the only thing they see in front of them are full seats, with the empty seats behind them. As patrons will be looking forward a great majority of the time, it creates the perception that the house is full. Some theaters are easier to dress than others. The easiest theaters to dress are proscenium houses with balconies. If the demand doesn't warrant it, then don't open the balcony and push all buyers to the orchestra. The orchestra will fill up, and you can close off the balcony. Seriously, how many people will stand up and turn around just to see if an upper balcony is full?

3. If you need to comp tickets, then make the comp tickets work for you. Ok, things are really desperate and you have found yourself in a situation where even discounts are barely working. You need to get some butts in seats, and your boss is telling you to just fill the house. In this situation, it is very important not to look desperate. Like everything else in life, you need a plan for dispersing complimentary tickets. Whatever you do, don't just throw out a comp ticket offer to a large group of people (i.e. listservs, message boards, etc). Like discounts, comping tickets is best done as a one to one activity. Use your comp tickets to:

Reward your best customers first. Comp tickets can be used to thank new subscribers, reward donors for increasing gifts, to remedy customer service issues, etc. Even though you can't sell these tickets at full price, they still have value--make them work for you.
Incentivize additional purchasing activity. Offer comp tickets to a poorly performing show as an incentive for additional purchases or upgrades.
Reward your staff. Offer additional comp tickets above and beyond your normal policy to staff members as a way of thanking them for their hard work.
Promote the production. Comp tickets can be given to media outlets, cab drivers, concierges, librarians, teachers, interest groups, convention and visitors bureaus, etc. in order to raise the visibility of the production and your organization.

The worst thing you can do when you have a poorly performing production is to take actions that make you look desperate. Like sharks, your patrons will smell blood in the water, and it will quickly kill an already under performing show.

Interestingly, a local theater company advertised that a recent production was one of the most successful shows in their company's history. However, for the entire run of the show, I kept seeing discount offers for tickets to that production all over the place, which led me to believe that the show was struggling. In this case, if it indeed was one of their highest grossing shows, in my estimation, they snatched defeat from the mouth of victory by creating the perception that the show needed to be discounted.

To wrap up, marketers are the masters of perception. It is our job to create and impact public perception for products that are popular and not so popular. But if we have done our jobs well, at the end of the day, our patrons won't be able to tell the difference between the two.

Customer Service from a Marketer's Point of View

2010-12-29T20:18:00.008-05:00

I have been a lifelong customer of American Airlines. A frequent flyer, credit card holder, miles gifter--you name it. I started flying AA because they had direct flights into St. Louis, where most of my family lives. From there, I started to accrue miles, and soon enough, I booked all of my travel on AA. It became a habit. I knew their routes, the layout of their planes, and how to navigate Dallas Forth Worth airport like a local. In performing arts terms, I was a long time subscriber. That is until now.

My flight from St. Louis to Washington, DC was canceled the day after Christmas due to weather (even though DC didn't receive any snow, and my plane was at the airport ready to take off). I was informed by a robo call, which also told me that I was rebooked for a flight 26 hours later. The message ended by instructing me to call AA reservations if I had any questions or concerns. Knowing that I had to be at work the next day for two interviews with major media outlets, I tried calling the number given. After being hung up on four times, the automated telephone system said "we are experiencing high call volume. If you would like to speak with an agent, please call back later." Knowing that I wouldn't be able to speak with a human, I tried working out my problem on the AA iPhone App and on their website, neither of which were designed to handle cancellations. My last option was driving an hour and a half to the airport, which I did only to be met with an apologetic but complete ineffective gate agent. So with no other option, I boarded a flight 26 hours later, however I decided I would no longer be an AA subscriber.

As marketers, we know that it costs significantly more to attract new customers than it does to retain them. Customer service is one of the easiest ways to create brand champions or to drive loyal customers away. As the economic crisis continues, we are all being forced to examine our expenses and improve ROI. So here are some thoughts on customer service as a marketing tactic to reduce churn:

1. When dealing with a customer service complaint, take a holistic view of the customer. At Arena Stage, we are fortunate enough to have a robust database that allows us to see a holistic view of our patrons. Each time a patron comes into contact with our company, it is recorded. Any employee can log into the database, and see a lifetime's worth of interactions. Like most companies, Arena Stage has policies and procedures, however our greatest asset is the excellent judgment of our front line staff. They are instructed and empowered to thoroughly review a patron's file, and to depart from most policies and procedures if necessary to retain loyal customers. I would rather waive a $10 exchange fee for a longtime subscriber every once in awhile than spend ten times that finding a new subscriber. Senior managers must allow front line employees the flexibility to take care of highly valued customers.

2. Track all customer service issues, and start to look for a pattern. Each time a customer complains, be it to front of house, box office or anyone else, the complaint should be logged into your database and tracked. Every Monday morning, senior members of the Arena Stage staff are sent a CSI (customer service issue) report listing all the complaints that came in the previous week. These complaints are then put into a spreadsheet, sorted into categories and analyzed for any visible patterns. If the same issue continues to come up, you can bet that there are ten times the number of frustrated patrons with the same issue who haven't complained. It is then your responsibility to proactively address the issue swiftly to prevent future patrons from having a similar disappointing experience with your company.

3. Be proactive, rather than reactive. The best service comes from proactive management of customer service issues. Instead of relying exclusively on complaint tracking and analysis, be proactive and solicit opinions. Send customer satisfaction surveys. Benchmark numerical responses from year to year, and ask open ended questions. Aggressively solicit customer service issues and correct them before others have to experience them. In addition, if you notice a customer has experienced a problem, try to contact them before they contact you. We ask our house managers to get the names of all patrons who share complaints and/or concerns. This allows us to follow up with the patron and suggest a solution, apologize or offer some form of compensation before they contact our box office. Imagine receiving an apology and a compensatory offer from a box office before you even contact them to report an issue.

4. Even small gestures go a long way. After doing a little research on airline customer service, I was reminded by Time Magazine's Richard Zoglin in his article "The Airlines' Customer Complaint Lines: No Answer" that even small gestures go a long way. You might not be able to meet all the demands of an angry customer, but you should be able to offer a little something to most of them. A comp ticket to an under-performing show, a free drink at the bar, complimentary parking, an autographed poster or perhaps a handwritten response from your Artistic Director. In today's world of fast-paced, unfriendly, automated response systems to customer complaints, it shouldn't take much to stand out from the crowd. Differentiate yourself from your competition by making a small gesture to each upset patron.

By offering better customer service, you can reduce your marketing expenses by slowing down churn. Make it a priority to retain the customers you spent valuable time and resources attracting in the first place.

Why I Hate Comp Tickets

2010-12-05T10:46:00.010-05:00

If there is one thing that can kill your earned revenue quicker than anything else, it is a misguided complimentary ticket policy. Someone asked me the other day why I hate comp tickets so much, so I decided to list my top reasons:

1. Comp tickets devalue what it is we do. For my entire career, I have watched artists struggle to make the argument that the arts mean business, and that an artistic career is just as viable an option as any other. However, these same artists then give away the fruits of their labor to anyone with the most feeble of reasons. In the past few days, a viral video entitled "Explaining the Arts Non-Profit," has been passed among my colleagues illustrating this point. It starts out with one bear saying how much he enjoys a choral group, and then asking for a comp ticket. The other bear responds by saying that putting on a concert is expensive, and would prefer it if the first bear would purchase a ticket. The first bear is befuddled by the response because he thinks the choral group is made up of volunteers who perform as a hobby. For many of us, the arts aren't a hobby--they are our livelihood, and we deserve to be compensated for work that enriches the lives of so many people.

2. People don't show because they aren't invested. Many organizations believe that they must give away comp tickets to "paper the house" in order to fill as many seats with butts when important people such as reviewers are in the audience. However, in many cases, it backfires on them. Those who receive comp tickets haven't paid anything for them, therefore they aren't invested and many don't bother to show up. An average no show rate for comp tickets is in the 30% range. Next time you are at an opening night performance, take a look at how many empty seats there are. I would bet dollars to donuts that those empty seats are a result of a faulty comp ticketing policy. Not only are organizations giving away free tickets, but they aren't even getting the results they want out of them.

3. Blood in the water. Nothing smells of desperation worse than massive public discounting and uncontrolled comp ticketing programs. You might as well put a sign on your theater that says "no need to buy because we can't give tickets away." Marketers are in the business of managing perception more than reality. Even with shows that are under performing, smart marketers have tools in their toolbox to create the perception of demand.

4. Comp tickets create box office nightmares. The old saying that "those who pay the least complain the most" definitely applies to recipients of comp tickets. Recipients of comp tickets, in my mind, are the most entitled and demanding group of patrons to serve. They demand the attention of box office and front of house staff, which in turn takes a significant portion of your limited resources away from your full paying audience.

That all being said, there are a few good reasons to use comp tickets in a controlled and well thought out strategy:

1. As benefits for full time employees and actors. In many organizations, comp tickets are an important part of the benefits offered to employees. Organizations want their employees to be proud of their work, and knowledgeable about what is on stage, so offering them complimentary tickets is well worth the loss in revenue.

2. For members of the press. Press members who have agreed to cover a particular performance should be offered a comp ticket. However, do not give out comp tickets to press who haven't agreed to coverage. If a press member wants to see a performance but isn't going to cover it or your organization, it is more than acceptable to ask them to purchase a ticket. Just because they are a member of your credential press corps doesn't automatically entitle them to a free ticket.

3. To cultivate potential investors and/or donors. Comp tickets can and should be used to host potential investors and/or donors as a means of cultivation. However, these tickets should be monitored and tracked. I have seen companies give away thousands of dollars worth of comp tickets to potential donors who were in the "cultivation" process for years without a single donation.

4. As a professional courtesy. Most organizations have a vested interest in other artists seeing their work. Agents, casting directors, affiliated artists, artistic directors, and producers comprise most of this group. In some cases, if a relationship is exceptionally important, offering comp tickets would be appropriate. In many cases however, a discount for industry professionals will work just fine.

In closing, here are a few quick thoughts on developing a comprehensive comp ticketing policy for your organization:

1. Create a budget for comp tickets. Used in much the same manner as an expense budget, this allows an organization to plan for a given number of comp tickets each year for various purposes. Make sure to get buy-in from all members of senior management as they will be responsible for managing the comp tickets for their departments.

2. Develop very clear instructions on how comp tickets are to be distributed. The key to a good comp ticket policy is clarity. Make sure your policies are easy to understand and simple to follow. For fairness, it is important that the same policy be in effect for your entire organization. Once a clear and concise policy is created, stick to it.

3. It's like a crack addiction--it will be tough to wean people off of them. If your organization has a serious comp ticket problem, you might need a couple of years to turn it around. Be prepared...you will piss people off. But we are talking about the livelihood of the organization and its artists. Why would anyone want to buy a ticket if they know that your organization gives them away at the drop of a hat? It will be tough, but worth it. I promise.

Managing Success

2010-11-12T22:38:00.002-05:00

I was joking with my Managing Director a couple of days ago that managing success is just as time consuming as managing a flop. On the other end of a conference call, Adrian Bryan-Brown, whose press firm Boneau/Bryan-Brown represents Arena Stage, replied “yeah, but it’s a lot more fun.” Truer words have never been spoken.

At Arena Stage, we are fortunate enough to be in a situation where we have two record-breaking productions playing concurrently: Molly Smith’s production of Oklahoma! and Marcus Gardley’s world premiere of every tongue confess directed by Kenny Leon starring Phylicia Rashad. In the past two months, I have learned a lot about what it means to manage success. Below are a couple of things to keep in mind when a mega hit hits:

1. To ensure success in the future, you need to think about retention today. Having a smash hit is exciting—orders are flooding your box office, reviews are kind and generous, and you don’t have to stress about making your sales goals. But there will be a tomorrow, and inevitably you will hit a patch that isn’t as pleasant. So take the time today to maximize your chances of retaining all the new patrons that are coming through your doors. Help prepare them for the experience by sending them a pre-attendance e-mail that discusses the show, provides dramaturgical insight, offers tips on parking and transportation, and suggests possible dinner options. Think about greeting them with a welcome kit, or maybe a complimentary drink at concessions. Go the extra distance to ensure their first experience with you is memorable for all the right reasons, and then follow it up within 48 hours with an irresistible offer to come back for another production. Studies show that if you can get new patrons to come back to just one additional production during your season, you will significantly decrease churn.

2. Have a plan for what do if inventory suddenly becomes available. Even during high demand situations, inventory becomes available as you get closer to a performance date. Sometimes group leaders can’t fill their quotas, or maybe you get lucky and you have found a way to add a few more seats. In most cases, companies just blindly throw that inventory on the market and are satisfied when it sells. These tickets have a value beyond their price as in most cases there is significantly more demand than there is inventory. Perhaps you can maximize the value of these tickets by offering them to your highest donors first as a benefit of donating. Or you could choose to sell the tickets at a significant discount to the winner of an online raffle, thereby collecting hundreds of contacts that you can use to promote to in the future. Or a little more controversial, some companies, particularly TicketMaster clients, are setting up their own e-bay style auctions to maximize revenue.

3. Monitor discounts and comp tickets aggressively. I recommend incentivizing early purchasing behaviors by providing patrons the best possible discount when you put tickets on sale. Even in high demand situations, I would encourage people to protect a significant allotment of tickets to be sold at a substantial discount weeks in advance of performances. Once you are into performances, and demand is at its highest point, discounts need to be managed aggressively. I believe that most arts organizations have an obligation to make sure that all productions are accessible to audiences that might not be able to pay full price, but that doesn’t mean you have to offer discounts on demand. If patrons want to wait for a rave review before purchasing tickets, then they can purchase them at full price. The other option is to purchase well in advance. I would also recommend budgeting your comp tickets. If each department has a maximum amount of comp tickets they can use, then you won’t have to serve as the arbitrator when people request comp tickets. It will also help you project future sales as you can factor those seats out of your projections. Keep in mind though that just like full price tickets, demands for comp tickets increase when you have a hit on your hands. However, you need to ask yourself with each comp ticket request if honoring the request is worth the full price of the ticket, because I assure you, you will be able to sell that seat.

4. Save money on advertising, and build a reserve. Normally I would suggest spending more money on advertising a hit show as you are more likely to see a higher return on investment, however if you are in a situation where you feel relatively sure that great press coverage and word of mouth is enough to drive the needed sales to move all your inventory, then pull back on advertising expenses. Many companies enter into yearlong advertising contracts with vendors, so cutting advertising completely might not be an option. But you can build a reserve of the advertising expenses you saved on your hit production to help you later in the year when you have a production that isn’t selling as well.

5. As a follow up to bullet #4, encourage word of mouth. There is nothing more powerful than word of mouth. I know I have a hit on my hands when daily sales double the second week of performances, because I know that patrons who saw a show in the first week are talking. Think about all the ways in which you can help them spread the word. Maybe a post-attendance e-mail from the star asking them to tell all of their friends. Perhaps you should give patrons a complimentary souvenir to walk away with so they can show their friends. At Arena Stage, we are giving out complimentary hand fans to Oklahoma! attendees that have a replica of the 1907 Washington Post article announcing Oklahoma’s statehood on one side, and the lyrics to a song on the other (not to mention, The Washington Post is sponsoring them so there is no cost to us for 40,000 fans). Create a viral video featuring behind-the-scenes work, record a podcast with a leading star or even do a robocall message from a celebrity. The goal—getting them talking!

If you find yourself in the fortunate position of having a record-breaking hit on your hands, make sure you do everything in your power to have that show pay dividends well into the future. I liken it to winning the lottery—you can spend all the money today, or you can put it into a savings account and have it work for you in the future.

The Problems of Traditional Pricing and How Dynamic Pricing Can Increase Accessibility

2010-10-17T08:11:00.004-05:00

Over the span of the last several months, there have been numerous emotional debates over pricing in the blogosphere, particularly among a small handful of very respected colleagues in the theater industry. I have remained, for the most part, on the sidelines as much as possible, because parts of the debate centered around practices that I have publicly endorsed at major conferences. As such, I didn't want to interfere in what was an open and honest dialog. However at this point, I feel the need to address some of the misinformation that has been posted on a few reputable blogs, and shed some light on what to me seems to be a misunderstanding of dynamic pricing by Isaac Butler (founder of Parabasis) and Adam Thurman (author of Mission Paradox).

Some things to think about:

1. Dynamic pricing in itself doesn't determine accessibility.

Dynamic pricing is simply a tool, or maybe it is better described as a philosophy. Like most things in life, the devil is in the details. How it is applied is much more important than the concept itself. Basic traditional pricing establishes a maximum price point usually determined by seating section and date of performance. Once tickets are placed on sale, they are usually released at the maximum price point. In contrast, with most applications of dynamic pricing, tickets are initially released at the minimum price point, and only increase to the maximum price point if demand warrants. This ensures that a certain amount of tickets are guaranteed to be sold at the minimum price point, whereas traditional pricing can allow an entire house to be sold at the maximum price point from the initial release date.

In addition, dynamic pricing doesn't dictate how an institution deals with allotments set aside for specific audience demographics. In the case of Arena Stage, we have six distinct savings programs that target specific audiences that are extremely important to us as an organization. Aside from the pricing of the general ticket allotment, most organizations that practice dynamic pricing protect ticket allotments for their savings programs, even for productions that are in very high demand.

From my vantage point, dynamic pricing is the Robin Hood approach to yield management. The very few people who wait until the last minute are charged the maximum price point to provide for those who are charged a much more accessible price by purchasing well in advance.

2. When debating pricing, the maximum price point is much less important than the average ticket price.

When determining how accessible major institutions are to the general public, it is much more important to examine an institution's average ticket price than to critique its maximum price point. To reach the maximum price point, at most institutions practicing dynamic pricing, demand has to be so high that 90% or more of available inventory is sold, meaning that only 10% of inventory is ever sold at the highest price. In looking at it from another perspective, 90% of all inventory is sold at some sort of discount. The only litmus test an institution has to determine how accessible they are to the general public is their average ticket price. To determine average ticket price, one needs to divide total ticket revenue (subscriptions + single tickets) by the total number of tickets sold. By looking at an average ticket price, one gets a complete analysis of all sales across the entire spectrum of their ticket allotments, including those sold through savings programs. The argument shouldn't be that non-profits shouldn't sell beyond a certain maximum ticket price. Instead, it should be that non-profits should maintain an accessible average ticket price. If you are focused on the maximum price point, you can't see the forest for the trees.

3. Dynamic pricing rewards behavior that is much more in line which subscription purchasing.

I have heard my colleagues bemoan the death of subscriptions for the past decade. I too am inclined to believe that generational differences in purchasing behavior will lead to the eventual demise of the subscription. However, traditional pricing practices have escalated the downturn of subscriptions.

In most institutions, subscribers are a group of patrons who purchase multiple productions and do so early in a show's purchasing cycle. For this, they are rewarded with a slight discount. The trouble with traditional pricing occurs when single tickets are placed on sale at the maximum price point directly out of the gate, only to be drastically discounted usually a week or two before the performance when management realizes there isn't the demand to warrant the initial price point. Subscribers then realize that in a significant percentage of cases, they can wait until the last minute to purchase, and will be rewarded with the same, if not better, discount than they would have received if they purchased months in advance. Pavlov proved that if you reward a certain behavior, it will increase. If you want to kill subscriptions, then continue with a pricing model that provides the best discount at the last possible minute.

Until someone much smarter than I figures out the solution to the subscription dilemma, I will always support a single ticket pricing model that encourages behavior more associated with subscription purchasing patterns. If an organization wants to increase its subscriber base, reward early purchasing decisions with the best possible prices, and make sure that those who purchase late, do so at the highest possible prices. I am convinced that this approach to pricing is why Arena Stage has significantly increased its subscriber base over the last three fiscal years in the midst of the global economic crisis.

Final Thought
When debating and analyzing pricing strategies for an organization, remember that "a little knowledge is a dangerous thing." Get all the facts. Study sales patterns. Talk to stakeholders. Hold focus groups. Look at peer organizations. Do your due diligence, and be prudent. Before moving forward, make sure you have a complete understanding of the various options and how your decision will impact organizational values. Prior to implementing a dynamic pricing strategy at Arena Stage, we thoroughly studied the model for more than a year, and had very thoughtful discourse among staff, leadership and the board.

