Working with the Artistic Staff to create exciting Marketing Opportunities

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...

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

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

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

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...

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

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