Wednesday, March 31, 2010

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

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
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

Saturday, March 20, 2010

A Collection of Worst Practices

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 ( 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.

Sunday, March 07, 2010

The Truth About Attracting Younger Audiences

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.