Groupon and Mass Discounting Strategies

2010-09-26T17:09:00.003-05:00

Spurred in part by an excellent article written by Chris Jones of the Chicago Tribune, in the past month, there has been a lot of talk about cultural organizations using Groupon (an online, mass discount website). Just like any mass discounting method, using Groupon should be a well thought out strategy. Used correctly, and it can work very well. Used incorrectly, and it can be very costly.

Things to remember about Groupon:

It is out there for the world to see and it was designed to be used by social media, so that it is picked up and passed along at a very rapid pace. From some of my previous posts on this blog, you probably know that I am a fan of what I call "ninja discounting." Very rarely do I use mass communication to advertise and promote discounts, preferring instead to use one-to-one direct marketing techniques aimed at very strategic recipients. If I need to discount, then I want to make sure that I can control who gets the discount so that it flies under the radar of full price buyers.

Groupon generally rewards a pattern of behavior that isn't desired--namely, last minute ticket purchasing. Before turning to a mass discounting strategy like Groupon, performing arts organizations will wait to see how their standard campaign is doing. If they are on goal, most won't discount. If they are off, time to throw out the offers. But this usually happens pretty late into a campaign. Let's use the Joffrey Ballet that Chris cites as an example. Their programming begins in October, as does Arena Stage's, so I would guess they launched their subscription campaign last spring. How do you think a subscriber who purchased early and at full price will feel when he sees that if he waited several months he could get a subscription at 50% off? and what do you think his purchasing behavior will look like next year? and trust me, he will get the offer because as my first point illustrates, it goes to everyone.

Groupon is a for-profit company, and operates like one. They take a significant cut of each sale made. Using the example from the Joffrey Ballet, subscriptions were offered at 61% off regular prices. However, the cut that the Joffrey gets is significantly less than that, so they most likely sold those subscriptions at 75-80% off. Larger organizations can negotiate better splits with Groupon than their smaller counterparts, but I haven't heard of anyone keeping more than 60% of the full sales price.

We must always remember that discount buyers behave differently and you must budget for that. Full season subscribers at most organizations renew at a rate between 85% to 90%. However, I have found that full season subscribers that purchase their subscriptions at a drastic discount renew at a much lower rate (around 60%). Additionally, because they spent significantly less amount of money per ticket, the no show rates are also substantially higher, sometimes leaving large empty holes in your house.

Instead of putting subscriptions on Groupon in order to attract thousands of new subscribers, I would do the following:

Using your database, compile a list of the tough holdouts that you have hit up seven to eight times already during your subscription campaign (usually includes single ticket buyers and non-renewed subscribers from the past 3-4 years).

Next, trade lists will all the other arts organizations in town.

Then possibly consider purchasing lists from a list broker.

Combine all the names into one master document, and suppress your current subscribers, donors and full price ticket buyers.

Using the exact same deep discount offer you were going to give to Groupon, develop a cheap, but effective mailer and send to your list. Make sure it is an offer that is impossible to pass up, and that the offer leads in design and has a deadline. (note: if you don't have a large box office staff, then make sure the offer is online only, or you will be swamped). The key is to keep production and mailing costs low--send using non-profit postage and use a discount printer/mail house.

By doing this, you get to keep the entire purchase price of the discounted subscription, and you minimize the possibility that your dedicated and loyal patrons will see that you are heavily discounting late into your campaign after thousands have already purchased.

I find that Groupon is most useful when trying to fill large sections of an empty house on dates that are less desirable. Full price ticket buyers don't seem to mind because they didn't want those dates anyway, and most companies budget low percent paid capacities on those dates so it is additional revenue that wasn't anticipated.

Remember to Test even the "Sacred Cows"

2010-09-06T18:39:00.005-05:00

I think I have always been attracted to arts marketing because it allows me to use both creative as well as scientific talents. To this day, I might be the only person to graduate from Missouri State University with a major in speech and theatre education and a minor in mathematics. So it should come as no surprise that I take a very scientific approach to marketing.

In every campaign I lead, I constantly manipulate variables and note outcomes in an attempt to continually improve upon previous results. The easiest variables that marketers turn to are design and pricing. How many times have you tested a carrier package? an offer? pricing strategy? Probably quite a few times. Now think about how many times you have tested different timing schemes for putting products on sale.

This was the first year in my tenure at Arena Stage where we experimented with using timing as a variable. For almost as long as we have had mini-subscriptions, we have put them on sale at the exact same time as our full season subscriptions, fearing that instead of waiting or upgrading, our potential mini-subscribers would opt to go elsewhere for their entertainment. The fear of losing potential mini-subscribers was so strong that for many years timing wasn't even considered a possible variable to test.

As a leader, you have to always remember that the fear of a potential loss will always be significantly more powerful than the possibility of a probable gain. By nature, we are risk averse, and if given a choice to pursue status quo or trail blaze, we will choose status quo each and every time unless there are overwhelming odds. But you have to be mindful of "sacred cows," and be willing to test even the most concrete of assumptions. In my career, the testing of "proven strategies" has led to some pretty remarkable results.

For our inaugural season in the new Mead Center for American Theater, we experimented with exclusively putting full season subscriptions on sale for the first four months of our subscription campaign. In addition, we developed a pricing strategy that encouraged full package purchases, and new exclusive benefits for full season subscribers, such as the ability to purchase parking in our onsite, underground parking lot. It was a test of timing as a variable--would potential mini-subscribers upgrade to the full season, wait until mini-subscriptions were available or leave Arena Stage entirely.

As we are eight months into our subscription campaign, we have some pretty interesting results:

we exceeded our projections for full season subscribers both in number of subscribers as well as revenue by almost 60%
we had three times as many subscribers upgrade their packages when compared to those that downgraded
full season subscriptions weren't just for renewals and upgrades--we more than tripled our projections for brand new subscribers to Arena Stage at the full season level. At this moment, 11% of our entire subscription base are patrons who have never subscribed to Arena Stage and did so in their first year at the full season level.

As our full season subscribers renew at a much higher rate than our mini-subscribers do, I anticipate that the growth that we have seen in our number of full season subscribers will benefit us for many years to come.

Some thoughts on Dynamic Pricing

2010-08-18T19:45:00.003-05:00

A couple of months ago, a good dialogue about dynamic pricing began when Trisha Mead (PR and Publications Manager, Portland Center Stage) wrote a blog post on the benefits of dynamic pricing on the 2am theatre blog, and then Adam Thurman (Director of Marketing, Court Theatre) wrote a response entitled "the perils of dynamic pricing." It reminded me how often marketers disagree with each other when it comes to so called best practices.

If your organization is considering dynamic pricing, a couple of things to think about from someone who has some experience with it:

1. Tailor all marketing strategies to your organization. How can one pricing strategy be perfect for one organization, and completely wrong for another? The simple answer is every organization is unique, with a unique set of circumstances to consider. For example, if an organization's funding mix is 70% earned and 30% contributed, chances are, they might be much more likely to consider a dynamic pricing model, as ticket sales play a more prominent role in the organization's fiscal health. On the flip side, if your organization is known for more riskier programming, and relies upon contributed revenue more to subsidize less popular work, then dynamic pricing might seem like an alien concept.

2. Be mindful of your organizational culture and brand. Some companies are pioneering and entrepreneurial in nature, always looking for new opportunities to increase revenue streams. Other organizations have a more egalitarian approach to arts consumption. If your organization is known for having low prices available to everyone, then a dynamic pricing model might cause quite a disruption. However, those that argue that non-profits have nothing to learn from for-profit models are naive. There is now a long history of non-profits and for-profits working together. Even the most egalitarian of organizations, a "people's theater" like the Public Theater, routinely relies upon revenue from the for-profit theater world to fund its non-profit mission. Where would the Public Theater be today without A Chorus Line or New York Theatre Workshop without Rent? Sometimes for-profit strategies and approaches can be very beneficial to non-profit missions.

3. The funding conundrum. In his post, Adam asks a question which is meant to imply that the implementation of dynamic pricing could jeopardize an organization's "case for support." I have heard this argument before, and found it intriguing. Over the span of the past few months, I have sat on a couple of major funding panels with representatives from the top national arts foundations. I took the opportunity to ask them about the impact dynamic pricing might have in their opinion on an organization's "case for support." Without exception, each funder recognized that contributed support, especially from foundations and corporations, has taken a significant hit as a result of the global economic crisis, forcing non-profits to devise methods to increase other revenue streams. They understand these strategies in some cases are necessary for survival, and consequently said that they would not have any impact on a funding decision.

4. Dynamic pricing doesn't necessarily mean eliminating accessibility. Most non-profit art organizations would agree that accessibility to art is important. Dynamic pricing in itself doesn't preclude patrons from experiencing a performance if they can't pay top dollar. What it does do is force price sensitive consumers into an early buying pattern. Remember that in most cases, dynamic pricing doesn't affect ticket prices until a venue is at 60-70% paid capacity. If you purchase early, dynamic pricing shouldn't come into play. One of the reasons that I like dynamic pricing is that it rewards a buying behavior that is essential to converting a single ticket patron to a subscriber. Subscribers buy early and in bulk partially to get the best pricing available. If you can train more single ticket buyers that the later they purchase, the higher the price, it teaches the price sensitive single ticket patrons purchasing behaviors more aligned with the purchasing behaviors of subscribers.

Adam and Trisha are both right--dynamic pricing is both beneficial and perilous. Depending upon the needs of your organization, what's good for one, might not be good for all. Makes me start to wonder if there are any such things as general best practices.

Marketing to our Emotions

2010-08-01T19:29:00.003-05:00

Long ago, I read Dale Carnegie's How to Win Friends & Influence People, a book that I think should be required reading for all managers and marketers. The one lesson from the book that remained with me for all of these years, was a reminder that although we like to think of ourselves as rational decision-makers, we are first and foremost emotional beings.

In finishing my reading of Jonah Lehrer's How We Decide, which will be a new required book for my graduate students, I was reminded of a couple of important ways in which emotions override logic in decision-making:

Loss Aversion. The fear of loss is more powerful than the appeal of a gain, so powerful that often times it makes us make irrational decisions. To prove this principle, Lehrer discusses several studies and experiments involving investments. It has been proven over the past seven decades that stocks outperform bonds almost 12 to 1, leading one to question why bonds are so popular. In the early 1950s, an economist named Harry Markowitz won the Nobel Prize for developing an equation for the best investment ratio to ensure optimum performance. However, when it came time to implement his own theory, which supported heavier investments in stocks, he decided it was too risky and invested in stocks and bonds equally. In applying this principle to the performing arts, one could infer that the most powerful marketing message would be a message that demonstrated how one could avoid a loss (instead of acquiring a gain). For example: "Tickets selling out fast! Select dates still available. Don't be left out in the cold--call today!"

Expectation of Price. Arts marketing lore has it that price can affect one's perceived value of a brand. The thought is that selling tickets at a lower price will devalue the experience. According to Lehrer, there is some wisdom to this theory. In his book, he discusses a wine tasting experiment at Stanford. In front of a panel, scientists placed five bottles of wine ranging from $5 to $90, and the panelists were told that each bottle contained a different wine. However, there were only three types of wine, so two types were repeated (actually the $5 wine was placed in the $5 bottle and the $45 bottle). Even though the $5 and $45 bottle contained the exact same wine, the $45 bottle was considered far superior. The scientists followed up with another experiment, this time not listing any of the prices. When the taste test was executed completely blind, the cheapest wine got the highest rating of the group. Using the expectation of price to our advantage, wouldn't it be more beneficial to set the prices of our products a little higher (thereby establishing a higher perceived worth), and then discount if need be, allowing the customer to think that they are getting a bargain? Which is a great segue to...

The Anchoring Effect. Lehrer contends that a meaningless anchor--in many cases a contrived number--can have a strong impact on one's decision-making habits. To bolster his case, he describes a process that most of us are all too familiar with. When purchasing a car, we might first be drawn to the sticker price, even though most of us know that almost no one pays the actual price listed. That's because the sticker price is an anchor which allows the car dealership to sell a car at the actual price and make it look like a deal to the consumer. We leave the dealer thinking we just got a $20,000 car for a few thousand dollars less, when in actuality, we paid what the dealer was hoping for or else we would have never driven the car off the lot. So in our lives, if we need the average ticket price to be $50.00, why not set the price a little higher and discount so that our product's perceived quality is higher and the consumer walks away thinking they got a deal?

The Power of the Personalized One. Good fundraisers use this emotional quirk of our brains all the time. Lehrer examines a couple of experiments by Paul Slovic, a psychologist at the University of Oregon. In his experiment, Slovic shows a group of people a photo of a specific starving child while telling that child's story. Afterward, he asks for a donation to a charity designed to address starvation. For a different group, he provides statistics about starvation throughout Africa--numbers that illustrate the staggering size of the problem, and then he asks for a donation. The funds raised by the second group were 50% less than the first. The lesson -- causes need to be personified and at a scale where a person believes he or she can have an impact. In our daily lives, having a specific child tell how your organization's programming affected them could be more impactful than even the most compelling statistics.

Although not written for marketers or the arts, I would encourage everyone to read Jonah Lehrer's How We Decide. On average I tend to read a book about once a week, and I have found How We Decide to be one of the most challenging and intriguing reads I have had in a very long time.

Are you an expert? You must be a failure

2010-07-13T19:59:00.005-05:00

Recently I was introduced to Jonah Lehrer at the Theatre Communications Group annual conference in Chicago where Mr. Lehrer was a keynote speaker. His speech inspired an earlier blog post, and convinced me that I should probably read his book How We Decide. I am just about a quarter of the way through it, and I must admit that I am finding it a bit dense, although completely fascinating. Instead of reading right before going to sleep, I am waking up a little early to read because my brain needs to be fresh to process some of his ideas.

In the second chapter of the book, entitled "Predictions of Dopamine," Lehrer examines two subjects--TD Gammon (a computer specifically designed to play backgammon competitively) and Bill Robertie (a man who is a world-class expert in chess, poker and backgammon). In his examination of these two subjects, I learned two amazing lessons:

1. If you want to be an expert, you need to fail a lot! Lehrer quotes physicist Niels Bohr who defined an expert as "a person who has made all the mistakes that can be made in a very narrow field." Demonstrating this principle was TD Gammon. TD Gammon was leaps and bounds better than earlier computers at playing backgammon primarily because it was programmed to learn from its mistakes. When TD Gammon was ready to compete, its inventors wanted it to go up against a world class champion so that it could learn, so they recruited Bill Robertie. In describing his first matches with TD Gammon, Bill said "The first time I competed against TD Gammon, I was incredibly impressed. It represented a big improvement over any other computer program I'd ever encountered. But I knew I was still a better player." The next year, when Bill returned to play TD Gammon after a year's worth of almost a million errors in played matches, it was a different story. TD Gammon had become an expert by studying its own mistakes.

2. It isn't good enough to make errors, you must systematically study them. In determining how Bill Robertie could become a world-class expert in three games, it became clear that his success was linked to his systematic study of his failures. Lehrer quotes Robertie who states "It's not the quantity of practice, it's the quality. The most effective way to get better is to focus on your mistakes." In Lehrer's study of Robertie, he noticed that after Robertie plays a game, he painstakingly reviews what happened, and every decision is critiqued and analyzed. Even when he wins, he insists on searching for errors. In my professional life, I have been accused of being a perfectionist more than once, and direct reports have questioned whether I am ever happy with a result as I constantly analyze decisions, even on the cusp of a great victory. From a management perspective, I can see how that could be construed as having an insatiable appetite for perfection, but I guess I view learning in much the same way as Robertie does. Celebrating success is important, but in situations where you need to learn, and learn quickly, you need to focus on the mistakes even in victories.

Lehrer concludes that "mistakes aren't things to be discouraged. On the contrary, they should be cultivated and carefully investigated." I believe as managers we are responsible for creating environments where admitting mistakes is encouraged, so that as a team, we can all learn from them. In an age where people only want to talk about "best practices," we should also be discussing "worst practices." As it seems to me that you can only get to the "best" by surviving and learning from the "worst."

Recently I was sitting on a funding panel with a representative from a large influential funder, whose organization was supporting projects that could either be great successes or massive failures. It was considered by the funder a "success" to have either outcome, as long as a detailed analysis of each project was made available to the public to learn from. I thought this demonstrated very forward thinking on the funder's behalf, but the funder admitted to me that the public analysis requirement was a significant deterrent to applicants, as they were afraid that public failure would make them less desirable for funding from other sources.

As a field, failure should be celebrated, as long as we are relentless in our analysis of each failure and learn from each incident. Shame should be reserved for those organizations who are complacent in situations that demand change.

Perpetuating the Myth

2010-06-20T18:10:00.013-05:00

I've just returned from the Theatre Communications Group Annual Conference. The theme for the conference was "Ideas into Action," and it built upon the previous year's conference where the field took a look at some of the major issues facing all of us. The idea was to take what we discussed last year and to explore "bold new solutions."

The first session I attended was entitled "Theatres Becoming Centers in the 21st Century." I attended partially because my Artistic Director, Molly Smith, was speaking, but also because I wanted to hear some ideas from other centers from around the nation as we move toward the opening of the Mead Center for American Theater. The one thing that stayed with me through the entire conference from that session was the quote Molly used to open her remarks--she referenced a quote by R. Buckminster Fuller in which he said: "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." It made me think that as a field, if we generally agree that our business models have significant issues, then why do we spend so much energy devising band-aids for them instead of building new models that make the existing ones obsolete?

Later that evening, I had the pleasure of listening to a wonderful speech given by Jonah Lehrer, the author of the book "How We Decide: the New Science of Decision Making." He kept me captivated throughout his entire manifesto, but a single story stood out among the rest (well, at least to me). The story goes that Procter & Gamble decided they wanted to invent a new soap to make mopping more efficient. After several months of failed attempts to create this novel soap in house, they hired a creativity firm to work with them. The firm spent nine months studying homemakers as they mopped their floors, and in the end, they concluded that a new soap wouldn't revolutionize mopping because mopping as a means of cleaning was essentially flawed in itself. After observing one woman cleaning up coffee grounds on the floor with a damp paper towel, an idea emerged--what about getting rid of the mop entirely, and fastening a damp paper towel to the end of a stick? And the Swiffer was born.

After more than 50 years of success, where should the resident theater movement look to throw away a mop, and replace it with a Swiffer? In looking back on my scribbled notes, it looks like I came up with four different ideas:

1. Arts Education/Community Engagement. The idea of having an education department at a resident theater is relatively new. Maybe 15 years or so ago, funders started to route resources to student and community programs. Theater companies took note, and started developing more education programming, however the programming was almost always intended to compliment the more "formal" arts education that students were getting in the schools. Fast forward to present day where the focus of our schools have become glued to developing the highest standardized test scores. In this environment, arts education has been highly marginalized, if not all together eliminated. Who is teaching creativity, at a time where we frequently hear from top corporations that creativity is a key component to success in today's ever changing world? Do we need to look at our education departments to figure out how to serve this essential need by ourselves instead of being a complimentary service to our school systems.

2. Subscriptions. Where is our generation's Danny Newman? When he invented the subscription, it revolutionized how performing arts organizations did business, and it mirrored how a certain generation wanted to "consume" artistic product. Baby Boomers joined Kiwanis clubs, went to church, participated in bowling leagues, and purchased tickets to a large number of shows well in advance at discounted prices. But times have changed--Generation X doesn't act like its predecessor, but we are still using the same sales techniques on them that have worked for decades with Mom and Dad. How do we continue to serve Baby Boomers as they still have the largest disposable income, and work to meet the needs and buying habits of Generation X and the Millenials? We can keep slapping band-aids on the subscription model, by doing things like introducing smaller and smaller "pick your own" packages, or acknowledge that we may need a new mop to clean up this particular problem.

3. Development vs. Marketing. If you read my previous post entitled "The Problem of Silos," you know this is an issue that I have been stuck on for awhile. In my career, I have worked at some amazing organizations both incredibly large and very small, and I can honestly say I have never seen an operation that integrates the needs and priorities of marketing and development well. Almost always, one wins out over the other, the cause of which usually can be tracked back to funding and/or leadership. To solve this, a few organizations have developed external affairs divisions that house both marketing and development activities, however those departments are just as segregated under a Director of External Affairs as they would be under an Executive Director. I proposed a new system in my prior post, but this type of change is daunting considering it would mean dismantling and rebuilding the entire revenue generating departments of an organization.

