NPR Story

Thursday afternoon NPR's Neda Uluby reported on the response from various arts organizations to their budget shortfalls this year.  As you'll hear, their answers have ranged from total pullback to all in gambles.

Economic Woes Force Arts Groups To Scale Back

Side Effects of the Economy

Fascinating article in the New York Times this past weekend concerning corporate collections appearing as full fledged exhibitions.

And Now, an Exhibition From Our Sponsor

Retail vs. Brand marketing

I've been thinking about the challenges we'll face over the next few years as the economy slowly seems to turn around.  It's unlikely that marketing budgets will rebound in 2010 and 2011 may also be a tough budget year.  

Which led me to think about the differences in retail advertising and branding.  It's not unusual for branding to be pushed to the side when times are tight. And predictably, it seems that most marketing being done for the arts today is exhibition by exhibition, performance by performance.  The retail side of our business.  

I see very few ads or campaigns promoting the museum or the performance venue itself.  And while there is an argument to be made that you are your content, I strongly believe your brand goes beyond today's playbill.   But when budgets are tight we tend to focus on driving today's ticket sales, leaving the brand as tomorrow's issues.

That works fine when you've got recognizable names coming in show after show.  What happens when you a lesser name performer, a more artistically driven production, an exhibition from your permanent collection?   Is your brand going to be strong enough to bring in the audiences then?   Probably not, if you've been ignoring it during the down economy.

It would be nice to address this issue with a new image campaign, but as I mentioned at the beginning of this post, budgets aren't likely to get larger anytime soon.  May I suggest, in lieu of additional advertising, that you look at your complete marketing plan and see where you can infuse your brand. 

Most of us have lots of touch points already.  It's a matter of making sure that each of them carries our brand message as well as info for the individual show.  Here are a few examples you could start with:

- What venue info are you including in collateral for your performances?

- Does your social media only talk about individual shows or does it also cover the organization as a whole?

- Are you also including brand ideas in your PR plan?  

Just take time to look for the opportunities that allow you to promote current shows but also  build your organization's reputation as a whole.  You're brand will be the stronger for it.

 

Arts in Crisis

"...marketing is the only way to grow an audience."

Michael M. Kaiser, President Kennedy Center

I believe that quote that should be pasted in big bold letters on the wall of every arts organization in the country.

Three months ago Mr. Kaiser announced the creation of Arts in Crisis: A Kennedy Center Initiative.  Through the program, Kaiser and other executive staff members at the Kennedy Center are providing free consultations to arts organizations around the country.  

The Sacramento Philharmonic is participating in the initiative and they're hearing very clearly that Kaiser is not in favor of putting marketing budgets on the chopping block.  Here's an article that appeared yesterday in the Sacramento Bee "Don't sacrifice marketing, expert warns arts groups".

Mr. Kaiser's remarks resonated deeply with me.  Yes, we need to be prudent.  Yes, we need to stretch marketing dollars.  But if we allow our offerings to disappear from public view because we don't promote them, we are assuring that our audiences will disappear as well.

If you'd like to know more about the Kennedy Center initiative the website is www.artsincrisis.org.  Or read one of the following articles:

Kennedy Center Crisis Counselor - The Washington Post

Kennedy Center Offers Help to Arts Groups - The New York Times

Performing Arts Struggle Under Crisis - Variety

Joanne Bernstein on Selling Season Tickets

Joanne Scheff Bernstein is the well known author of two arts marketing books, Arts Marketing Insights and Standing Room Only.  With so many of us in the midst of selling ticket packages for the 2009-2010 season I thought it would be a good time to get her perspective on how to handle sales in a down economy.  She was kind enough to answer a few questions on the topic:

Ticket - Is this the most difficult year for selling season subscriptions you’ve seen as a marketer?  

