Arts Marketing 101 - Setting Financial Expectations

 

I really like this one.  Originally put up in Jan. 2010.  New posts tomorrow.

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Setting financial expectations is a linchpin skill.  If you do it well, everything else becomes easier.  If you do it wrong, nothing else you do matters that much.

So what can you use to set your revenue projections for an artistic event?  Here's a list:

1.  Organizational History - You want to look back over your history to see what previous events bought in AND what they were projected to bring in.  Looking back over the previous three year or so is fine, any further back probably will not be that helpful.

2.  Venue comparisons - Many arts organizations perform in multiple venues.  Does the venue you are in hurt or improve your average attendance?

3.  External factors - This is where you consider all the things happening in the world during your event.  Things like:

-  The weather

-  What competitor arts organizations will be doing

-  Does the event tie into any major holidays

You get the idea.

4.  Internal factors - Maybe you didn't have a marketing person for the past 2 seasons and now you do.  Factor that into your projection.  Maybe the reverse is true.  Factor that in.  When I talk about internal factors I mean considering everything going on within your group that may impact how well the show sells.

A good projection factors in all four things.  An informed decision is always a better one.

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Let's break out a hypothetical event and see how this works.

XYZ Theatre is planning to do a three week run of a musical.  What should the projection be?

History - We've never done a musical before.  So for the sake of starting the projection let's say that it does as good as our best selling drama.  Let's call that $10,000 over the run.

Venue Comparison - We have produced in this venue before, so let's assume this doesn't help us or hurt us.  FYI, if this was a new venue for us I would probably lower the projection to reflect the difficulty of drawing people to a new venue.  But for now, we keep it at $10,000.

External Factors - The city we are in has 5 musicals opening at the same time.  That's not great news for us.  I'd lower the projection to $9,000.

Internal Factors - We just hired a new marketing person.  Hurray.  But she hasn't really had time to get her feet wet.  So let's say she will have an impact, but not that big of one.  Maybe $1,500 worth of impact . . . . the new projection is $10,500.

Obviously your process will be more involved, but this isn't rocket science.  Use the information you have, make informed guesses . . . and when in doubt, be conservative in your projections.

So, we have $10,500.  All done right?

Nope.

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So there you are, ready to get your 10,500 in tickets when your boss/Board chair/whatever comes in.

He reminds you that musicals are expensive things.

He implies that the competitor shows aren't really that much of a threat.

He also thinks that a new marketing director, rookie or not, should be able to bring in much more then $1,500.

So instead of the goal being $10,500 it should be more like $18,000.

"That" he says "is what we need the show to make."

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Ah yes, need. 

Please remember the following:

No one cares what you need to make in ticket sales.

The public is not going to magically buy more tickets just because the show cost more to put up.

This is our fatal mistake.  We draw a fake correlation between what we need and what others are willing to spend.

So what do we do?  Do we just tell the boss that he (or she) is an idiot?

Nope.

Maybe there is another way.

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So the boss wants 18,000 and all the research indicates that 10,500 is the best this show can do.

Time to have a meeting.

We get all the key players in a room and present the 7,500 gap between what we can get and what we need.

And then we ask what SPECIFICALLY can we do to fill that gap.

Work harder isn't an acceptable answer.

Work longer isn't an acceptable answer.

Market better isn't an acceptable answer.

If people can come up with clear, tangible, logical ideas that could possibly fill part of that gap then increasing the revenue goal can be considered.

But if all people have is fluff, or half thought out ideas, or ideas that simply can not be executed with the resources you have then you CAN NOT increase the goal.

You can not do it.

And if you work at a place where people insist on increasing revenue projections based on magical thinking then you really need to find another place to be.

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When it comes to setting financial goals, fighting the magical thinking is the hard part.

The ability to do that is what separates mature, successful arts organizations from a bunch of people determined to crash into the brick wall of reality at the highest possible speed.

Poor projections kill arts organizations.

I can't be any clearer about that.

Don't let it happen to you.

  

 

 

 

 

 

Comments

[Tom Watney]

Good post.
Many thanks.