4. Funding vs. Accessibility. There are a multitude of reports out that show that funding has dropped during the global economic crisis, which has put more and more pressure on earned revenue sources to make up the difference. On the 2amt blog, there has been a heated debate on dynamic pricing, particularly as it is used by non-profit theaters. For those unaware of dynamic pricing, the basic premise is that ticket prices for popular productions are increased as demand increases. Is it a coincidence that dynamic pricing has really gained ground and become almost standard practice during the two years following the start of the global economic crisis? If there is less funding, then we need to make more money in ticket sales. Seems logical to me. The problem is that many times, we are doing excellent work in education and outreach programs that reach populations that will never be able to afford a ticket at our institutions. This used to be addressed by funders who supported lower priced tickets, but as that money has dried up, to keep afloat, institutions have cut discounting programs. So where does that leave us? For me, I have become more and more interested in finding new revenue streams--and hopefully new streams that aren't dependant upon the fickleness of reviews either.

As I wrap up this post, I am more cognizant than ever that as a professor of arts management, the techniques that I am teaching my graduate students are antiquated. I call them "best practices" when a more appropriate title might be "yesterday's best practices." If I continue to teach how I was taught, aren't I just perpetuating the myth that our arts organizations are healthy and ready to take on the challenges of the 21st century? Maybe I should begin my classes by challenging them to throw out the mop.

Outsourcing: Make sure to consider the CONs as well as the PROs

2010-06-06T16:14:00.007-05:00

A couple of weeks ago, NPR ran a story entitled "Everyone Else Outsources, So Why Can't the Arts?" Since that time, the story has stuck with me. One positive result of the global economic crisis is that it has forced mature organizations to rigorously examine business practices, many of which haven't changed since the publication of Danny Newman's Subscribe Now! I am consistently amazed at the number of organizations that choose to remain stagnant because change is scarier than doing nothing and watching failure creep up to the doorstep. I applaud organizations that are taking steps to inform the field, as successes and failures will provide beneficial data we can use to plan our next steps. And while I have been accused on many occasions of being too aggressive with implementing change, in this case, I am reminded of a saying that a wise professor in graduate school would always say to me--"just because it is new, doesn't mean it is better."

Let me begin by saying that I support the outsourcing of activities that involve highly specialized tasks. Even in large organizations, most of us are generalists with maybe an area or two of specialized training. In unusual circumstances, many times we need to draw upon an expert with a lot of experience in a certain area. As we approach the opening of the Mead Center for American Theater, I am working with several outside companies that we are outsourcing very specific tasks to including Boneau/Bryan-Brown, SpotCo, Target Resource Group, SD&A, Mires+Ball, Shugoll Research and Allied Live.

Although we outsource work to some of the best companies in the business, we wouldn't be successful unless we supervised their work closely. The best outcomes are usually a result of forming very tight partnerships between on site institutional managers and specialists at the outsourcing firms. One without the other usually ends with mediocre work. In fact, I can't remember a single instance in my career where I hired an outside firm and it removed as much work from my desk as I had hoped for.

In addition, as Russell Willis Taylor asks in the article, one must consider the opportunity cost of outsourcing, particularly in areas of customer service and development. For those of us lucky enough to have been TicketMaster clients in our careers, we know how hard it is to get outsourced sales agents on message and equipped to provide excellent service to our customers (I even tried delivering baked goods weekly to call centers). How can an outsourced entity be as passionate as you are about your institution, and isn't that passion crucial in developing fundraising activities? And we don't like to admit it, but in some cases, we are in competition with one another. In purchasing ads, setting up promotions, pitching stories to the press, calling in favors, taking advantage of remnant space--when you are working with 10-20 arts organizations in the same town, who gets priority when undoubtedly there will be times when the interests of these organizations conflict with each other?

I am eager to see how this experiment in Columbus pans out. To me, this model creates many more questions than it provides solutions, however I think they should be commended for taking an innovative step that I am sure will inform the field in the future.

Just a sidenote--I wonder what BP thinks of outsourcing its drilling rigs at the moment?

The Blurring of the Line between Marketing and Publicity

2010-05-02T19:00:00.006-05:00

The global economic crisis has made almost every industry reexamine its business practices in an effort to reduce costs, find efficiencies and tap new sources of revenue. A sector with perhaps some of the most significant changes has been media outlets. Television stations are now requiring reporters to also function as their own cameramen and video editors. Some stations are heavily investing in online media as their revenues from broadcast commercial sales shrink (Pepsi decided not to advertise during the Super Bowl for the first time in 23 years). Print media outlets are rapidly shifting content and focus to online domains, and if they already had robust online presences, some like the Washington Post are looking into other sources of advertising revenue, such as developing iPhone applications. Reviewers and culture writers are seemingly a dying breed as news outlets consolidate resources and rerun content from other providers (the Los Angeles Times regularly runs articles from its Tribune sister in Chicago), including more and more from user generated sites.

The new trend seems to be a blurring of the line between publicity and marketing. The longstanding tradition of having an impenetrable fortress between advertising and editorial at major news outlets seems to be waning. It used to be that the most an advertiser could do to help push a story was to ask their ad rep to get a press release on the right desk, however I am starting to see more and more advertising proposals that include guaranteed opportunities for press coverage and interviews. Media outlets are starting to regard press coverage as added value to advertising contracts designed to encourage a higher advertising spend. In the most extreme circumstances, there are now significant media sources that have become exclusively pay to play—meaning that the only way to secure editorial coverage is by signing an advertising contract. A recent article highlighted this trend in Seattle where arts organizations have banded together to purchase editorial time on a television station, however this isn’t an infomercial or advertorial, it simply is editorial coverage that is bought and paid for.

My concerns about this new model:

Is there a role for an impartial voice? One of the reasons that news outlets are trusted is that they are (mostly) viewed as being impartial. Will editorial features ever have the same power that had in the past if the readership realizes that the coverage has been purchased? How can you have an impartial review if the reviewer works for a publication that is selling editorial opportunities?

Is there a role for small organizations? Many small organizations live on earned editorial coverage as they do not have an advertising budget. As news outlets start to allow their editorial coverage to be influenced by advertising spends, what happens to the small organizations that have no money to spend?

Is there a role for a publicist? Many publicists I talk to are enraged about this new trend. Imagine that you are a publicist, and have been pitching an outlet for months and months with no success only to find out that the publication is pay to play. In a manner of minutes, the marketing director places an advertisement and all of a sudden editorial opportunities are available. What then becomes the role of a publicist?

The Biggest Marketing Challenge of the Next 10 Years (Part 4)

2010-04-25T16:26:00.003-05:00

The final response in this series of posts belongs to Julie Peeler, a close friend and expert arts marketer. Prior to her current position at Americans for the Arts, Julie headed the National Arts Marketing Project, which was where I met her in 2004. She is a wealth of knowledge, and someone that I look to for advice when I am navigating particularly difficult marketing decisions. I hope you enjoy her insight below.

Julie Peeler
Vice President, Private Sector Initiatives
Americans for the Arts

I would be happy if I could figure out what’s going to happen in the next 6 months. After all, very few people could have predicted in 2008 that we would be in the shape we’re in right now, facing the issues we are facing. But if we’re to learn anything from the current conditions, we know that we cannot be as insular as we have been as an industry and a profession. The arts are as bruised by this recession as any other business, and we are positively and negatively affected by the same social, economic and demographic factors as any other business. The recently published National Arts Index by Americans for the Arts points to just that thing.

And we need to become more nimble as organizations and managers than ever before. Shrinking funding and a fracturing of the American demographic mean less behemoth organizations and smaller, service oriented groups. No one department holds the crown for Nimbleness. I have worked with as many arts groups where the executive director was nimble but the staff was rooted in “this is how we always do it” as is the opposite case. There is no room for tradition any more. Not in the art on the stage or the wall or in the classroom, not in the management of our organizations and especially not in the way we reach new audiences.

And speaking of audiences, they are more and more becoming customers, and co-creators, rather than a passive body of viewers. They don’t need us to curate and direct but to facilitate their own personal arts experiences. Organizations must continually look for new ways to connect people to the arts: virtually, by being embedded in the community, by working though community issues, etc. We will be seeing more virtual organizations in nontraditional spaces, a greater blurring lines between professional and avocational, and less of a quest for a building where the building manages us rather than us managing the building.

The big challenge for marketers will be to think outside of marketing and consider how shifts affecting the world at large will translate into how their organization is run, how it connects to audiences and how they in turn, market.

The Biggest Marketing Challenge of the Next 10 Years (Part 3)

2010-04-11T16:19:00.003-05:00

Part three of the series features responses from two experienced theatrical marketers--one that works at one of the finest training institutions in the nation, and the other works at a top Broadway marketing and advertising firm.

Anne Trites
Director of Marketing & Communications, Yale Repertory Theatre
Assistant Professor of Theater Management, Yale School of Drama

Technology! I think the biggest marketing challenge facing arts organizations is related to the impact of technology on communication with audiences – current and prospective. We used to rely on print and radio advertising, snail mail, email and the telephone to communicate. A great deal of time was spent developing just the right message to be delivered at just the right time to each segment. We would develop tactics to stimulate positive word of mouth to encourage sales. Marketers were largely in control of the message. Technology has already tipped the balance and audiences are quickly gaining that control. Individual audience members offer their opinions frequently and with immediacy on a growing number of platforms. Some have online followings that rival those of professionals. And, the voice of the audience has more authenticity and therefore more clout with their networks than any marketing message.

It’s hard to think about ten years from now only because of the speed at which technology is stimulating change to marketing tools and consumer behavior. Whether it is two or ten years from today, I believe we will become `somewhat’ more transparent marketers working in partnership with loyal fans in our audience. I say `somewhat ‘because I also believe we will use the information we glean about audiences through their online activities. We will still be segmenting audiences and crafting targeted messages which we hope will become viral. In other words, it will be the same but different!

I think the biggest challenge is not about what it will be like in ten years, but how we will get there. Can we be nimble organizations? Can we keep up with the fast pace of change? Can we be proactive and get in front of change? Can we measure our efforts and make wise choices during this period of change?

One more thought … I wonder if our art form will become increasingly unique because it is live. We’re already using the slogan “there is no app for this” at Yale Rep for next season.

Ilene Rosen
Director of Business Development, SpotCO

I wanted to respond to the question Chad posed with a challenge I think we can tackle. The issue is this. Today’s marketing and advertising environment has not only changed drastically in the last five years, but it is continuing to change, and it is more cluttered than ever.

So, how do we stay focused on SELLING TICKETS?

With the economic downturn and the explosion of new media, we face some tough questions:
What are the most effective forms of advertising now?
How best to use new and social media?
Does print advertising still provide value?

As new media continues to grow as an industry, this list of questions will only expand, and these questions leave me with some concerns:

• I worry that as marketers, we will get so overwhelmed with ‘the clutter’ that it will become more difficult to make good marketing decisions.

• I worry that as more forms of social media become available, we will spend more and more of our marketing energies trolling the Internet aimlessly trying to find/engage audiences.

• I worry that with all of the new and traditional media options to choose from, our attentions will get diverted away from making strategic marketing decisions. As a result, we will make less effective choices about where to focus our dollars and resources.

As we move into the next decade, I hope that we can stay macro: focus on selling tickets. If we make choices based on STRATEGY, I think it will help us be more effective in this elusive marketing environment.

As marketers, we do need to try new things, but we should be strategic about what we are doing or the efforts are wasted. We should repeatedly ask ourselves – could this yield a ticket sale, either directly or indirectly?

We will want to stay on the frontlines of new media, but when we post things on Facebook, YouTube, Twitter, etc., we have to be thoughtful about it and ask ourselves what the strategy is behind every post. We should be able to answer that question.

Over the next decade, we will need to explore, experiment, and take risks, but I believe we can be successful only if we make decisions based on strategy. If we can use macro strategies as guides, it will help navigate us through all of the questions we face moving forward.

The Biggest Marketing Challenge of the Next 10 Years (Part Two)

2010-04-08T19:04:00.003-05:00

The series continues as more experts weigh in on what they believe will be the biggest marketing challenge arts organizations will face in the next 10 years.

Jim Royce
Director of Marketing and Communications
Center Theatre Group

"Word of Mouth is Just Too Important to Ignore"

This is an economic time when every business and arts organization needs to look intently at its core audiences, ask yourself: what can I do to bring customers closer or more frequently to our product? How can I leverage their experience to generate more word of mouth or get it going faster and wider?

Oscar Wilde’s famous remark, “The only thing worse than being talked about is not being talked about,” is even more relevant in the age of social networking and ten-second sound bites. And the rules of spreading chatter have not changed: ya gotta have something interesting to spread around, it must be easily talked about, credible, respectful and satisfying.

People love to talk and when they have information or an opinion they think is worth sharing; they won’t stop talking. Your mavens are key talkers, because mavens thrive as influencers and need constant content. Often friends see them as informed and therefore they earn respect and attention. What do your best friends do to inform you of the cool things they’ve experienced or get you to experience?

There is plenty of evidence that shows if you can influence 150 people to spread enthusiastic chatter online, it will move faster than a newspaper circulation with a million readers.

It’s our job to educate, inform, and build interesting chat. Make no mistake: you can’t decide what’s remarkable to someone else. You can only hope your stuff is what other people think is remarkable and want to talk about.

Accommodate your core loyalists and mavens with new perks and incentives to keep their attention. Offer payment plans, free parking, extra tickets, cookies, anything customers may not expect that send signals we are in this tough time together and we want to reward “your” loyalty, especially now.

Spend more time on relationships with people who are infrequent attendees. They can be influenced by your evangelism in these tough times. Evangelism brings out the passion in your work.

Revisit or revitalize the attributes that make your brand stand out. Now is not the time to make big changes unless you see major advantages at the end of the recession. Consumers want stability and trust that says we are capable of delivering high quality and engaging productions.

Remember Malcolm Gladwell’s The Tipping Point? He spoke about ideas working like social or viral epidemics. They start small and grow because a few connectors or see something unique, but other people, tastemakers, spread them to gain wider attention and “remark-ability.”

It is the power of a lively context in which most people accept interesting products, events or ideas. Make them gain stickiness and their attraction grows exponentially.

I love Andy Sernovitz and Seth Godin. Both practice what they preach about word-of-mouth marketing and good strategic values. Andy’s classic remark haunts me every day: “People love to talk. They are talking about you and your stuff right now.” Yes they are. And Seth Godin’s famous book Purple Cow, made me a fan of him for life. (If you are driving down a long country road past herds of common ordinary cows, and all of a sudden one is purple, what would you do, think or feel? Do you have a purple cow?)

People talk to each other for advice, confirmation, and validation before committing to a significant decision or purchase. Value is a centerpiece in the customer’s mind and confirming value is critical to the sale process, particularly for high-cost experiences, like ours.

If you get excited about an arts event and you want to go, the next action is to talk about it with someone who will go with you. And you have to come up with a good reason to start the conversation. It’s up to us to help supply you with those opening lines.

WOM is more than just word of mouth. We have word-of-e-mail, word-by-blog, by Facebook, text messaging, YouTube, online search, and reader reviews in newspapers and Web sites. And this is all happening with a landscape of social networking options that have dramatically changed the way people chatter and inform themselves.

Sernovits says, “You’re getting talked about whether you like it or not. The conversation has started, so you might as well get involved. Word-of-mouth marketing only works if you have good products and services. It works if people like you and trust you. The best part, I’m convinced, is the more we participate, the more the conversation grows, and the more it becomes about us.”

It is our responsibility to provoke the chatter. Make sure tastemakers are an integral part of your audience makeup from the very beginning.

Make the chatter interesting and remarkable enough to spread. Participate through advertising, blogs, social networking, and the creation of online content to help fuel the word-of-mouth. We’re in the business of providing experiences people want to be engaged in and talk about.

Remember one of the key values of Google founders Sergey Brin and Larry Page: “Do no evil. Deliver more than expected.”

Finally, make your Web site rich with content – especially video – about your events and company brand. Spark meaningful word-of-mouth and participate honestly in the dialogue, even if it is controversial. For the consumer, make your e-mail a trusted and useful source of information, service, and most of all, full of sticky news people will want to pass along to their – not just promotion. Build stronger social networks and deeper connections in your community.

Eugene Carr
President
Patron Technology

The biggest marketing challenge arts marketers will face in the next decade is not technology, budgets, or audiences – it’s THEMSELVES. As the Web continues to evolve, arts patrons and consumers will have more choices and options literally at their fingertips. Will arts marketers step up and innovate, or be left behind?

A decade ago, in the middle of the dot-com crash, few would have predicted the rapidity with which the Internet would not only rebound, but forge unexpected and profound changes in how we now communicate with each other. In a short decade the very fundamentals of marketing have been challenged and reshaped.

During these past 10 years, the corporate world embraced this transformation much more quickly than did the arts. It wasn’t simply because they had more money, because the truth is smart Web-based marketing doesn’t need to be expensive. Those entities that the arts compete with for consumers’ time quickly recognized the potential that new technology could afford them, and made huge strides in improving their Web sites, generating paid Web traffic, selecting easier to use e-commerce technology, and investing time and effort in leveraging social media.

In fact, the commercial entertainment industry was one of the first to embrace social media. Even Broadway producers (not often known for innovation) are catching on. Though a few forward-thinking arts organizations have made strides in improving their online presence, not enough have.

According to our 2010 Patron Technology National Arts Patron Survey (March 2010), in which 10,000 arts patrons responded, only 20% indicated that they “always, or almost always” rely on arts organizations’ Web sites for their arts-going planning. And just 39% indicated that arts Web sites had improved in the last year. There’s a lot of ground to be made up here.

Looking ahead towards the next decade, I think it seems obvious that the rate of change wrought by the Web will continue to accelerate. In the next few years, the computer monitor will morph into your home television screen. Watching a live theatre performance or concert produced by a cultural organization streamed over the Internet will become commonplace. The Met Opera has already proven what that kind of thing does to generate demand for the live event itself.

Geo-location technology will also be a game-changer. Your mobile device will be able to tell you (while you sit at a restaurant checking your e-mail) what movies are starting within a mile of your location, in the next hour. Will arts events be listed as well?

Will arts leaders embrace changes like these and be like the creative entrepreneurial people they clearly are when they focus on producing for the stage? Or will they lag behind on the technology front and watch other forms of entertainment race ahead, as has happened during the last decade?

If arts marketers decide collectively to convince their boards and funding community that it is imperative that they get ahead of the technology curve, then there's a chance that the arts industry can blaze a trail that other entertainment art forms will envy.

The biggest challenge is not the change itself, but whether we've got the guts as an industry to embrace the change and go after it.

The Biggest Marketing Challenge of the Next 10 Years (Part One)

2010-03-31T18:40:00.009-05:00

These past two years have been incredibly challenging. As the global economic crisis settled in, we all tried to figure out what that would mean for our organizations. Some organizations failed. Many launched emergency fundraising appeals. And recently, we are beginning to see the questioning of major business practices, from preview performances to selling subscriptions. New technologies are changing the way audiences interact with "art," some major metropolitan areas are showing significant declines in arts participation, and many states are slashing their arts funding.

Even with the recent craziness, it looks as if there might be a light at the end of the crisis tunnel. Many of us have been in the trenches for awhile, making strategic planning difficult as we tend to the fire of the moment. However, as we emerge from the financial crisis, we should start thinking about what lies ahead. As we enter a new decade, I began to wonder what the biggest marketing challenge of the next ten years would be, and it occurred to me that I would love to hear what some of my colleagues thought. So I asked them.

This will be part one in a series of posts where I bring you the thoughts of several leaders in the field as they respond to the question: "What is the biggest marketing challenge the arts will face in the next 10 years?"

Thomas Cott
Director of Marketing, Alvin Ailey American Dance Theater

I think some of the biggest marketing challenges of the next ten years will be linked inevitably to changes in artistic programming that have already begun. We can expect a disconnect between the more traditional art forms and things like amateur art, participatory art, mixed-media art and site-specific works. Also, the demographic shifts in the U.S – the rise of the so-called ‘minority majority’ -- should have a big impact on programming, and thus arts marketing.

Another challenge is how we deal with younger generations of Americans who did not grow up attending theater, dance or classical music and who didn’t have much (if any) arts education in school. Arts marketers will need to provide ad hoc arts education for these adults.