Bernstein - Most organizations are still selling their subscriptions for the 2009-2010 season, so it is hard to tell at this point how much the performing arts will be affected during the upcoming season by the difficult economic situation. Overall it is expected that subscriptions will be down. How much each organization is affected is dependent on three main factors: 1) the quality of their artistic product 2) the pricing structure of the organization, and 3) how responsive the organization is to customer needs and preferences. If subscribers have only been delighted by 2 or 3 out of 5 productions in their series in recent years, they are more likely to drop their subscriptions and select which programs to attend. When the quality is consistent and meets audience expectations, there will be far less erosion of subscription sales. An organization with highly priced tickets, such as a major opera company or symphony, is more likely to lose subscribers than an organization where the financial commitment is not significant given people's more frugal life styles in the current environment.

Subscription selling became challenging for performing arts organizations around the turn of the 21st century.  Over the past several years,  more people have clearly exhibited their preference to choose exactly which shows to attend and to be more spontaneous in their ticket purchases. Organizations that have adapted to these changes in consumer behavior by offering mini-series, choose your own series, and offering payment plans over time for package sales, among other strategies, are in a stronger position to retain subscribers and even attract new subscribers than those organizations who have not been tuned in to meeting customer needs. Those organizations  that have not been flexible and customer-centered in their marketing approaches are definitely facing difficult subscription campaigns this season.

Ticket - What are the questions you’re getting from your clients in regards to season subscriptions and what advice are you giving them?

Bernstein - My advice this season is no different than it has been in the past several seasons: the key to success is great art well marketed. If marketers keep doing the same things they have always done, no matter how much they improve it, they will only get what they had before. It is crucial that marketers put their customers first. This means that they must pay attention to what their customer are saying and doing and that they must be rigorous about customer satisfaction. This is the fundamental concept that is explained in detail from various approaches in "Arts Marketing Insights."

Ticket - What are some of the more innovative ideas you’ve seen organizations use to try to combat the economy this year?

Bernstein - One symphony I work with has gone from a season brochure that historically divided up concert descriptions by whether the programs were classical, pops, chamber, or choral. This year, based on the premise that people often like a variety of styles, the brochure listings are strictly chronological and people are encouraged to select which performances they want to attend. None of the programming is pre-packaged for them. Hopefully this new approach will encourage people to try programs they have never attended in the past and possibly even purchase more tickets than in previous years by selecting from among the variety of options.

Some organizations are starting to do something that I recommended in both my books: offering extended payment plans over several months to encourage subscriptions.

The most common strategy I've seen in recent years is the frequent use of deep discounts. There are pros and cons to this tactic. Generally the organizations sell more tickets than they would have otherwise, but I am concerned that people will become accustomed to "last-minute" price reductions and will not buy tickets without such discounts. Hopefully, as the economy improves, people will ease up on their expectations for discounts and will attend the shows they want to see. People need entertainment and appreciate asethetics as much as ever, if not more so, and arts attendance is a fine alternative to other more expensive pursuits, such as leisure travel.

Many organizations are appropriately cutting costs in areas that do not have a detrimental effect on the quality of the artistic product to help them through these difficult times. I am recommending that organizations conduct short-range strategic planning, reviewing budgets on a monthly basis and their strategies every three months, so they can be responsive to the rapid changes in the environment. When an expected foundation gift does not come through or the annual fund does not realize the anticipated revenue, organizations must adjust immediately.

Ticket - You released your last book in 2006.  Any plans for another?

Bernstein - Since my books cover fundamentals and strategies that apply over a wide variety of times and situations, I do not feel the need to update what I have written in the current environment. I do expect, however, that over the next couple of years I will compile some interesting case studies based on my consulting work that will have generalizable messages for arts managers.

You can learn more about Joanne Bernstein at her website Arts Marketing Insights.

Economic Impact on the arts

Good overview story in the Washington Post on the impact the economy is having on arts organizations across the country.

One interesting example included in the article was from the Rochester Philharmonic.  They've elected to keep season ticket subscriptions open for those that have lost their jobs since January.  The Philharmonic has guaranteed that if the member is still unemployed by the time the season begins, they'll receive their seats for free this year.  It's a nice gesture that, hopefully, will build long-term loyalty.

