Arts Marketing

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

2009-06-21T13:06:00.002-05:00

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 coordinate 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...