In addition, as fundraising goals are harder to achieve, there will be more pressure on marketers to make up the difference. But there is a limit to how much we can charge for tickets. And more to the point, while there will probably always be people who will gladly pay for 'premium seats' and plenty of others with an appetite for bargain prices... how do you convince audience members who used to buy in the middle price range to do so when they are worried about affording their basic costs of living? Even if the economy improves significantly in the next 1-2 years, there is a strong indication that some Americans’ buying habits have been irrevocably altered. The widening income gap in this country is deeply worrisome.

Last but not least, a myriad of technological advances – although they can provide wonderful marketing tools – offer big challenges to arts groups, especially those with limited budgets, staff and understanding of technology. Web 3.0 is upon us, but most arts organizations are still grappling with Web 2.0 ideas.

But. Take a big breath, everyone. All of the above challenges notwithstanding, I can’t imagine a better time to be involved in the arts. Look at the incredible opportunity we have. Over the next decade, we as marketers (along with the rest of our colleagues) get to be involved in this seismic realignment of our country. We are the ones who will determine the future of the arts in the country. Who can resist that challenge?

Rick Lester
CEO, Target Resource Group

Today may be the good old days for arts marketing. Very good organizations are running against a tide of numbers that could ultimately prove overwhelming. Three decades of selling tickets, raising money and balancing unbalance-able budgets frame this view, but it’s what we see in TRG’s cumulative data on arts and culture buyers that is alarming.

Thirty years ago, a high proportion of subscribers were seriously engaged. In the orchestra world, the audience included avocational musicians. They studied seriously. They performed chamber music in their homes. This generation departed from the scene and marketers successfully made a clever transition of message. To “Subscribe Today,” one could find happiness as a spectator. Participation was no longer required.

This strategy worked. Across the country we added thousands of new subscribers and single ticket buyers. Admittedly, these new folks no longer wanted to attend 24 Saturday night performances. Simple, we said. We’ll sell you twelve performances – or nine. Or six. And it worked. Unfortunately, another force was in play. Demographics.

As theatre, opera, orchestra and ballet companies replaced one generation with another, the new target market came of age -- Baby Boomers. Today marks the best of times for serving Boomers. Right now the target pool is 60 million of us who were born between 1946 and 1964. Any current marketing or fundraising effort need not be as efficient as those programs implemented twenty years ago. There are so many people who fit the current target, one can miss the bulls eye and still be okay.

What happens in 2020? The members of Gen X finally begin reaching the target life stage. Even if we forget the cultural divide that resulted from the demise of public arts education when this group passed through our schools, the arithmetic boils down to one number: 20 Million. That’s how many Americans were born between 1964 and 1981 -- 60 million Boomers will be replaced by 20 million Gen X’ers.

The math is simple - and it doesn’t work. Everything an arts organization does well today must be three times more efficient in 2020 if they are to maintain today’s level of success. We could, of course, wait and see what happens when Gen Y (born between 1982 and 1995) replaces Gen X. These so-called Echo Boomers are almost as big a group as its parent generation. But our data suggests waiting is a high-risk option.

Is there a solution? Yes, but it won’t be easy. The rate of audience attrition today is unacceptably high. Nationally, TRG analysis shows that 80% of all new single ticket buyers never return for a second visit. Unchecked, attrition will continue depressing audience growth and feeding decline. Smart organizations, however, won’t ignore the danger signs or wait for the generational echo. By 2020, the best among us will have long since stopped over-prospecting for new stealth patrons and will retain almost everyone they touch.

Future posts will feature responses by:
Anne Trites, Director of Marketing and Communications, Yale Repertory Theater
Ken Davenport, Producer, Davenport Theatricals Enterprises
Eugene Carr, President of Patron Technology
Ilene Rosen, Director of Business Development, SpotCo
Jim Royce, Director of Marketing, Communications and Sales, Center Theatre Group
Julie Peeler, Vice President of Private Sector Initiatives, Americans for the Arts

A Collection of Worst Practices

2010-03-20T15:13:00.005-05:00

A couple of weeks ago while sitting on a funding panel, I said to a representative of a very large funder that I didn't understand why people were so afraid to fail, and then discuss their failures openly so that everyone could learn from them. Especially in the fields of technology and audience development, more advances come out of failure than anything else. The funding representative said that she felt the same way, but heard from companies that they were afraid to admit their failures because they feared it would affect future funding opportunities.

Well, I thought I might get the ball rolling by discussing some of my biggest failures and what they taught me:

Always give the exclusive to your best customers. I have made this mistake a couple of times, but trust me, I have learned the lesson. Every now and again, you might have a big news story that a major news outlet will want an exclusive on. They might even promise you front page or prime time coverage, in exchange for the opportunity to be the exclusive outlet to break the story. In the past to protect an exclusive, I have made the decision not to release any information until after the story broke. However, imagine how your subscribers might feel if they first learn of this news by reading the front page of the newspaper? Do you think they would feel like part of the family? or a VIP? NO! I still work with our media relations staff regularly to negotiate exclusives with major news outlets, but we always inform our subscribers first. It might only be an hour or two before the mainstream news breaks it, but they are first to know.

When hiring, a fire in the belly trumps experience. The old saying that "90% of directing is casting" is applicable to all walks of life. By far the most important responsibility I have is hiring. In the last several years, I have been faced with a similar dilemma--a choice between someone with a ton of drive and less experience vs. someone with a ton of experience and less drive. The first time I made this decision, I went with more experience and less drive. Big mistake. You can teach skills, but you cannot teach strong work ethic.

If you don't have the support of artistic staff, don't consider launching a blog. I have launched blogs at Virginia Stage Company (VSC) and Americans for the Arts, and relaunched a blog at Arena Stage. My first attempt at VSC failed miserably. As a communications outlet, I made the decision that I would serve as the principal writer, mostly because it was my job and secondarily because I couldn't get artistic staff to buy into the idea. So I started writing, and I couldn't get a single reader. Why? People don't care what a marketing director thinks. They want to hear from the cool people --artists, designers, actors, etc.

All that glitters isn't gold -- especially with technology. I have always been an early adopter of technology to help market cultural experiences. I used to jump on every new idea that came out spending hours and hours developing ways to use new technological advances to communicate with stakeholders. After building podcasts, Second Life sites, NING communities and discussion boards that have all failed, I take more time now to think about the overall strategy before jumping in. A year and a half ago, Next to Normal was coming to Arena Stage, and we knew there was a good chance it would be going directly to Broadway. The show already had a large number of dedicated fans, so I wanted to build a community where they could all interact with each other in anticipation of a commercial run. We set up a NING site (http://www.n2nfans.com/) and started to promote it like crazy. After two months of promotion, we had 45 fans. The show had a huge following, but the idea failed. Why? When I asked fans later why they didn't join, they said they didn't want to create yet another log-in and profile. To participate, NING makes you do both, and people were tired of having multiple log-ins and profiles (Facebook, MySpace, YouTube, Yahoo! Groups, etc). The idea was good, but the technology was flawed.

Small cuts can negate million dollar advertising plans. Early in my career, when I had to look at budget cuts, I made a decision to protect advertising expenses at all costs, opting instead to try to find operational expenses to cut. Together with my team, we looked at every little expense we thought we could shave. Despite not cutting any advertising expenses, I noticed a drop in ticket sales the following year. This concerned me, so we sent out an email survey to lapsed subscribers to figure out what happened. Two stories came back that will always stick with me: 1) a subscriber said that she stopped coming because she couldn't get a house manager to help her get a taxi home (we had released a part-time house manager to save money), and 2) one woman stopped subscribing because she had a hard time walking to the theater because of ice on the sidewalk (the city was notoriously bad about clearing sidewalks, so we used to set aside money to salt the major sidewalks that led to the theater, but we cut that). I did what I set out to accomplish which was to protect our advertising expenditures, but in doing so I compromised the experience. Word of mouth is the most powerful form of advertising, so the experience has to come first.

The Truth About Attracting Younger Audiences

2010-03-07T18:25:00.005-05:00

In the past few weeks, I have served on a couple of panels and delivered a few speeches about attracting younger audiences. In doing so I found that many people harbor some misconceptions about attracting younger audiences. I understand that younger audiences are a sexy topic to funders and board members, but there are a few things we all need to think about before launching our assault on the Gen X'ers and Millenials.

Product. Of the four Ps of marketing, most will agree that product is the most important. So why then is it the least considered when looking at ways in which to attract younger audiences? If your core artistic product is not appealing to younger audiences, then you will almost assuredly fail to get them to fully engage with your organization. Throwing an after hours party, turning a performing space into a disco or hosting themed young professional events might get targeted demographics into the door, but what we really want is for them to engage with the mission of the organization. If the mission precludes the organization from programming attractive art or an artistic leader isn't sensitive to the programming desires of young adults, you might be able to get them in the door, but they will never be a stakeholder of your institution. Just as location is king in real estate, in the arts, nothing is as powerful as the programming.
Price. News Flash -- many younger audience members have money, and are not as price sensitive as some of us assume. Consider this study that reports that the 37 million young adults from 25 to 34 years of age in the U.S. have an aggregate income of more than $1.1 trillion. In an attempt to explain the absences of young people, I think we have jumped to price as the primary issue because it is much easier to change than product. However, I would argue that those who have to adjust tickets to bargain basement prices to attract younger audiences primarily have a problem with the product. Consider that in 2008, Ticketmaster reported that the average price for a ticket to a Coldplay concert was $217. For those lucky enough to have seen Coldplay, you know their events are filled with Gen X'ers.
Place. Secondary to product, we should be asking ourselves if our institutions are welcoming to younger audiences. Churches and theaters are both struggling to attract younger members, and I believe are failing for many of the same reasons. Things to ponder: 1) what is the average age of your ushers? if they are the first people to welcome your audience, would someone in their 20s be welcomed by a peer or by someone that could be their grandparent? 2) Gen X'ers can barely remember a life without computers. Millenials have never been without the Internet. Yet we expect audiences to disconnect and remain in a dome of silence when they are at our institutions. Why not provide free wifi? configure our websites to work on handheld devices? 3) Is your organization's virtual presence as inviting as your real world location? can I purchase tickets, get answers to my questions, and engage with you on my schedule?
Promotion. Secondary to price, this is the area that most institutions focus on. Video + Facebook + Podcasts does not automatically = younger audiences. You should think of new media tools as just a means of communicating. Nothing more, nothing less. Like any other tool, you have to know how to properly use it, and then use it to put the right message in front of the right audience. Most new media initiatives require two separate, but crucial steps to properly execute a campaign: the building of a communications infrastructure and the creation of content. You can have amazing content, but no friends to connect with. Or you can build a network of thousands of friends, and lose them quickly with the mediocre content. But for new media tools to work, you must have a product, place and price which are all conducive to younger audiences, and then you can concentrate on perfecting your new media skills.

As marketing directors, we have the least amount of control over product and place, and the most amount of control over price and promotion. Therefore we concentrate our efforts in the areas that we can affect, but if you don't get the first two right, you are wasting your time with the last two.

How We Can Support New Work (an addendum)

2010-02-21T17:05:00.003-05:00

My latest blog post entitled How Marketing Directors Kill New Work caused quite the stir among my colleagues. For those that know me, I have never been one to shy away from controversial issues, especially if I have a strong position on the subject. With that being said, I stand by what I wrote, but decided that I should probably add an addendum as several good points were raised by my readers.

I was challenged by some to address the steps that marketing directors can take to help support new work. I must admit after rereading my post, I found myself to be a little more critical than helpful, which wasn't my intent. So below are some suggestions, ideas and responses to comments:

Seek the help of the playwrights. In promoting new work, particularly if a new work speaks to an audience unfamiliar to you, seek the help and advice of the playwright. You know your organization's audience, and they know the target audience of the play. Combined, you should be able to find ways to attract your traditional audiences to the work and develop methods to entice new audiences into your doors. In my couple of years at Arena Stage, playwrights like Lisa Kron (Well), Daniel Beaty (Resurrection), Tom Kitt/Brian Yorkey (Next to Normal), and Matthew Lombardo (Looped) have been incredibly helpful in developing marketing strategies. Still to this day, I find that playwrights are surprised when I ask for their input on marketing strategy, messaging, artwork creation and outreach events.
Budgeting. Several colleagues lamented that executive leadership forced them to set earned revenue goals too high on a new work knowing full well that they would not be able to achieve them. My advice is to develop earned revenue projection tools that are accurate and stick to your guns. In the past two years, our earned revenue projections at Arena Stage have been off by less than 1%. We have developed a sophisticated system that has been proven to work in even some of the most difficult economic circumstances. Although the entire senior staff discusses the assumptions and logic behind the forecasts, ultimately we support our revenue forecasts as a team. The surest way to ensure failure for a new work is to set an unattainable goal, for when you miss the goal by a wide margin, it can cause leadership to shy away from new work, when in reality it was a forecasting issue, not a programmatic issue.
Start early. Every arts administrator has to deal with issues of capacity, particularly in an economic climate where many companies have had to reduce the size of their already overtaxed staff. In taking on new work, we should remember that audience development is a slow and time consuming process. It can take a year or more of intense, dedicated work to make inroads into an untapped community. All too often, due to the typical planning cycles of regional theaters, marketers are not given enough time to develop and execute an effective strategy. Artistic directors can help marketers by lengthening their planning cycle for new work, so that marketing staff have ample time to develop an audience.
Don't Over Do It. Ask any marketing director, and they will tell you that acquisition campaigns are much more costly than retention campaigns. When looking at audience development, we are dealing with large acquisition campaigns. These campaigns take a significant investment not only in terms of money, but also in terms of staff time. Unless a marketing team is exceptionally large, I would advise tackling only one or two projects per year that focus on new audience markets. Any more, and you run the risk of not being able to provide the support these projects need.

The entire team ensures the success or failure of a new work. It is important to note, as I was reminded several times in the past couple of weeks, that a marketing director is only one member of the team. However, I can only control the actions of one person -- myself -- and that is why I focus on what we as marketing professionals can do to increase the success of new work.

How Marketing Directors Kill New Work

2010-01-31T17:40:00.008-05:00

As I only post when something catches my attention, my posting habits are a little sporadic. Sometimes I will write a couple of posts in a week, and other times I will only post once a month. I have been feeling pretty guilty lately about not posting more, but nothing really jumped out at me until very recently.

In the past couple of weeks, two things have impacted my work as a marketer--I was extraordinarily fortunate to attend a convening of Black playwrights as part of the American Voices New Play Institute at Arena Stage, and I finally got around to reading Outrageous Fortune, the new report put out by TDF about new play development. Via both contexts, I heard numerous complaints about how institutional theaters market new work.

It became clear to me that marketing directors, in some cases, have the ability to kill new work. In Outrageous Fortune, one playwright contends that institutional theaters are "about a certain kind of system...when plays come in, they want to systematically find a way to market them." Another playwright states that new play production "comes down to marketing. Some say we love this play; we can't find the audience for it. It pisses me off, because a lot of people in marketing don't know how to find new audiences." It is easy for marketers to take offense, however we should admit that at too many institutions, this is the case. Marketing directors are like anyone else; we are creatures of habit. If we have been in the job for awhile, we start to develop systems for marketing products. We know how to market musicals, new plays, African-American work, political satire, etc. But what happens when the Artistic Director brings us something that we can't pigeon hole? Well, I guess that depends on the person sitting in the marketing director's chair. Some of us get excited as it presents an opportunity to learn and grow, and a chance to build our audience base. Others might be daunted, and instead of facing the challenge, they retreat to the comfort of the known. But let's be clear--whether we accept the responsibility or not, it is our job to find an audience. The audience for more challenging, esoteric work might be smaller than a crowd-pleaser, but either way it is our duty to go into the community and find those people to support the work. In thinking about this issue, I am reminded of a piece of advice my mentor gave me in graduate school. She said a producer's job is to find ways to say yes.

While reading Outrageous Fortune, I had an interesting interaction with a playwright. When questioned why a play hadn't made a commercial transfer despite being critically acclaimed, the playwright said the producer had a difficult time projecting revenue due to the late buying habits of the audience. To all those on the outside, it was almost impossible for us to understand why a commercial production would not be forthcoming. If it was indeed a case of projecting revenue, then the marketing director has failed this extraordinary new play. Just because our jobs become difficult doesn't mean we have the luxury of being able to choose to carry out our responsibilities. Revenue forecasting is incredibly difficult, especially in light of the current economic crisis. However, who better to forecast revenue than those with the tools to do so?

Are these cases of marketing directors behaving badly? It sure looks that way. We got into our jobs knowing the territory. We are tasked with developing new audiences, supporting the mission of the institution, forecasting revenue, promoting all types of work, etc. If you don't like any of those tasks, then you should move on. Maybe the job isn't for you. Don't jeopardize the livelihoods of playwrights, or the advancement of our craft, because you don't want to take on a tough task.

That being said, before I finish this post, I wanted to mention that there are two major sources of revenue at non-profit institutions--earned revenue and contributed revenue. If marketing objectives have the ability to sacrifice your institution's mission, then I would argue that you have become too reliant upon box office revenue. For-profit companies focus on one thing: building a product that has audience appeal sufficient enough to make the most possible profit. Non-profits as well have a singular focus: fulfilling their mission. At no point can marketing objectives jeopardize an organization's ability to fulfill its mission. If you get to that point, you might as well become a for-profit entity.

The Lure of Star Power

2009-12-27T14:58:00.009-05:00

I just finished reading Playbill.com's Top Theatre Stories of the Year. The leading story discusses how stars sell tickets, and in a year with a down economy, it seems that the only thing that sells tickets are the stars. From this little story it seems clear that if you don't have an A-list star in your show, don't even try a Broadway transfer.

Arena Stage in the past few seasons has been lucky enough to host a few stars, most notably Carrie Fisher in Wishful Drinking and Valerie Harper in Looped (and not surprisingly, both productions found their way to Broadway). From a marketing perspective, nothing makes my job easier than a star, particularly stars that are lovely to work with as both Carrie and Valerie were. But let's be honest, it doesn't take a marketing genius to sell tickets to star powered vehicles. And it isn't just New York that has a taste for the stars. The Shakespeare Theatre Company and the Kennedy Center just presented two star productions that sold out immediately: Phedre with Helen Mirren and A Streetcar Named Desire with Cate Blanchett. It used to be that New York and Los Angeles were the cities that needed stars to sell, but it looks like DC might be going that way as well. Or maybe the entire country.

But there are problems with stars as well:

1. Star productions are a gamble, especially for regional theaters. Most Broadway productions can guarantee stars, but regional theaters for the most part cannot. Regional theaters tend to announce productions and casts several months before a show opens in time to sell subscriptions and advanced single tickets. However, during the time between the announcement and the opening, a star can get a better offer from a Broadway production, television series or movie which will lead them to pull out of the regional production, leaving audiences with an expectation that theaters can no longer fill.

2. Most times even with a guaranteed star appearance, run lengths have to be shortened as the schedules of most stars won't allow them to appear for a run length of several weeks, meaning that these productions will more than likely be off subscription. To capitalize on the star production, many theaters use them to boost subscription sales by only allowing subscribers to purchase the very limited quantity of single tickets to the star show. However, often times, patrons will purchase the cheapest subscription package available only for the opportunity to purchase the star production, and then won't attend the rest of the subscription shows leaving theaters with half empty audiences throughout the season.

3. Are regional theaters building an appetite for something they cannot always feed? If theaters have a couple of successful years of bringing in stars for productions, what happens when they can't find a star production for a year or two? In essence, they have built an event based audience that they can't always feed. And in this case, these types of patrons aren't loyal to the company, they are loyal to productions that feature stars. They are the most fickle of any audience segment. The first time you don't deliver, they will move on to somebody that is.

4. Are regional theaters teaching hoards of future patrons that only star vehicles deserve their patronage by filling their programming with stars if and when they get them? Or even a larger concern for me, what about those companies that regularly program poorly conceived productions that showcase a star over a brilliantly produced production without a star? The Playbill article focuses on this issue, citing several poorly reviewed, star centric productions on Broadway that financially recouped along with numerous well reviewed productions that lacked stars which struggled from day one.

There is no doubt about it--a star production can be fun. Your audiences will love them, you will sell plenty of tickets, and they will bring national attention to your part of the world. However, like anything else, maybe some moderation is in order?