Read the article here, Stage of Emergency. 

Federal money for the arts trickles down

Ten days ago the NEA announced their grants from the President's stimulus package.  In all $19.9 million was given out to state and regional arts agencies.

In our neighborhood the Southern Arts Federation in Atlanta received just over a half million and the North Carolina Arts Council (NCAC) received $339,100 in federal grants.

The NCAC announced that it, like other recipients of the stimulus money, will "re-grant the funds to support the preservation of critical jobs and artists' contracts".  Local arts councils, statewide service organizations, and organizations that currently receive General Support and Outreach grants are eligible.  North Carolina organizations have through June 1 to apply for the funds to NCAC.  

For more information about the North Carolina grants check out the NCAC's Economic Resource Recovery Room.  A full list of the organizations that received federal money from the NEA can be found here.

Fundraising Pipeline

I was taught very early in my career that sales and fundraising is a numbers game.  The more qualified prospects you talk to, the more successful you'll be.  Bloomberg reported on two studies this week that, to me, make increasing the number of prospects going into your fundraising pipeline a top priority.

The first study, from the research group the Conference Board, says that 45 percent of corporations will reduce their philanthropy budget in 2009.  Another 19 percent have philanthropy cuts under considerations.  Support for the arts and culture led the list of causes for which cuts were expected.

Bank of America and the Center on Philanthropy originated the second study.  The 2008 Study of High Net Worth Philanthropy shows that individual giving among wealthier Americans, those with household incomes over 200K and net worth over $1 million, has decreased over the last few years.  The study monitored charitable giving for the calendar year 2007, which included the starting period of the housing decline.  They report overall charitable giving was down from '05 to '07 by 9.7%.

More importantly, for arts organizations this same study showed in 2005 that the group's annual support for the arts was $16,465 per household.  In 2007 the figure dropped to $4,792.  That's a pullback of over 70% among those most likely to make charitable donations.

Both these reports tell us clearly that you  cannot expect current donor bases to support your organization at the same level they have in the past.  The logical conclusion is that to offset those losses you'll need a larger overall pool of donors.  That's easier to say than to do, but it brings me back to my initial point, it's a numbers game. 

If you look at your development plans and it took 8 proposals to secure one funder two years ago.  Count on having to approach 15-20 to get the same funding level this year.  If your membership program went to 10,000 addresses before, it's probably going to take 20,000 this year just to stay even.  

It's hard work to find twice as many qualified prospects.  It takes more time and effort, but the alternative is most certainly further cuts to staff and programming that we all want to avoid.  I'm guessing that if you look around you'll find plenty of people in your organization that will pitch in to help fill the pipeline.

A final note, there is interesting information on why donors leave from that same report on High Wealth Philanthropy that you may find useful.  I'll share that in a future post.

Can your Grandmother improve your bottom line?

My grandma Hazel was a great cook and a sharp wit.  She'd also set you straight in a hurry if you didn't say "thank you".   

"It's what properly raised people do", she'd tell us.  

Many arts organizations are cutting staff and programs in an attempt to stay afloat in the current economy.  Letting details slip is an inherent danger when there are fewer people and resources.  

While you aren't going to be able to do everything you did before with 30% less budget, there are certain areas that should be preserved at all costs.  I would argue that customer service falls into this category.

Your "customers", whether big donor or one-time ticket holder, are feeling today's pinch as well. But despite more limited budgets, these are the individuals still choosing to come to your performances and support your exhibitions.  They could have selected any number of other options, including leaving those hard-earned dollars in the bank, but they chose you.  That deserves your appreciation and recognition.  

So make sure you're providing a warm greeting at the box office window.  Make sure visitor services are at their best.   And for goodness sake, send your follow-up notes after meetings or when donations are given.  