Make sure you keep one foot in both courts

2009-12-22T18:17:00.002-05:00

Sometimes at the conclusion of a speech that I am giving, I have someone from the crowd come up to me and thank me for all the great information, exclaiming that they are going to end their direct mail campaigns in order to shift resources to technology based viral marketing campaigns. At that moment, I usually cringe and apologize, for I definitely communicated something that I didn’t intend to. For those that read this blog, you know by now that I am a proponent of using technology to grow audiences, building communities and diversify revenue streams. That being said, most major arts organizations find themselves with a foot in two different courts—how to please the audiences of tomorrow, and still serve the audiences of today.

We sometimes forget that there are four generations in play in our audiences: the Silent Generation, the Baby-Boomers, Generation X and the Millenials. Many books have been written, white papers drafted and speeches given (including by yours truly) on how to effectively target Generation X and Millenials as they are the future for arts organizations. However in doing so, some rabid believers have advocated throwing the baby out with the bathwater. Allocating all of your resources at any one of these groups, unless you have programming that only speaks to a certain generation, is foolish, certainly as foolish as not diversifying your stock portfolio.

Let’s take a look at subscriptions. Most arts marketing professionals agree that the subscription model is dated, and is dying a slow death. That doesn’t necessarily mean that we should pull the plug on them today when they still probably have a good decade left in them. Several performing arts organizations still receive a major portion of their earned revenue via subscription sales, and although Danny Newman might have published his treatise decades ago, his point that subscriptions protect a company from poor reviews and the fickle buying habits of single ticket buyers is still spot on. At every performing arts organization that I have worked for, I noticed a declining subscription base, and within two years with strategic changes have stopped the decline and started increasing the number of subscribers. I don’t say this to seem like a miracle worker (for which I am not), but it does make me wonder how much marketing directors are directly responsible for declining subscribers.

I am starting to believe that the decline of subscriptions might be in part a self-fulfilling prophesy. If a marketing director fully believed that subscriptions were dying, and that nothing could be done to affect declining subscription numbers, then he might be inclined to focus his limited resources on addressing the needs of his “future audience,” thereby ensuring the decline he was forecasting.

We know from surveys that subscribers tend to be older, and more than likely are part of the Baby-Boomer or Silent Generation. We also know that these generations have been purchasing tickets in this manner for years, are usually more comfortable with transaction conducted over the phone or via mail, and therefore respond better to some classic direct marketing techniques such as direct mail or telemarketing. However if you are underfunding direct marketing in order to fund other priorities (such as online marketing), then the decline in your subscription base might be caused by poor strategic marketing decisions.

When creating a holistic marketing campaign, a wise marketing director should always keep in mind that we are serving multiple masters—each master having a different set of expectations and desires. The key for all marketing professionals is putting the right offer in front of the right people using a communications vehicle that gives the message the highest possibility of success.

What if they are just tired?

2009-11-21T18:56:00.004-05:00

In the last few weeks, I have been doing quite a bit of traveling. I have gotten the opportunity to speak with many of my colleagues from around the nation, and they are all saying the same thing -- ticket sales are down this year. Last year, I kept hearing that well branded products were doing very well, while less known fare was struggling. Now I am hearing that even annual cash cows (think A Christmas Carol and Nutcracker) aren't doing well. When a classic theater has problems selling Romeo and Juliet, you know something is up.

So it got me thinking about what is going on (and of course, this is just an opinion). We are all seeing reports that even though some aspects of the economy might be improving, many are still getting worse, such as unemployment. Unemployment is the highest is has been in 20 years. Last year when the stock market crashed and it became clear we were all in for what looked to be an unprecedented global economic crisis, many companies panicked. They didn't know how to project future revenue, so they opted to look at the side of the ledger they could control -- expenses. With that came the layoffs.

Those lucky enough to survive the layoffs took on responsibilities that were normally handled by two or three people. Many managers noted that the resulting model was unsustainable, but thought that most people could put up with the extra load for a short period of time, hoping that the economy would improve and that hiring would be possible. Well, it has been over a year, and unemployment is getting worse, so the unsustainable model of having one person carry the workload of three continues.

As arts administrators, I no longer believe our largest challenge is dealing with people's fears about the economy. That was so last year. Instead, we now have to deal with people who are simply exhausted, and when Friday comes, they want to do nothing more than spend the weekend on the couch in order to recuperate and be ready for the next grueling work week. Whereas last year, our largest competitors might have been other cultural destinations or sporting events, I am starting to think that our most significant future competitor might be cable television and a warm bed.

Blogging from NAMP...

2009-11-01T11:17:00.003-05:00

Once again I find myself at the National Arts Marketing Project Conference, which is being held this year in Providence, RI. This is my fifth conference, and instead of presenting like I have done in the past, I really wanted to listen in on other sessions to hear what is being discussed. I have been asked to blog about my experiences for Americans for the Arts so these posts can also be seen on their blog.

This morning I was lucky enough to sit in on the Every Dollar Counts: Using ROI to Prove Marketing Effectiveness session. I decided to go to the session because one of my favorite arts marketing experts was presenting--Philippe Ravanas, marketing professor at Columbia College and former VP of Corporate Communications for EuroDisney. I have seen him speak at several conferences and he is always extraordinary.

This morning he discussed a situation he found himself in when he was the Manager of Client Development at Christie's in London. Each year, they would produce a beautiful catalog of auction items that they would send to most of their database. These catalogs were highly coveted, and cost the organization $20 a piece to produce, however Philippe noticed that his ROI (return on investment) for these catalogs was poor. It was costing him too much to produce and mail these catalogs in terms of how much revenue they were bringing in. After researching the problem, he found that they were mailing these catalogs to almost every purchaser, including those people who purchased once twenty years ago and people who only purchased a minor item just to get on the distribution list, as the Christie's catalog seemed to be a popular coffee table item. He soon cut back the distribution, and only sent the catalog to his higher end purchasers. This action greatly improved his ROI on the catalog.

It brought me back to a previous blog post I wrote about the future of the subscription brochure. If you read the post, you can see that I have some serious doubts as to whether or not a subscription brochure works as a sales piece. That being said, our subscribers at Arena Stage love our season brochure because it invites them into the process. There are articles by our featured artists, a letter from our artistic director, beautiful artwork, etc. We have heard from our subscribers that they anxiously await our brochure each year, and that these brochures have become collector's items. So they perform a very valuable function in maintaining relationships with our higher end purchasers, but they aren't necessarily needed to push acquisitions. In fact, we have found that other smaller pieces with a clear central message that cost significantly less to produce and mail actually perform better for acquisition campaigns.

As Diane Ragsdale says in her article Recreating Fine Arts Institutions : "Arts leaders may be tempted to think that the solution to dwindling audiences lies in better marketing, but if arts organizations are going to survive, they have to put more than the season brochure on the autopsy table." I completely agree with Diane...but what happens if an organization isn't even willing to put their season brochure on the autopsy table?

Thoughts on the Voodoo Art that is Branding

2009-10-24T11:05:00.005-05:00

Many established arts organizations are finding themselves in the position of having to reinvent tried and true business models to adapt to the ever changing economic landscape. Diane Ragsdale, Associate Program Officer for the Mellon Foundation, offers a well thought out paper on this subject entitled Recreating Fine Arts Institutions. Although I don't agree with all of her arguments, I believe she outlines the overall dilemma very well.

So, what do most organizations do in this situation? They bring in a branding firm to slap a new coat of paint on the organization by creating revamped messaging rules, visual systems and logos. In guiding a couple of these rebranding projects myself, I have learned the following:

1. You can slap a little lipstick on a pig, but it is still a pig. Rebranding begins with artistic strategy. If an organization truly wants to address significant business or perceptual issues, it must do so with the product first. It doesn't matter how savy a branding firm is, if you don't reposition your artistic strategy, there is no reason to rebrand. In working on the rebranding campaign for Arena Stage at The Mead Center for American Theater, I believe this was handled in an excellent fashion by our artistic staff. The senior artistic staff members drafted an artistic plan that clearly outlined where we were, and where we wanted to go. It was a shift from a traditional regional theater model toward becoming a national center for the production, presentation, study and development of American Theater. Once given this clearly defined goal and the artistic strategies to achieve it, the rest of the rebranding process could officially kick off.

2. Say what you want, but your customers will tell you your brand. Have you ever noticed a clear disconnect between the official corporate messaging from a company and your perception of the same company? An example of this can be found in a blog post that I wrote about Hyatt Regency in 2007. Hyatt Regency corporate communications boast that they go above and beyond in customer service, but as you can see, that wasn't my experience. No matter what you say, your brand lives in the minds of your customers. We can craft the best messaging campaigns in the world, but it will not matter if we don't deliver. What we deliver on will become our brand.

3. Brand strategy can be crafted by marketing, but its success is determined by everyone. Think of the people who actually execute your brand -- front line sales associates who process orders; artists who develop the product your customers will experience; the parking attendant who most likely will be the first person to greet your patrons on the evening of their performance; the concessions staff who has to process a vast amount of orders in a very limited amount of time. And then think of the amount of time that a Marketing Director generally interacts directly with patrons. It's time to get over ourselves...brand strategy will live or die by the people who represent you on the front lines, not the pretty new colors you have selected for the organization.

All of this is to say that I do believe that messaging and visual systems are critical in conveying a brand, however they are not the most important factors in developing a brand identity. Artistic strategy and the day to day execution of your brand promises will always outrank the look and feel of any brand.

The Problem of Silos

2009-09-20T19:00:00.013-05:00

I have just returned from a National Arts Strategies seminar entitled Managing People. One of the many things I love about their seminars is that they force you to take a hard look at strategic planning, and how strategic planning influences everything from marketing strategies to, in this case, human resources.

Upon my return from the seminar, I started to think about a common structural problem that many organizations encounter -- the problem of silos, particularly silos between the marketing and development departments. As non-profit arts organizations became more and more sophisticated, there began to emerge two distinct entities: a marketing department tasked with maximizing earned revenue streams and a development department responsible for overseeing all contributed revenue streams. It can be said that "marketing" departments have existed for much longer, and that even for major arts organizations, development departments are somewhat of a recent development (Arena Stage hired its first development director in the late 1980s). With two distinct departments tasked with being responsible for all revenue coming into an organization, all too often, the strategies devised by each department are done so with minimal thought to how they will affect or interact with the strategies of the other, causing the silo effect. As a consultant, I see this with many of the clients I work with, and it makes it difficult for an organization to make the best overall decision on how to move forward strategically.

In the last decade, many organizations have experimented with the "external affairs" model where one large department, housing both development and marketing, is tasked with revenue management. The problem with this model is that in most cases, although the department is united under one leader, there still exists marketing and development silos under the external affairs banner. Again this creates a problem because it doesn't allow an organization to view a complete picture of the customer as one side will look at a customer from a ticket sales perspective while the other will see his potential as a donor. Given the experience of the external affairs director, many times one division is stronger than the other depending upon the director's history.

So remembering a session from this summer's TCG conference, I thought what would I do if I had no rules to abide by and I were running the zoo? I believe I might blur the lines between development and marketing much more than they have been in the past in an effort to view the customer holistically and therefore provide better service. The heart of most of the roles in each department rely upon the same set of skills -- messaging, selling and promoting. Below would be a possible org chart for an external affairs department:

Director of Business Development (not so hot about the title, so it might change): This person would be responsible for all new business development. Chiefly responsible for getting new audiences into an organization, growing the reputation of the organization in targeted segments and organizing audience development events.

Direct Reports:

- Group Sales

- Inbound Sales

- Telesales

- Audience Development

Director of Loyalty and Retention: This person would be responsible for taking the current customer base, and moving them up the loyalty ladder from single ticket buyers to multi-buyers to donors. Also responsible for audience retention programs.

Direct Reports:

- Customer Account Managers: These individuals would oversee a given number of customers and would be responsible for their customers complete care with the goal of moving the customer from a multi-buyer to a subscriber to a donor, and then renewing them the following year. They would track the participation of each of their accounts, and provide customized personal strategies designed to enhance the relationship between the organization and the customer.

- Planned Giving

- Capital Campaign

Director of Brand Management: This person would be responsible for the overall brand of the organization from institutional messaging and design to public affairs and media relations.

Direct Reports:

-Media Relations

-Publications/Art Department

-Marketing/Communications

-Sponsorships

-Special Events

Director of Government & Institutional Affairs: This person would be responsible for being the liaison to all government offices (local, state and national) as well as foundations.

Direct Reports:

-Grant Writers

-Lobbyists

-Foundation Officers

Want to get into trouble? Concentrate on new audiences

2009-08-30T18:26:00.002-05:00

If I had a quarter for every time I have been asked in my career how I planned on attracting new audiences to an organization, I would be a rich man. On the flip side, I am almost never asked about customer loyalty or retention. The quickest way for an organization to get in trouble from a marketing perspective is to ignore audience retention problems in favor of attracting new audiences.

Some common misconceptions:

1. In order to grow, you must attract new audiences. This statement is only true if you are attracting more new audiences than you are losing the audience members you currently have (and even if this is the case, it can be much more expensive...more to come on that point). Many of us are so captivated by the allure of attracting new audiences that we concentrate much of our attention on getting the new ones in the front door while the old ones are running out the back door. A recent study of nine of the most prominent U.S. orchestras conducted by Oliver Wyman showed that these orchestras were great at getting new audiences, attracting on average 57% additional new households in 2007, but had significant issues in retaining current audiences with 55% of unique households not returning in the same year.

2. New audiences are great for the fiscal bottom line. This simply isn't true. The only thing that new audiences are on their first visit is a losing proposition. New audiences only become financially beneficial to an organization over a significant period of time. The money invested in bringing in new audiences only pays off when looking at lifetime value. And to determine lifetime value, one must ensure the new audience member sticks around for more than one visit. A study conducted by Katy Raines in the United Kingdom showed that first time attendees spent on average half as much as their returning buyer counterparts. When looking at the Oliver Wyman and Katy Raines studies, one truth comes to light: first time attendees will spend half as much as regular attendees and on average 83% of them will never come back.

3. Spending money on programs specifically designed to bring in new target audiences is a good investment. The holy grail of new target audiences is the revered "young" audience. So, to get them in the door, organizations spend a lot of time and resources on developing young professional societies, throwing parties, putting together after hours events, and other similar tactics. But if your programming isn't of interest to the target demographic you are focusing your efforts on, you might as well just throw money right out the window. Having a late night club scene in your building might attract young people, but it won't convert them into experiencing your organization's central product. If you are truly invested in cultivating any specific target audience, you must find ways of making your core product attractive to them.

By nature, humans are attracted to what is new and hip. The grass is always greener on the other side, that is, until one reaches the other side. Don't be sucked into a strategy because it is shiny and new. Before digging new wells, make sure that your existing ones don't have any leaks.

So the next time someone asks how you plan on getting new audiences into your organization, you might want to begin the conversation with the status on your current audience. Are they loyal to you, or do they run for the hills after their first visit?

So you are a first time marketing director, huh?

2009-08-10T19:46:00.002-05:00

Just recently, I have had several students and former employees who have been offered their first marketing director gigs who have reached out to me for words of wisdom. Below are the fifteen points that I like to share with any first time marketing director.

1. When results at the box office are disappointing, one of two things are usually the culprit: the artistic product didn't live up to expectations or the marketing plan wasn't successful. When enquiring minds want to know what happened, don't point fingers unless you want fingers pointed back at you. Artistic Directors will fail, and so will Marketing Directors. The arts are inherently risky, and if you are taking risks, at some point you will fail. Get up, dust yourself off, and work to make up the loss on future productions.

2. I have worked for very large and extremely small organizations. I used to think that large organizations had the resources to do everything right. I have found that organizations are sometimes like dogs, the bigger the dog, the larger the pile of shit you have to deal with. So instead of judging the organization on size, judge it on how well you fit within it -- we all have to deal with shit, so you better love the dog.

3. If you want to be successful as a marketing director, you either have to love the product or be a masochist. You are in the arts, which means you are over worked and under paid, so make sure your commitment is worth it.

4. On hiring:

There is nothing more important than hiring.
Always be scouting for talent. You might not have a position to fill, but you will some day.
If I have to choose, I will always pick hunger over experience. You have to be hungry in today's market to be successful. The real key is not to have to choose between hunger and experience.
Know yourself before you look for others. Look for people who have strengths where you have weaknesses.

5. I don't know is an acceptable answer for questions that you don't know the answer to. Whenever you have that as a response, it is your responsibility to seek out the answer in a timely fashion.

6. When you start working for a company that didn't have a successful marketing campaign prior to your arrival, fight the urge to change everything immediately. For two reasons: 1) Most times, there are good reasons (even if outdated) for the decisions that were made, and 2) you will need some time to prioritize which things need to be addressed first.

7. If you plan on being the marketing director for more than a month, make decisions that make sense for the long term, even if they might not make sense for the immediate future.

8. As soon as you start seeing the signs that one well is starting to dry up, you better do two things: 1. address the cause for the well drying up if possible, and 2. start digging a new well. Too many marketing directors aren't on the look out for new revenue streams when we should be.

9. Offer help to your colleagues. Most likely you can help someone in a situation you have dealt with, and in turn, your colleagues can probably assist you.

10. Never forget about a patron's entire experience. You can have the greatest play on the most beautiful stage in the best section of town, and it won't matter a bit if you run out of toilet paper in the women's bathroom.

11. Be a discount ninja -- move quickly and silently if needed, but don't disturb the general public.

12. On negotiating:

Rule 1: When leaving the negotiation table, always make your opponent feel like he won.
Rule 2: Never let your opponent win. Only sign agreements that are beneficial to you.
Rule 3: Don't be greedy with Rule 2. You want to win, but if you win too big, you will violate Rule 1, and it will be the end of your relationship.

13. Before accepting a position, make sure you have a candid conversation about your general beliefs on marketing strategy. If the organization is looking for a technology wizard, and you just figured out "the internets" recently, probably not a good fit. Always better to have the lengthy conversations before you start than the awkward conversations after.

14. In times of trouble, often inaction can be more costly than reaction.

15. Be aware of your ego. Many times the best marketing ideas won't come from your department. When good ideas cross your desk, be humble enough to act on them and thank the source.

Pricing as a Strategy to Encourage Early Purchasing Behavior

2009-07-30T17:27:00.001-05:00

In my earlier post, I wrote how I have observed that consumers have become ultra late purchasers this past year, while hypothesizing that with the state of the economy, most light to moderate users were waiting on a review to make a purchasing decision. Following that post, I received a lot of comments and e-mails asking how one could counteract this trend. I noted to the concern of some that we were shortening our advertising campaigns because we were finding no correlation between the amount of advanced advertising spends and the amount of advanced sales. This is not to suggest this course of action is for everyone, but I do believe it is wise for us.

I further believe that we should start looking more at pricing as a strategy to encourage early purchasing behavior. The traditional approach of discounting performances early in a run is one method of attack, but I would suggest looking at what happens after a show takes off. If consumers are waiting for a great review before purchasing, then we should capitalize on that as much as possible. Several arts organizations have experimented with demand based pricing. This isn’t a new idea, but I believe that we are just now starting to perfect it.

Demand based pricing provides an incentive for early purchasers--they will be “insured” against a spike in ticket prices if a show receives a fantastic review and takes off. Late purchasers who wait until a review hits, will have to pony up significantly more than those who leap before the review. Just as patrons learn that some companies do fire sales on shows that aren’t selling well, they will soon learn that they either purchase early or pay a premium for waiting for the review. There simply is no incentive for late purchasers to buy early if they can get a relatively good seat at the same or similar price point as an early purchaser.

This will require some educating on our behalf. Sales offices (noticed that I didn’t say box offices) in responding to complaints from customers should take the opportunity to cross and up sell – “Our prices increase with demand. With a favorable review, the demand for a production increases significantly causing prices to go up. I am sorry that has resulted in a higher ticket price for PRODUCTION A, but I know you will also be interested in PRODUCTION B because it is very similar and has an amazing cast. While purchasing today for PRODUCTION A, we can lock in the lowest available price for PRODUCTION B with the best available seats if you would like, guaranteeing that you will be protected from any increases in the future. And remember, subscribers are always protected against any fluctuation in price due to increased demand. I wouldn’t be doing my job if I let you paid any more than you absolutely had to. I know that you will enjoy both PRODUCTION A and PRODUCTION B so let’s take care of both today.”

Pricing should be a fluid variable. If we cannot encourage early purchasing behavior by running advanced advertising, maybe we can do it by capitalizing on those who insist upon purchasing late.

Buying Trends and the Impact of Reviews

2009-07-12T19:29:00.007-05:00

To say that this has been an odd year would be a drastic understatement. A little less than a year ago towards the end of September, I remember working with the leadership and board of Arena Stage on an action plan to address the stock market crash and the, at that time, anticipated economic crisis. It seemed we had an incredibly daunting task ahead of us -- exactly how does one forecast and prepare for an economic crisis on the scale that none of us have ever experienced before? At the conclusion of our fiscal year, I am happy to report that Arena Stage had an exceptionally strong year, both artistically and financially. Our success has afforded me the time and opportunity to look back over the course of the year and analyze some of the patterns we saw to learn from them as we embark upon the next fiscal year.

From an overall observation, I started to notice two things that struck me almost immediately after the market crash in September: late purchasing behaviors became common place, and many of our would be patrons put a much higher importance on reviews in making a purchasing decision. To confirm what I thought were changes in patterns, I input sales data into an excel spreadsheet which produced the graph above. Starting from six weeks out and then going through the week that most reviews hit, I tracked our weekly sales for all eight of our mainstage productions. A dominant pattern appeared--sales remained constant for almost every show until the opening week, and then several took off almost exponentially after reviews hit.

Because we had several very short runs for a couple of our productions (2.5 weeks and 3.5 weeks), I created marketing plans that started advertising campaigns much earlier than normal, in an attempt to secure significant advanced sales. But even with robust advertising expenditures, audiences weren't willing in most cases to plop down their money until the show opened or they read a great review.

Takeaways:

1. As I don't see an end to the economic crisis anytime soon, I expect this pattern to continue next year, so I am not going to waste valuable advertising dollars on advanced campaigns as this graph shows that despite those expenditures, patrons still waited. Instead, I am going to shorten the campaigns, and spend significantly more over shorter time periods and concentrate on pushing reviews. This most likely will mean where before we had about a 50/50 split (50% of advertising dollars spent before opening and 50% after), next year we will look at a 30/70 split (30% spent before opening and 70% after).

2. In this blog just a little more than a year ago, I was arguing that traditional reviewers were becoming less influential with the addition of citizen based reviews and user generated content. However, when the crisis hit, many patrons began looking for a "sure bet" when spending their very limited expendable income. So reviews became even more important than they previously were, and certain reviewers became more influential as several media companies cut their reviewers, leaving only maybe two or three major critics in a large metropolitan area. From the graph above, you can see at least four examples of shows that took off after the reviews hit. Also by concentrating more advertising dollars for after a show opens, you can put more money behind pushing exceptional reviews.

Overall:

I thought I was going to have several heart attacks this year as sales patterns for individual shows were completely different from previous years. So much so that there were a couple of times that I was forecasting that a show would miss its goal by a significant margin only to go over goal by the time the show closed. I am sure that I must have seemed a little schizophrenic to certain board members, but forecasting during this climate was exceptionally difficult. I will say however that I was very proud that our reforecasted income model that was developed in October was almost spot on. We ended the year with a 1% variance off where we forecasted we would in the box office. Next year, I will probably continue to have the minor heart attacks, but I now know what I am up against--extremely late buyers who are very sensitive to reviews. They say that knowing is half the battle, so now we have to shift our tactics to address our new reality.

The Future of the Season Brochure

2009-06-21T13:06:00.003-05:00

For decades now, the most revered communications tool of most performing arts organizations has been the season/subscription brochure. We spend weeks if not months toiling over copy, getting images, crafting pitches, working with designers, going to press checks and coordinating with mail houses. Once finished, it is the holy grail of marketing collateral for the rest of the year -- the piece that we take to conferences, show our donors, give away at outreach events and mail to everyone we think has even heard of our organization. And for years, this strategy has been virtually untouched, even while the world around us has changed rapidly. Isn't it time we question whether or not there is a better way?

My biggest problem with season brochures is that we try to pack into one piece messages for all of our separate target audiences: full season buyers, partial season buyers, single ticket buyers, annual fund donors, capital campaign donors, genre specific audiences, etc. For example, a partial season subscriber who prefers musicals and gives at a $50 level each year will receive the same brochure as a full season buyer who prefers serious dramas and gives at the $1,000 level each year. Each target audience looks for different things in our organizations, and we should customize our communications to each group.

Recent advances in printing technology and online communications have made customizable communications much more affordable, but most of us, fearing change to our detriment, still print tens of thousands of one brochure and mail them to all of our target audiences over and over again until those list segments stop producing.

The way we talk to renewing subscribers vs. new subscribers, multi-buyers vs. single buyers, musical lovers vs. drama lovers, and donors vs. non-donors should be different. So why are we addicted to the season brochure? is it our love for crafting one primary brand-driven piece that we can roll out like a turkey at Thanksgiving dinner?

This year Arena Stage has experimented with ordering significantly fewer primary subscription brochures, and then augmenting our direct mail campaigns with five targeted mini acquisition brochures for some of our larger audience segments: musical lovers, drama lovers, locality buyers (we have venues in Virginia and DC), event driven purchasers and our African-American patrons. Each group has a specific relationship with Arena Stage, and should be communicated to in a tailored fashion. I have even heard of colleagues at different organizations creating customizable online brochures for different target audiences.

Communicating to the masses with one overall brochure packed with several different messages is a way of the past. I still foresee the use of a season brochure as a branding piece, but as a sales piece, I believe there are better options out there. The proof will be in the pudding as they say, and as we get the results in for our targeted mailings, I will share them.

Measuring the Impact of Social Media

2009-05-31T16:06:00.006-05:00

Every time I speak at a conference, I am generally asked how I track the results of my social media campaigns, and what I consider a success. Everyone seems to be thinking in terms of ticket sales and return on investment. I don't disagree all together, but I also think we have to measure success on how these communications tools strengthen our relationships with our target audiences, and encourage a higher level of participation with our strongest supporters.

Recently at the spring LORT conference, I sat through a well thought out presentation by Sergi Torres, a third year graduate student from the Yale School of Drama, who took on how to track social media campaigns in terms of sales at Yale Repertory Theatre. The results were impressive, and I was glad to see research being done on how social media campaigns could spur sales. However, I was left wondering what type of value we assign to engaging our customer base.

I am a fan of Thomas Cott's You Cott Mail, as are many of my colleagues. On Friday, May 29, "You Cott Mail" featured a blog post by Douglass McClennan entitled "10 ways to think about social networking and the arts." In Mr. McClennan's post, he makes the argument that "using social media as just an opportunity to sell tickets is a bad strategy, the electronic equivalent of junk mail...the idea is to cultivate relationships with an audience that is increasingly online." While many of my peers would argue that the main priority of any Marketing Director should be increasing ticket sales, I would argue that we also have a primary responsibility of "Creating Raving Fans." How many times are we looking for new audiences just to see them leave after the first time they visit? Why don't we focus on deepening the relationships that we have already cultivated?

Side Note -- Although I found Mr. McCleenan's blog post very interesting, I must say that I disagree with some of his primary arguments. He states "Outside of your primary artistic role, don't get into the content-producing business. Video is hard. Magazines are hard (and expensive) to produce and sustain." I must contend that we are in the business of creating content, particularly as mainstream media sources go out of business. And video is not hard. If you can afford a mini Flip camera and some basic video editing software, you are good to go. If the Anaheim Ballet, which has an annual budget of $290,000, can create a video campaign on YouTube that attracted 10.8 million unique views and enabled them to become the #2 All Time Most Viewed Non-Profit, than anyone can do it.

So in the future when I am asked "what kind of sales do you see from your social media campaigns," I am going to reply, we should be asking what types of measurements we are using to track the engagement levels of our online communities. That is the primary objective, and sales are secondary. As Arena Stage moves toward becoming a national center for the production, presentation, development and study of American Theater with the opening of The Mead Center for American Theater, I consider it a success when people all over the world are watching our videos and interacting with our content online, even if they don't have the means to travel to Washington, DC and purchase a ticket.

On Transparency (Long Post)

2009-05-25T14:08:00.009-05:00

Most of those who know me know that I am an avid reader, generally consuming a book a week, mostly on topics related to my work. A couple of weeks ago someone left a copy of Radically Transparent: Monitoring and Managing Reputations Online by Andy Beal and Dr. Judy Strauss on my desk. To this day, I have no clue who left it on my desk, and when I left the office to attend a Strategic Marketing conference by National Arts Strategies, I threw it in my bag thinking it would keep me company on my trip. I have just finished reading the book, and I found it fascinating, particularly for those of us who were trained in the old school of public relations. I have known for some time that with the proliferation of new technologies, "spin" is no longer an accepted practice, as information travels too fast, and some of the most interesting stories are broken online by citizen bloggers. In this new world, being transparent seems to be of prime importance, and that is an argument made beautifully in this book.

The authors encourage every organization to become "radically transparent," which means "being open and honest online, admitting mistakes, engaging stakeholders in discussion about you and your brands, and even revealing your internal processes." They go on to say that "there is little censorship in the world of online social media--the community values raw truth. The internet community immediately comes down hard on those who employ conversation spin, control, manipulation or spam."

Recently when I was giving a presentation at the Leagure of Resident Theatres (LORT) conference entitled "Theaters as Media Outlets," I made the argument that traditional media relations would no longer work and a new system would have to be created. I discussed how our artistic staff have direct lines of communication to our audiences via blogging and twittering, and that we were taking the next step of purchasing FLIP cameras for senior artistic staff so that they could capture their own video. As a communications department, we are still responsible for crafting messaging and monitoring all of our external communications, but we are trying to make those communications as authentic and transparent as possible.

In a recent article for Wired Magazine, "The See-Through CEO" Clive Thompson states "in the new world of radical transparency, the path to business success is clear. Show what you are doing, reveal your processes, acknowledge mistakes, and participate fully in conversation that concerns you."

Many media relations professionals have been following the relationship between the Guthrie Theater and the press, which has turned into an apparent feud during the past couple of months. It is always easy to be a Monday morning quarterback, and believe me I have my own issues, but I have to believe that if the Guthrie embraced the idea of radical transparency more, all of this might have been avoided. Below are a couple of articles concerning the relationship between the Guthrie and the press:

January 6, 2009: "Compensation in the Arts: Some Salaries Raise Eyebrows," The Minneapolis Star Tribune. Rohan Preston reports that Joe Dowling, Director of the Guthrie Theater, received a pay package of $682,229 in 2007, and then makes the argument that Dowling is paid much more than his peers at other theaters. I found it interesting that there wasn't an official response from the Guthrie, except an identified board member who sits on the compensation committee and a board member who spoke on anonymity. The article received 163 comments online, many of which weren't pretty.

February 2, 2009: "Don't Review This," Minnesota Playlist. A little less than a month after the article on Joe Dowling's salary, Melodie Bahan, Director of Communications (assuming that would be equivalent to Arena's Director of Media Relations) writes an article criticizing the state of arts journalism, particularly that found in daily newspapers and takes some swipes at the reviews found in her hometown papers (including the Star Tribune). Even if you agree with the arguments she makes (and elegantly so), the timing of her article could be construed as sour grapes over the Dowling piece.

This article prompted responses from the local critics and reporters:

Graydon Royce, Star Tribune

"Star Tribune's Peck responds to Guthrie staffer's rip" by David Brauer covering Senior Arts Editor Claude Peck's response. In response to Ms. Bahan's request for better arts journalism, Mr. Peck states it is "very difficult, for example, in the case of the Guthrie, which has had a long reputation of giving the barest minimum of cooperation for our newsgathering efforts."

Garnered responses from bloggers:

Minnesota Mist: To Ms. Bahan: "Oh, honey! Surely you at least thought twice about such a position after the Star Tribune newspaper reported last month about the $682,300 salary and benefits that were paid to Guthrie Director Joe Dowling in 2007. (That is less than 3% of the Guthrie's budget, by the way.)...I would bet that you and your colleagues did not welcome the writing of such news. Nor the discussion that has reverberated since...You read it here first: I can and will run any company into the ground for $500,000 a year. I will bring along my own cronies to help me do it. Where do I sign my contract?"

Secrets of the City: Theater Publicist vs. Newspaper Editor

Butts in Seats: When you Grab that Cute Ball of Fur, You Also Get the Teeth: "I just thought the whole situation was a great reminder to us all that when we bemoan the lack of good arts coverage, we should be mindful that what we wish for is a double edged sword situation and not entirely the ideal we envision."

Seems like this has been an ongoing issue...

February 3, 2008: Tynan's Anger Blog: The Guthrie Theater gets Childish. "In the latest case of critical reactionary drama queenery, a full page ad by the Guthrie was placed in the Minneapolis Star-Tribune after the paper gave their most recent production a negative review. While the ad had been "planned for months," the content, decided upon after the reviews came in, feature a near-exact copy of the positive review from the alternative weekly CityPages."

Which continues...

March 26, 2009: "Guthrie Theater to Trim Budget by $4 million," Minneapolis Star Tribune. "Trish Santini, director of external affairs, said she was not authorized by board president Randall Hogan to release Dowling's salary. The Star Tribune reported in January that Dowling's 2007 compensation was $682,229 (which included a $100,000 bonus). Dowling disputed that Wednesday, but did not offer specifics. "The focus on me and my salary, which has been inaccurately reported, and I would say somewhat with ill-informed research, has led to a considerable amount of discussion in the community," Dowling said. "Let's take the heat off that and talk about the fact that here's an organization where people are willing all through the organization to make sacrifices."

Following this situation has reinforced a couple of things for me:

1. Be proactive rather than reactive as it involves the press. If it is controversial, break the story yourself through your own distribution channels, and provide the information that your stakeholders are looking for.

2. Transparency is king. The days of "no comment" and "not authorized to release information" are long gone. If you don't participate, it looks like you have something to hide. I am sure that funders read these articles and wondered why the Guthrie wouldn't comment and why the board wouldn't release information on Mr. Dowling's salary, particularly in the wake of Enron, ING, Madoff, etc.

3. You can't possibly win in a public slug fest with the press

Capture Information

2009-05-10T11:04:00.002-05:00

First off, I am amazed at the number of organizations that don't want to invest in data hygiene. Most likely, your database is the most valuable thing in the office. If my building was on fire, it would be the first thing I would try to protect. If your database gets corrupted or is out of date, it will compromise your ability to hit both earned and contributed revenue goals. So invest in data hygiene so that your database is as clean and up-to-date as possible. Send out your data for in-depth hygiene services and appending at least once a year, and go through the NCOA process quarterly.

That being said, don't let opportunities to capture information go by. I just got back the data hygiene reports for Arena Stage this past week, and we had roughly 20,000 bad addresses (which isn't surprising since we have such a large database). However, when I looked at the report closer, almost half of those bad addresses were due to missing contact information. So I did some investigating, and realized that when we were processing complimentary ticket requests, we were not asking for contact information. If we are going to give away a free ticket, I would like to be able to at least contact the recipient for a donation later in the year. So we now have a new policy -- to process a complimentary ticket request, we must have your contact information. This goes for contest winners, promos and donations as well.

We have also recently engaged Target Resource Group as consultants, and in our initial meetings with them, they encouraged us to find ways to collect contact information for all members of group bookings. Group bookings can be a very large source of revenue for Arena Stage. For example, 34% of our revenue on single tickets for Crowns came from groups, which means that most likely 20% of our houses were group bookings (when taking into consideration our subscriber base). But we only have the contact information for the group leader. Knowing that the best prospects for subscriptions and donations are individuals who have been to the theater before, not capturing contact information for all group attendees is a costly mistake. So now we are devising incentives for group leaders to provide contact information for every person in their group.

Quick Idea from LORT -- VereVox

2009-05-03T15:53:00.003-05:00

I just got back from my trip to the League of Resident Theatres conference in Los Angeles, where I co-presented a session called "Theater Institutions as Media Outlets" with Jim Royce, Director of Marketing, Communications and Sales at Center Theatre Group. The presentation went well, and I learned a lot during the conference. However, I am still surprised at how a three hour time difference can cause so much jet lag. I am exhausted.

I promise I have a ton to share from the conference, but to tide you over for just a couple of more days, I will share an interesting "success story" from Trisha Kirk, Director of Marketing at the Guthrie Theater.

In the past, Trish has used a company called VereVox to record a targeted phone message which was sent to subscribers who hadn't renewed for the upcoming season. She used a well-known actor in her community to record a message with a soft sales pitch, reminding current subscribers that their subscription deadline was approaching and thanking them for their support. Reported results were very positive, and it seems like she isn't the only one using VereVox as Rodi Franko, Director of Marketing and Communications at the Alley Theatre, reported positive results as well.

It's cheap and works well -- what isn't to like about that?

To Tweat or Not to Tweat

2009-04-12T18:26:00.004-05:00

Twitter is the newest communications tool in the Arena Stage arsenal, and the more we use it, the more I am convinced it should be treated in the same manner as a blog, or perhaps a little more delicately. At its core, Twitter was created to send micro-blog messages to followers on a regular basis throughout the day, explaining what you are up to and your thoughts on current surroundings. Those who are avid users send several tweats per day, and the tweats of those that you follow aggregate on your homepage, or they are sent directly to a mobile device. Many organizations have created Twitter accounts but few have figured out how to successfully use this communications tool.

As a web 2.o application, the central idea behind Twitter is interaction, so it amazes me how many organizations use Twitter to simply push information, such as reviews, headlines and marketing promos. Remember, as I like to say, no one is interested in what a marketing director has to say. So keep it interesting, and try to make it as interactive as possible.

An alternate way of using Twitter could be having a senior member of your artistic staff set up a Twitter account, and have them twitter on their activities. Therefore, you won't have to worry about having a boring organizational voice, and the application can be used for what it was invented for -- to report on the activities of a single person. David Dower, Arena Stage's Associate Artistic Director, recently set up a Twitter account of his own where he twitters about his travels and his work on our productions. It has been embedded in the Arena Stage blog, and at any given moment, a patron can see what he is up to. Since he leads the artistic development team, his days are pretty interesting...much more so than mine. Really, who wants to know we just bought another ad in the newspaper?

Institutions as Media Outlets

2009-03-22T09:48:00.003-05:00

In this moment of substantial change, most companies are looking inward to determine what adjustments need to be made to their business models to flourish in today's new economic climate. Significant shifts need to be made to address the new reality, and that new reality includes taking a hard look at how consumers get information about the arts.

Since the mid-1980s, newspaper circulation has been declining in the United States, but the current economic crisis has thrown gasoline on the fire, causing huge losses for newspapers nationally. Just recently we have seen four major newspapers cease print publication: the Seattle Post-Intelligencer, the Rocky Mountain News, the Tucson Citizen and the Christian Science Monitor. Additionally, four newspaper companies including the owners of the LA Times, the Chicago Tribune and the Philadelphia Inquirer, have sought Chapter 11 bankruptcy protection. Even before the rapid failure of many printed newspapers, arts coverage in many daily newspapers was shrinking, going from 912 column inches on average in 1998 to 702 column inches in 2003 according to Reporting the Arts II, a study conducted by the National Arts Journalism Program at Columbia University.

A huge shift in communications is about to occur away from organizations pitching stories to mainstream media for coverage and toward setting up institutional distribution channels to cover stories themselves. We have seen this in the past decade as the ways we communicate with our customers have become cheaper, quicker and more segmented. We now have e-mail lists, websites, direct mail, telemarketing, social networking, online video distribution, podcasts, photo streams, and blogs. Some large organizations can currently reach more than one million people using these distribution channels. Considering the New York Times has a circulation of 1.6 million, these distribution channels which used to be considered on the fringes of communications have become almost as powerful for some companies as their local newspaper.

Barack Obama learned in his presidential campaign that if he invested wisely in cultivating his own method of communicating with his supporters, he would be able to use that method to speak directly to the American people when in office. Now President Obama has an e-mail list of 13 million Americans that he uses to garner support for political initiatives. This list is five time larger that the daily circulation of USA Today, the newspaper with the largest circulation in the United States.

Just as we have invested in media relations over the past decades, we now need to heavily invest in developing our own distribution channels and our own content. This is a two pronged approach--we need to develop the infrastructure to distribute content and the ability to create content that our customers will want to consume. It is a significant change in strategy that is now upon us.

Make your voice heard with your advertising dollars

2009-03-08T15:15:00.003-05:00

This past Friday, I was on a conference call with several marketing and PR directors from various LORT (League of Resident Theaters) theaters. The purpose of the call was to plan discussion topics for the upcoming LORT conference in Los Angeles. We all agreed that the disappearing arts coverage in local and national press is one of the top issues currently facing non-profit arts organizations, and we recognize that the shrinking coverage has forced arts organizations into becoming content providers themselves. As we make the shift from pitching interesting stories for reporters to cover to covering them ourselves through various media channels (YouTube, Facebook, Blogs, Twitter, Flickr, BlipTv, etc), I believe it is also important to fight for the remaining arts reporters and critics.

We all know that the newspaper industry is in a world of hurt right now. The Rocky Mountain News, one of Denver's largest newspapers, has already bit the dust, and it looks very likely that the Seattle Post-Intelligencer will do the same. The chicago-based Tribune Company has filed for bankruptcy, and the New York Times doesn't look so hot either. Locally in DC metro area, we have seen the Baltimore Examiner go out of business and rumor on the street is that the Washington Post lost $40 million last year, however it owns Kaplan which made $50 million so they can continue to operate in the red, at least for awhile.

With all of this, you can imagine that the pressure is high to cut costs, and why not cut arts coverage? We are perceived by most not to be as valuable as other industries (I am thinking of the huge debate over the $50 million stimulus money for the NEA in the $800+ billion stimulus package, and how much controversy there was over that). So that is where we must step in. We need to make it clear that if a media source cuts arts coverage it will do so at the cost of advertising dollars.

It has been successful in the Washington metropolitan area. Just recently, a media source was going to cut a major source of arts coverage, going so far as to tell the writer that within weeks, she would be released. The League of Washington Theatres along with the management of several of the area's largest arts organizations sent a letter to the company outlining the likely economic consequences of the decision. Soon thereafter, the decision was reversed. Since the company changed its mind, and continued to support arts coverage, I have vowed to increase the amount of advertising I am spending with them this year, and am proud that they continue to be a great source of information on the local arts scene.

As I advocate to reduce advertising expenditures with companies that eliminate arts coverage, I would encourage you to consider increasing your advertising buys for companies that show an increased dedication to the arts. Locally, Arena Stage hasn't traditionally supported the DC Examiner (a local print publication) or DCTheatreScene.com (a local theater website). However, both have recently made efforts to increase their arts coverage, the former by printing a theater and museum guide and the latter by doing significant website improvements. Arena Stage now supports them both, and I plan to continue to do so.

The arts are an economic engine. We are a source of revenue, and it is about time that we are taken seriously. Don't be shy--vote with your advertising dollars.

Programmatic vs. Institutional Marketing

2009-03-04T22:13:00.006-05:00

At the invitation of my Board Chair, I had the pleasure of attending a speech at George Mason University given by Michael Kaiser, President of the John F. Kennedy Center for the Performing Arts and author of The Art of the Turnaround: Creating and Maintaining Healthy Arts Organizations. Prior to his speech, I was introduced to Mr. Kaiser, and as I reached out to shake his hand, I secretly hoped that some of his wisdom would transfer from him to me through osmosis. It came as a bit of a surprise that when I introduced myself, he knew who I was, and mentioned that he enjoyed reading my blog.

I admire Mr. Kaiser not only for his expertise in arts management, but also for his tremendous passion for helping struggling arts organizations. Most arts organizations are looking inward during this moment of economic downturn, trying to figure out how to adjust what they are doing to address anticipated future challenges. Mr. Kaiser on the other hand has made it clear that the Kennedy Center has a responsibility as a leader in the field to reach out and help other struggling organizations. I know that times are tough, and the economy has to be impacting the Kennedy Center as well, but even with less resources, the Kennedy Center has launched a new initiative called "Arts in Crisis" which focuses on providing planning assistance and consulting to struggling arts organizations throughout the United States. It truly takes a visionary leader to expand services in an attempt to fulfill an obvious need when resources are so scarce. And this is something Mr. Kaiser is personally committed to as he was proud to share that he has personally taken on consulting for 10 small arts organizations as part of this initiative.

That all being said, Mr. Kaiser discussed the difference between what he labels programmatic marketing and institutional marketing. Prior to reading his book, I had never heard of this distinction, but now find his argument incredibly valuable. He defines programmatic marketing as marketing that is designed to promote a certain activity (i.e. to sell tickets). Conversely, he sees institutional marketing as activities that are designed to promote the institution. He makes the argument that too many organizations do too much of the prior, and too little of the latter. I would have to agree with him. Most marketers feel comfortable with programmatic marketing because it has an obvious, quick and measurable impact (mostly measured on ROI, or Cost of Sale, etc). We don't feel as comfortable in institutional marketing because its not as easy to measure, and it takes a dedicated effort over an extended period of time to see the results.

That being said, the results of a well executed institutional campaign can be remarkable. Mr. Kaiser notes that an eight year aggressive institutional marketing campaign has been mostly responsible for a 250% increase in contributed revenue at the Kennedy Center, and when he was previously at Alvin Ailey, they doubled their fundraising in two years. A programmatic marketing campaign is limited in its abilities and scope because it lives in a finite period, where institutional campaigns pay dividends in both earned and contributed revenue because they help brand the institution and sell the vision. Why be satisfied with selling a slice when you can sell the entire pie?

To me, it all goes back to planning. Mr. Kaiser advises organizations to constantly be working in the future -- planning seasons three years in advance, crafting a long term vision, etc. Too many of us get bogged down in the day to day, and who can blame us, we are only human. When there is a fire, we all concentrate on putting it out, but if we are constantly putting out fires, it is good to be reminded that we also need to put effort into digging new wells, for without new wells, we will eventually run out of water for the fires.

What should I cut?

2009-02-15T13:27:00.004-05:00

I have read a couple of reports in the past few weeks that reported that most arts organizations are planning to reduce their expenses in the next year in response to the economic crisis. If you find yourself in this situation, you might be wondering what to cut. Just my two cents...

1. Printed Programs. Do you really need a four color, glossy, forty page program for each performance? Programs are created to provide vital information for audiences. If you take a serious look at your programs, I bet you can find numerous ways to reduce costs. The easiest -- reduce the number of pages in your programs, use lighter stock paper and avoid doing anything in four color.

2. Advertising. This is a tricky one. I wouldn't normally advocate for cutting advertising expenses, however as previously reported, I am finding that you can get 15-20% more for your dollar these days then you could even six months ago. If you can keep your same level of exposure for less, then count the savings. If you can't, then either get more aggressive with your negotiations or look somewhere else for cuts.

3. Audience Communications. How many of us spend thousands of dollars on printing audience handbooks, complete with performance calendars, box office policies, subscriber services, etc. More than 90% of the audience at Arena Stage regularly uses the internet. Save the money on printing these types of materials, and make the information easily accessible on your website.

4. Travel/Professional Development. Even though I am a huge believer in professional development, this might be an area in which you can cut back. Instead of flying cross country to attend a conference, is there one closer to home? can you stay with a friend? can you take a bus instead of a plane (for those traveling between DC and NYC, take the $20 Bolt Bus)? If you do need to travel, then Priceline your trip. If you name your own price on Priceline for your flight and hotel, you can save hundreds of dollars. You might not find yourself staying in the conference hotel, or you might miss a session or two because of flight times, but the savings are definitely worth it.

5. Invest in areas where your ROI is higher. Washington DC is perhaps has the most competitive theater environment outside of New York City. With that being said, I am always looking for ways to get a higher return on investment. At Arena Stage, I normally get a 6:1 ROI on traditional advertising expenditures. However, my ROI for the investment I make in group sales is 20:1. Next year I am slightly reducing our advertising budget and redirecting those funds into group sales.

6. Telemarketing. In October, Arena Stage ended its telemarketing campaign at our normally scheduled time. However, I found that telemarketing was a very effective tool for driving more sales, but I had maxed out my expense line for telemarketing services. At the same time, I noticed that our box office would experience lulls in their work, mostly between shows. We have always considered our box office to be a sales office, meaning they are not just responsible for taking orders, but also for selling. I proposed adding telemarketing to their responsibilities during the lulls. As you can imagine, at first this wasn't received enthusiastically. However, we offered sales associates incentives for making sales, and soon they started performing at the same level that our telemarketing firm was. We have some great sales people! Maybe that is why we are the best sales office in the world.

7. Make sure you RFP all your major projects. The communications department has an internal rule that we live by: if we anticipate that a project will cost more than $10,000, then we send out a request for proposal (RFP) and get competitive bids by at least three separate companies. I instituted this last year when I learned that we hadn't competitively bid our major printing projects in years; we kept going to the same company year after year. The first project that we sent out for a competitive bid was our season brochure. We got three bids, including one from the company we had consistently used for years. The company that we had used for years provided us with a bid that was $20,000 more expensive then the next expensive bid. We enjoyed working with them, but made it clear that if they couldn't match the second most expensive bid, we would go elsewhere. Guess what -- we saved $20,000 because the company matched the other competitive bids.

8. Press Materials. Are you still mailing out press releases, faxing PSAs and putting together heavy media wrap packets to ship to actors, designers and directors? Stop it all. Most editors and writers want press releases e-mailed to them these days. It has to do with timing. Imaging telling Editor A that Editor B scooped him on a story because Editor A's press release was still in the mail while Editor B received his electronically. Unless specifically asked by a major media personality, don't waste your money or time on purchasing expensive letter head, printing media releases, and then spending the money to mail them out. You can also send out PSAs and media wrap packets via e-mail (with links to photos, reviews, etc). I would also experiment with sending press invitations via e-mail. I bet the media doesn't cover your productions because they are enticed by your beautiful, four color invitations.

9. Posters. Be honest, how many of us print hundreds of posters for each show with the honest intention of placing them everywhere a couple of weeks before a show opens. Then as we get closer, we run out of time as well as places to stick the posters, and only use maybe 100 of them, throwing the rest away. Either find a more efficient system of distributing posters, or don't print them. They don't help you if you have to throw them away.

Renegotiate Your Advertising Contracts

2009-02-01T12:21:00.002-05:00

Everyone is tightening their belts these days, and as much as I would like to moan and groan about doing more with less, I worry more about those companies that aren't challenging their staff to come up with inventive ways to maximize revenue while minimizing cost.

At Arena Stage, I am currently in the process of renegotiating all of our major advertising contracts. Most of our major advertising contracts are for the entire fiscal year, and I leverage the entire amount I plan to spend to get better rates and more promotional opportunities. So in essence, we have signed contracts until the end of the fiscal year, and although most people would think that would limit your ability to renegotiate, major media sources understand that if they aren't willing to renegotiate, then you will spend less when the contract renewal comes up.

Don't be shy! Trust me, vendors won't make a deal with you unless they are going to make a profit, so get the best deal that you can. It is the wild west out there. Companies are losing advertising dollars right and left, and that has made them hungrier for business. Throw your contracts and their rate cards out the window, and start from scratch. If they aren't willing to renegotiate, don't use their product.

Most arts organizations are planning for a 10-20% reduction in revenue during 2009. To remain healthy, you need to negotiate advertising contracts that get you as much as you had in 2008 for 10-20% less than what you spent.

There are very few advertising outlets that are so powerful and large that they will refuse to negotiate with you. In days past, newspapers could claim this status, but falling revenues and declining readership has changed all the rules. Tell your advertising reps that you view them as a partner--if they help you become more successful, you will spend more money with them. Your fates are tied together. Make them work for you. And if they aren't willing to renegotiate a better deal in this horrible economic climate, go to one of their competitors. If they take care of you, remember the gesture and take care of them when it is time to renew your advertising contract.

Want a bailout of the arts? Don't make the ask in an Armani suit

2009-01-10T14:22:00.003-05:00

When the big three automotive CEOs flew separate private jets to Washington, DC to plead for public funds, I remember thinking to myself that I was thankful that I was a publicist and marketing director for a non-profit arts organization. The type of arrogance it takes to fly corporate jets to ask for billions of dollars in public aid surely could only be found in the private sector.

However, recently there has been a dust up about executive compensation in the non-profit arts sector, particularly because as the economy tightens, more and more arts organizations are pleading their case with stakeholders, some going as far as Mr. Kaiser in asking for a government bailout of the arts. Although I have tremendous respect for Mr. Kaiser, I am convinced that perhaps he isn't the best emissary for the non-profit arts--how does it look for a non-profit arts administrator who makes more than $1 million a year in salary to be the champion of the suffering arts scene?

Two separate stories have broken in the last month questioning the salaries of non-profit arts administrators. The most recent reported that Joe Dowling, Director of the Guthrie Theater in Minneapolis, made $682,229 last year, which represents 2.6% of the organization's $27 million budget. When compared with similar sized and larger organizations, Mr. Dowling's compensation seems high. Todd Haimes, who leads New York City's Roundabout Theatre which is twice the size of the Guthrie, makes $487,439 per year (and the dollar doesn't stretch in New York like it does in Minnesota). Similarly, Andre Bishop, the Artistic Director of Lincoln Center Theater which is 25 percent larger than the Guthrie, makes $428,183. So why is Mr. Dowling's compensation not in scale with his peers, or even peers at larger organizations? The second recent story takes a look at proposed legislation in San Francisco which is trying to limit non-profit executive compensation to a maximum of six times the salary of the lowest paid employee.

Executive compensation isn't a new concern. In the past couple of years, we have had several large controversies over this issue, including the infamous Lawrence Small, previous Secretary of the Smithsonian, and Josiah Spalding, Jr., CEO of the Citi Performing Arts Center. Mr. Small left the Smithsonian under a lot of pressure and controversy surrounding his lavish spending habits, which included a $15,000 receipt for the replacement of French doors at his home and spent $48,000 for two chairs, a conference table and upholstery for his office suite. In Mr. Spalding's case, he was awarded a $1.265 million bonus in 2006 even though he presided over five straight years of budget deficits, cuts to programming, and a dramatic drop in performances at the Wang and Shubert theaters, which the Citi Center operates.

Over the past year, I have read numerous articles about the woeful state of symphony orchestras, which are trying to remain competitive with downloads of classical music and are struggling to develop sustainable business models. Just in the past couple of months, the Santa Clairta Symphony, Pasadena Symphony, Kansas City Symphony, Las Vegas Philharmonic, the Virginia Symphony, the Detroit Symphony, and the Cleveland Orchestra have reported major financial problems. But when you look at the top 10 salaries for Music Directors in the United States, one would conclude that symphonies are flush with cash. The conductor of the cash strapped Cleveland Orchestra is seventh on the list of the top 10 and makes $1.2 million a year. The lowest on the top 10 list is Osmo Vanska of the Minnesota Orchestra who makes $713,518 and the highest on the top 10 list is Lorin Maazel of the New York Philharmonic who makes $2.189 million.

On the flip side of the argument, there are CEOs in the private sector who are so linked to the success of their company that even rumors of their illness cause stock devaluation. Over the past several months, it has been rumored that Steve Jobs, the CEO of Apple, has a terminal illness, and these reports have caused Apple's stock to fall. The tie between Steve Jobs and the success of Apple is so strong that it lead to Mr. Jobs holding a press conference where he released an update on his health, stating that "reports of his death are greatly exaggerated." After this announcement, share prices for Apple jumped four percent. When the success of the organization is tied so directly to the CEO, it might be entirely appropriate to compensate them at such a high level.

Either way, this argument over executive compensation reminds me of something a professor said to me when in graduate school--"when making an ask for money or pitching a sponsorship, never arrive at a meeting with the prospect dressed in an Armani suit or a Walmart suit--either way you are screwed." I have to think that in some cases the arts are arriving at these meetings in an Armani suit.

Working with the Artistic Staff to create exciting Marketing Opportunities

2009-01-06T21:02:00.007-05:00

In the past couple months, Arena Stage has planned and executed several exciting marketing opportunities as a result of the great working relationship between the artistic development staff and the communications staff. This relationship has existed for as long as I have been with Arena Stage, and most likely well before that. However, too many times the artistic department and communications department view each other as adversaries in other companies, and sometimes are in direct conflict with each other. For example, it might serve the communications staff better if a reporter sits in on rehearsal, but the artistic staff might be concerned about the reporter interrupting the rehearsal process. The current economic crisis has opened new opportunities for dialogue between artistic and marketing personnel because it is becoming more and more obvious that companies which successfully navigate this crisis will be those that pull together and find new inventive ways of doing business.

The Finding Yolanda Casting Search was the most recent collaboration between the artistic development and communications departments at Arena Stage. We are producing our fourth production of Crowns this spring. Most regional theaters in the United States have a production or two that they bring back on a yearly basis, most commonly A Christmas Carol. However, after several years, it can become difficult to procure media coverage for these types of productions. With this in mind, we were looking for a new angle to garner attention from the local press. At the same time, our casting department was feverishly looking for a young, talented African-American woman to fill the role of Yolanda. Our casting director, Daniel Pruksarnukul, came up with an idea that accomplished both goals--an American Idol like contest to find Yolanda. The communications staff and artistic development staff pulled together to create an all day open call. It was sponsored by ABC7 and News Channel 8, each of which aired free 15 second promos for several weeks leading up to the auditions. The Finding Yolanda Casting Search also received coverage in the Washington Post, ABC7, News Channel 8, Back Stage Magazine, WTOP, WAMU (local NPR), DCTheatreScene.com, TheaterMania.com and BroadwayWorld.com. We invited our audiences to come and watch the open call as well, giving our audiences an inside look at what happens at auditions. The winner was announced on the ABC7 evening news.

This was a win-win for both departments. Casting found an extremely talented young lady to fill the role, and communications had an angle to pitch to the press.

Check out video of the winner. Congratulations Zurin Villanueva! Looking forward to working with you.

The holidays aren't so hot...

2008-12-15T19:41:00.000-05:00

for most arts organizations. More news from around the nation on the impact the economic crisis has had on arts organizations:

Shakespeare Santa Cruz Has 1 Week To Save Its Own Life
Ailing California Orchestra Cancels Season
KC Symphony Hit By Economy And Competition
More Trouble For Ballet BC As Bank Freezes Funds
A First Glimpse Of Houston Ballet's New HQ (Or Not)
NPR Cuts Two Programs And 7 Percent Of Staff
Tough Times Get Tougher In Charleston
Miami City Ballet Resorts To Taped Music
Baltimore Opera Company Filing For Bankruptcy Protection
Filling The House: Met To Offer Subsidized $25 Tickets
Broadway Musicals Dropping Like Flies
Las Vegas Philharmonic Musicians Lose Confidence In Management
Art Basel Miami Slowdown
A Formerly Secure Arts Venue Takes A Dive
Las Vegas May Lose Children's Concerts
Virginia Symphony Cuts Concerts, Salaries
Las Vegas Art Museum Chief Steps Aside; Cuts Ahead

There was one piece of good news:
Minnesota Orchestra Defies Recession, Posts Surplus

Round Two: Arena Stage's New Deal Program

2008-12-11T20:05:00.003-05:00

When designing the Arena Stage "New Deal" One Day Only Sale, I knew that we were applying a temporary band-aid to a relatively large problem, and we would have to take a more systemic approach to dealing with the issues ahead of us. To keep the analogy going, I didn't expect the one day only sale to be the knock out punch in the first round, so here we are in round two (actually probably round 3).

In our response to the economic crisis, we have done the following:

Round 1: Arena Stage "New Deal" One Day Only Sale (November 14, 2008)

Round 2: Adjusted income projections and decreased expense budgets. Senior staff and members of the board formed three committees--the earned revenue committee, contributed revenue committee and an expense reduction committee. Each committee met several times over the course of a month to develop a recommendation for action for the full board. Both the earned revenue and contributed revenue committees readjusted their projections from the approved FY09 budget, presenting to the full Board conservative estimates on the impact the current economic crisis will have on the company. To match these adjustments, the company reduced its expenses and raised additional contributions. (November 21, 2008)

Round 3: Launch of the Arena Stage "New Deal" seats for all performances (December 12, 2008). Arena Stage previously operated on two classes of seats: A seats (prime seats) and B seats (economy seats). We were finding that we weren't having problems selling prime seats, but that our seats at the lower end of our pricing chart weren't moving as quickly as usual. To create a lower entry point while trying to avoid upsetting our subscribers who purchase early and therefore get the greatest discount, we created a new section of seats, called the NEW DEAL seats and set a price of $25. The NEW DEAL section would be limited to the last four rows in our Crystal City venue and the upper balcony in our DC venue. These areas of the each house didn't contain any subscribers, and therefore they wouldn't be upset by a mid-season change in pricing. To further address any subscriber concerns, we sent each subscriber a letter outlining the new program and giving them access to purchase NEW DEAL seats a day before the general public. The new $25 ticket price is 47-64% off what those seats previously cost, offering a significantly lower entry level price to all our performances. No other discounts can be applied to these tickets, and subscriptions aren't available in this price category (to prevent B seat subscribers transitioning to NEW DEAL seat subscribers). So far this move has garnered us some press attention from the Washington Post and our local NBC affiliate, and although I suspect these tickets will be quite popular, they won't sell at the pace of the previous offer. Where Round 1 was a sprint, this is more like a marathon.

I will keep you updated on the results. We opened NEXT TO NORMAL at Arena Stage last night, and I was really struck by one of the lyrics--"even the darkest night will see light."

The rules are changing, and changing quickly

2008-11-30T18:16:00.000-05:00

I have always believed that marketing success starts with the product. If the quality of the artistic product isn't there, there is nothing a marketing director can do to put more butts in seats. Audiences will leave no matter how thought out or brilliant the marketing strategy. That being said, if the product is strong, a primary function of a marketing director is eliminating the barriers to purchasing.

Several weeks ago, I began to feel that even with a strong product, in today's economy, we must give people a reason to buy. No longer would a strong artistic product marketed well be enough. I tested this hypothesis by developing the NEW DEAL program at Arena Stage, which resulted in sales significantly beyond our expectations. The reduction in ticket price, even if for a day, gave potential patrons the reason they needed to make the purchase, especially on something that was dependant upon very limited discretionary spending.

So I wasn't surprised by an article in the Washington Post entitled "Holiday Shopping in a Downturn: Deals or Nothing at All." The basic rule of retail businesses on Black Friday is to offer highly attractive "door buster" sale items to lure customers in the door. The idea is that even after the "door busters" are sold out, customers will stay and purchase non-sale items. It has worked well for retail businesses for over a decade. But it didn't this year. The rules have changed. Customers showed up for the "door busters" as usual, but once the deals were gone, so were the customers. They didn't stay and shop. Once the "reason to buy" was eliminated, the sales stopped.

It seems like all the rules have been thrown out the window. We know the small profit margin on new car purchases, right? Dealerships make most of their money on the financing. But to get people to purchase, there are several dealerships offering "buy one, get one" deals on cars. When have you ever heard of that?

Budgeting and the artistic product

2008-11-28T18:21:00.001-05:00

I had the pleasure of hearing Karen Hopkins speak at the National Arts Marketing Project Conference in Houston. During her speech, she said several things that caught my attention. Because the conference centered around how marketing and development departments could work together to maximize revenue, she outlined the revenue breakdown between earned vs. contributed sources for the Brooklyn Academy of Music:

Brooklyn Academy of Music
Expenses $38 million
Box office income: $11.9 million (31% of expenses)
Other earned revenue: 4.6 million (12% of expenses)
Contributed revenue: $22 million (private and public) (57% of expenses)
Programs:
· The Next Wave Festival
· Spring season of theater, opera, dance
· Education—serving 25,000 students at 219 schools

I have always admired the artistic work of BAM, and some of the nation's most creative work from the past several decades have been created and/or featured at BAM, including Peter Brooks' epic Mahabharata and Philip Glass's Einstein on the Beach.

One of the struggles that we are facing at Arena Stage is an imbalance between earned and contributed revenue. Arena Stage is more reliant on earned revenue than most regional theaters, and it puts the marketing department in conflict with the artistic department. I joined Arena Stage because of its long heritage of superb artistic work, and our artistic strategic plan calls for the exploration of new and challenging work in the future. However, the more reliant a company is on earned revenue, the less risk and new work the company can take on because it is reliant on steady box office revenue. Thankfully the communications department and the artistic department at Arena Stage work very well together, and we are in the process of hiring a chief development officer to increase our contributed revenue streams.

To test my hypothesis about how an imbalance between earned and contributed revenue streams can affect programming, I took a look at two institutions--one known for artistic risk taking and new play development (The Public Theater), and one known for presenting/producing only well known, less risky work (Walnut Street Theatre).

Here are their breakdowns:

Public Theater (New York Shakespeare Festival)
2006 990Expenses: $17 million
Box Office income: $5.2 million (31% of expenses)
Other earned revenue: $1 million (6% of expenses)
Contributed revenue: $8.6 million (51% of expenses)

Walnut Street Theatre (from their 2006 990)
Expenses: $13.5 million
Box office income: $11.5 million (85% of expenses)
Other earned revenue: $500k (5% of expenses)
Contributed Revenue: $1.4 million (10% of expenses)

To quote Michael Kaiser from his new book, "Not-for-profit arts organizations should be doing work that commercial producers won't consider either because the work is too large or too risky. This is what justifies the use of tax-deductible contributions." As I look at Walnut Street's financials, they are very close to operating like a for-profit institution, with only 10% of its budget coming from contributed revenue. So, don't look for them to do anything "too large or too risky." They can boast that they have the world's largest subscription base, and although I like Ralph Weeks (their Director of Marketing), it isn't because they figured out the "subscriber problem" or have exceptional marketing, it's because of their programming. Their shows for this season include 5 shows: State Fair; Hairspray; A Streetcar Named Desire; Born Yesterday; and The Producers (all musicals and/or well known products).

From the opposite perspective, the Public Theater can do "large and risky" productions, which they are well-known for because more than half of its budget comes from contributed sources. For comparison purposes to Walnut Street, check out the Public Theater's season: Road Show; If you see something, Say something; Taking Over; The Good Negro; Why Torture is Wrong; The Singing Forest; Khartoum; The Native Theater Festival. As a theater insider, I have only heard of three of these projects, mostly because Arena Stage has a history with two of them.

The more a company is handcuffed to its earned revenue streams and box office, the less it's able to concentrate on its non-profit mission. And in this economy, a heavy reliance on either contributed or earned revenue isn't a good idea since an organization's revenue streams should be diversified, so as not to put all your eggs in one basket.

More news from around the world...

2008-11-26T08:23:00.000-05:00

As the economy gets worse, the impact is starting to become apparent, even at some of the largest institutions in the nation:

Tennessee Company Calls Off All Opera For Next Season
Vancouver's Ballet BC Lays Off Everybody
Fundraising For Orlando's New PAC Falls Short
Detroit Symphony In The Red, And It Could Get Worse
Public Postpones 2009 Production of Guare's Free Man of Color
Young Frankenstein Folds, & Schadenfreude Strikes B'way
As Baltimore Orgs Face Cuts, Opera Co. Is On The Brink
Minn. Museum of American Art To Close, Reopen Eventually
Canadian Arts Groups Hurting As Stock Investments Plummet
Struggling Broadway Sees Two More Shows Close
MOCA Considers Selling Itself To LACMA
Madison PAC Cutting Staff

Results from the Arena Stage New Deal

2008-11-17T23:16:00.001-05:00

Round 1: Economy vs. Arena Stage

Tactic: Arena Stage's New Deal--25,000 tickets at $25 each for 24 hours
Good for the first week of any remaining production in 2008-09

Results: 6,661 tickets sold for almost $200,000 in revenue in a 24 hour period

Notes:

The previous highest grossing day at Arena Stage was $90,000 in 2002, which we more than doubled.
We created 229 entirely new patron accounts.
Several preview performances sold out, and the remaining shows have very healthy houses which should go a long way in boosting word of mouth early.
We sold 1,400 tickets in two hours from 12am-2am on Friday morning.
We had a line at the box office at 12am, including a woman in her sleeping bag.

ROUND 1 GOES TO ARENA STAGE

Asking the unpopular--is there too much art?

2008-11-17T23:14:00.001-05:00

The economic crisis is starting to trickle down to arts organizations all over the nation. Recent casualties of the crisis include Opera Pacific, Milwaukee Shakespeare Festival, and several Broadway shows. To adjust for the weakening economy, planned productions have been abandoned at Seattle Repertory Theatre, Washington National Opera, the New York City Opera and even at the seemingly untouchable Metropolitan Opera. Not to mention the St. Louis Museum of Art postponing its $125 million expansion or the Shakespeare Theatre missing its gala goal by $300,000.

The impact of the crisis will be felt in communities all around the country. Quite simply, the casualties listed above won’t be the last. Arts organizations will fail and close as contributed income dries up, and earned revenue weans. Although tragic for the artists connected to these organizations, the unpopular question that continues to emerge with my colleagues from around the nation is: are the closings of these organizations necessarily a bad thing?

Is there just too much art? Take for example an article written in the Washington Post on April 23, 2008 which cites a study by the Helen Hayes Organization that says in 2007, there were 402 more performances by theatre companies than the previous year but attendance was down by 36,000 patrons. From this report, it would seem that supply has significantly surpassed demand, and this isn’t surprising when you take into consideration the boom of new theaters in the Washington metropolitan area.

Artists, including myself, like to point to ways to increase demand, revitalize arts education, court younger audiences, launch massive outreach programs—as the answer to this problem. But the supply and demand conundrum that many communities face can also be solved by eliminating the excess supply. This crisis will create a de facto “survival of the fittest” culture for arts organizations. Those organizations that are financially sound and create consistently good product might feel a pinch but should weather the storm. Those organizations who were limping along prior to the crisis will probably cease to exist, thereby eliminating the surplus in supply in competitive markets and returning the community to a sustainable stasis.
In the end, although painful in its process, this crisis might create stronger artistic communities throughout the nation.

Notes from Ed Keller's session at NAMP

2008-11-10T12:30:00.000-05:00

Ed Keller, Word of Mouth Marketing Guru
Unleashing the Power of Word of Mouth
Plenary Speech
Monday, November 10, 2008

Recent example of great WOM marketing:
The Obama Campaign decided to announce his running mate via text messaging. That was the carrot to encourage people to sign up and provide their cell phone numbers to the campaign, which they used later to send out text messages to “get out an vote.” Those cell phone numbers were incredibly valuable to the campaign to set up their word of mouth campaigns.

3.5 billion brand impressions via word of mouth each day in the United States. Think about how expensive a brand impression is that you purchase via paid advertising.

Word of Mouth is the most influential touchpoint (from research done by AdvertisingAge). Word of mouth has more impact than any other touchpoint available.

What is word of mouth?
-people giving advice, insight and information to others in their own voice and in a natural, honest and genuine way.

Word of mouth marketing:
1. Encouraging word of mouth within a marketing objective.
2. Making it easy for consumers to spread the word about your brand
3. Making sure everything you do that touches the consumer is “TalkWorthy”

Word of Mouth Marketing Techniques:
Online: Online buzz, viral videos, brand blogging and brand communities
Offline: street teams, house parties, referral marketing, customer activation and CRM, WOM sampling and seeding, evangelist marketing (finding the 1% of your customer base who are evangelicals about your product and helping them spread the word)

Key Questions:
1. What’s your story?
2. Who will tell it?
3. How can you facilitate the conversation (tools you can create to help WOM)

6 Key Insights:
1. Americans like to talk. The average American engages in 105 conversations a week about products and services. Those conversations contain an average of 69 brand mentions. Top three categories: Food and Dining, Media and Entertainment, and Sports, Recreation and Hobbies.
2. Word of Mouth has Impact on Audience. On a zero to ten scale, 55% rated 9 or 10 on a 1 to 10 scale. 49% of people say they are likely to purchase a product that is recommended by a close friend.
3. Word of Mouth is mostly positive. 63% of brand references in world of mouth conversations are “mostly positive,” which is seven times the rate of “mostly negative” references (9%). Research also shows that positive word of mouth has more impact than negative word of mouth.
4. Word of Mouth is mostly face-to-face. 73% of marketing-related conversations take place in person. The remainders are phone (17%), e-mail (3%), text message (3%), online chatroom or blog (1%) and other (2%). This remains true across all age groups. Offline WOM is more credible, more positive and more likely to inspire purchase.
5. Half of WOM driving by media/marketing. Nearly 1 in 2 brand conversations refer to brand marketing or media. Consumers tend to take things they hear from traditional marketing mediums and use it in their WOM mentions. 50% of consumer brand conversations refer to marketing or media, lead by television (15%).
6. When it comes to conversation, not all consumers are created equal. One American in ten tells the other nine how to vote, where to eat, and what to buy. They are called the influencers.

Influencers:
10% of population accounts for 1/3 for all WOM.
60% more conversations each day.
90% more brand conversations.
They are leading indicators of consumer trends.
They are consumer advocates.
They are “market multipliers” – two to three times as likely to talk to others as the average consumer.
Eager to sign up for WOM programs and more than 3/4ths of influencers like to pass along info, discounts and ads for brand they like.
More than 3/4ths of influencers invite friends to events for brands they like.
2.5 times more likely to post reviews and ratings.

Reaching Influencers
· Find them in your database.
· Media planning tools are available to plan media efficiently. More active users of the internet and heavy users of print media.
· Many times, they will self-identify. Active participation on your website. They attend your events, and contact your call center. They also post reviews and ratings.

How marketing needs to change to maximize WOM:
· new marketing objectives
· Need to focus on things that are “talkworthy” campaigns that will create a buzz
· Better integration across marketing channels and disciplines.
· New channels, tools and techniques.
· Target influencers who are predisposed to recommend.
· Focus more on current customers, not just prospects.

First blog from NAMP

2008-11-09T23:07:00.001-05:00

Today was my first day at the National Arts Marketing Project Conference in Houston. I opted to come in a day early to participate in the pricing institute, and although they presented some interesting information, I feel like they condensed their overall presentation down so far to fit into one day that it lost some of its value.

I did have one insight and a good reminder today. The insight: at the pricing institute, we discussed values based pricing. What value do you bring to your customer, and the importance of comprehending, creating and communicating your value. However, Tim Baker (one of the presenters) said something that really resonated with me about organizations that do a lot of new work. He said "if the customer doesn't know the play they are going to see, it is extremely difficult for them to evaluate value, so the value equation must rest on the reputation of the institution." I took that sentence to read that if you want to do a substantial amount of new work, you must increase your institutional marketing to brand the institution because the customer cannot make a values based decision on a product that is unknown to them. This coincides with a main argument that Michael Kaiser makes in his new book The Art of the Turnaround. Mr. Kaiser's main mantra: good art, marketed well. And he says one of the major mistakes we make as arts marketers is concentrating too much on product marketing and not enough on institutional marketing.

I had dinner this evening with several respected colleagues, one of which being Kory Kelly, the new Director of Marketing and Communications at Actors Theatre of Louisville. Actors Theatre does quite a bit of new work, especially when it comes time for their Humana Festival of New American Plays. As a consumer, I don't have to know anything about the titles or the specific products because that festival is so well branded. I feel like I could buy tickets to any of the Humana Festival productions and see a high quality production. In this instance, Actors Theatre has done a great job of institutional marketing around the festival to boost sales for individual products.

I was also reminded today that you have to sell the experience. People don't buy the product in many cases, they buy the experience, and for many different reasons. At the pricing institute, we discussed the many "types" of values that one could assign to an arts experience including educational, spiritual, therapeutic, ritual, social interaction, and relationship enhancement values. The guy who purchases tickets to the opera for his girlfriend for a special night on the town purchases for relationship enhancement and ritual value (getting dressed up, heading out for a night on the town, etc). The parent who brings his teenager to see Death of a Salesman is probably looking for an educational value. I remember while living in London that if I was having a bad day, I would pop on over to RENT and purchase a 10 pound ticket to escape life. Even though I had seen the show numerous times, it provided me an escape from everyday life. We have to communicate the intrinsic and extrinsic values of our product by selling the experience.

Tomorrow I give my first of two presentations. So off to bed to get a good night's sleep...

Just landed in Houston...

2008-11-08T23:03:00.001-05:00

I just touched down at George Bush International Airport in Houston, and I couldn't help but think that I am pretty sure the celebratory atmosphere that I left in DC following the election of Barack Obama probably wouldn't be the same here.

I am in town for my fourth National Arts Marketing Project Conference, where I will be presenting two sessions, leading a round-table discussion and hosting a dine-around. A packed schedule, but I like it that way. I have met so many interesting people at this conference over the years.

A highlight of this year's conference is a convening of marketing experts from major regional theaters that I have been invited to on Monday, November 10. Jim Royce, Director of Marketing, Communications and Sales at Center Theatre Group and Rodi Franco, Director of Communications at the Alley Theatre are hosting the dinner. The group includes Alan Brown (WolfBrown), Mary Trudel (Wallace Foundation), Tim Baker (Baker Richards Consulting), Bil Schroeder (South Coast Rep), Linda Garrison (Steppenwolf Theatre), Anne Trites (Yale Repertory Theatre), Kory Kelly (Actors Theatre of Louisville), Chad Peterson (Northlight), Nella Vera (CTG) and myself representing Arena Stage.

The main topic of conversation will focus on how our institutions are addressing the current economic crisis. The group has agreed to let me blog about the conversation. I must say that I am incredibly excited to be at the table with this group of folks, and I hope some interesting ideas are floated.

Just today, two major opera companies announced huge changes that were blamed on the current economy. The NY City Opera announced that it has separated ways with its incoming artistic director Gerald Mortier, and the Washington National Opera announced that it has abandoned its plans to present the Ring Cycle next year. I have also heard from my colleagues around the nation at some of the largest theaters in the country that they are preparing to make substantial changes in their season. The first out of the box seems to be Seattle Repertory Theatre.

We are all in the same boat, so hopefully we can create an agenda to address this crisis together.

Arena Stage's NEW DEAL

2008-11-06T15:16:00.002-05:00

As the anemic economy lingers, I have gotten more and more questions, from press, board members and colleagues, about what I believe the impact will be of the worsening economic crisis. As I wrote in an earlier post, the honest answer is -- I don't know. Truth be told, the first several shows of Arena's season have performed on par with previous seasons, and Wishful Drinking was one of our best performing productions in the past decade.

That being said, I am not so optimistic about the future. Money is getting tight, and some of the most talented forecasters in the retail industry are calling for an incredibly rough holiday season.

As a preemptive strike, Arena Stage announced its New Deal program today. At its core is a huge one day only sale. For one day, Friday, November 14 from 12:00am until 11:59pm, Arena Stage will place 25,000 tickets on sale for $25 each, which represents 60% off regular ticket prices. I believe we owe it to our community to make ticket prices more reasonable during these times, and this is the program we have developed.

I also believe that we have to give customers a reason to buy, and buy now. To a lot of people, a great product is no longer enough -- they need a deal that they feel they can't pass up in order to purchase. In turn, I need them to purchase their tickets now far in advance for shows months away. I refer to this as my security blanket in case the economy gets worse--almost like a subscription in a way.

Round 1 begins...

What are you doing...

2008-11-05T09:23:00.003-05:00

to prepare your organization for the economic downturn? More from my experience and Arena Stage later this week, but check out the following headlines:

St. Louis Arts Museum delays $125 million expansion:
http://www.stltoday.com/stltoday/entertainment/stories.nsf/entertainment/visualarts/story/4efc5e0a4a78af6a862574f90069fed1?OpenDocument

Oregon Shakespeare Festival runs into Money Crunch:http://www.statesmanjournal.com/apps/pbcs.dll/article?AID=/20081102/COLUMN0801/811020304/1083/COLUMN

NY City Ballet Cuts Season: http://www.saratogian.com/site/news.cfm?newsid=20186738&BRD=1169&PAG=461&dept_id=602469&rfi=6

A Rough Road Ahead for Broadway:
http://www.nytimes.com/2008/11/05/theater/05bway.html?_r=1&ref=arts&oref=slogin

Opera Pacific Closes Down:
http://www.ocregister.com/articles/opera-company-jones-2217667-pacific-county

Milwaukee Shakespeare Dies:
http://www.jsonline.com/entertainment/arts/33613864.html

CTG announces Entertainment Stimulus Package:
http://www.theatermania.com/content/news.cfm/story/15957

Arts Groups Dig in to Weather Economy:
http://www.courier-journal.com/article/20081102/SCENE05/811020317/1011/SCENE

Museums Hit Hard by Economy:
http://online.wsj.com/article/SB122533230729582915.html?mod=googlenews_wsj

DC Fundraisers Show Signs of Trouble:
http://voices.washingtonpost.com/reliable-source/2008/10/rs-harman29.html