Remember also, not all your competitors will attend to these details as carefully right now.  So by maintaining your customer service you may truly set yourself apart from other organizations.  It can mean that your budgets don't suffer as greatly in this lean time and you'll be remembered when greater prosperity returns.  

It's possible.  And it starts by doing the simplest of things.  Like saying "Thank you".  Your customers will notice and your grandmother will approve.

MOMA sees opportunity with locals

Last week I wrote about combatting a downturn in tourist attendance by focusing on your local market.  Looks like the Metropolitan Museum of Modern Art was a step ahead of me.

The museum has started a campaign to bring New Yorkers into the museum.  The highest profile part of this campaign is their work in a Brooklyn subway station.  The MOMA has plastered the Atlantic/Pacific stop with images of work from their permanent collection, creating an underground gallery complete with audio guides.

The New York Times covered the story this month and you can also get an idea of the experience with this virtual tour.

Keep an eye on travel statistics

Over the last few months there have been conflicting reports on how much Americans will be traveling this year.  That's not really surprising with  so many people unsure about the economy and their own jobs. 

We are entering the time when vacation plans are made for the prime traveling season but this year there seems to be more of a wait-and-see approach.  

One small thought to combat a possible downturn in your out-of-town attendance, look at adjusting your media mix.  If travelers do decide to hold off on vacations this year, you'll probably need to pull out of some of the magazines and mailings targeted to visitors that you've used in past years.  

Then look at moving those dollars to media targeted for local audiences.  They're staying home too, but very few will be satisfied with sitting around the house as a substitute for their normal week at the beach.   

To keep an eye on the trends nationally you can get updates at traveldailynews.com.  And stay in touch with your local tourism and visitor's bureau to get their input as well.

2009 advertising budgets - Newspaper vs. Online

I was interested in a column that recently ran in the Raleigh News and Observer, the metro daily here in the Triangle.  The columnist, John Drescher, touted their growth in readership. This initially struck me as odd considering the trends for print have been steadily down the past decade.

It didn't take long to realize that the growth included online readers and that the online increases were overcoming declines in print circulation.  That would coincide with the national trend that shows newspaper website readership up an average of 12% or more last year.  For some the growth was even more dramatic.  The LA Times saw their online audience jump an astounding 78% in 2008.

For years the Arts section of local dailies have been mainstays in advertising plans for museums and theatres.  But with every dollar being precious this year, keep this move of readership from print to online in mind.

If the local daily is going to be in your marketing plan, make sure you take advantage of the soft advertising market by negotiating a presence online as well as in print.  While the online readership is up, some surveys show newspaper advertising revenues down to their lowest levels since 1996.  And as I mentioned in an earlier post, the current economy is making most advertising outlets very willing to negotiate deals.

The time is right to get the most out of your budget and take advantage of those increases in web readership to make your ad dollars go further.

Latest on the Rose Museum

Most of you have heard about Brandeis University's plan to close the Rose and sell the collection of works, which by some accounts are worth $375 million.  Early reports this week said that the sale would be used to cover the $10 million shortfall in the school's budget for this year.

I thought this sounded extreme when I heard it, and a bit unrealistic.  Why sell such a large asset to address a comparatively small deficit.  It's a little akin to killing flies with a elephant gun.  Plenty of individuals close to the story expressed the same reaction.  

Unsurprisingly, we are hearing now that the deficit Brandeis faces is much larger.  In an interview provided with The Daily Beast, the COO reports the shortfall is more like $79 million over the next six years.  In addition, their capital campaign is still underway and they face issues in this effort as well.   A primary funding source, Carl Shapiro and his foundation, are still reeling from the Madoff scandal.  The Shapiro Foundation has already announced to Boston area non-profits it will not be providing any more support in 2009 beyond the pledges it has already made.  So it's unlikely there are white knights ready to ride in with assistance.

There have been initial cries of outrage from students, alumni and The Association of College and University Museums and Galleries.  And I agree.  It sets a dangerous precedent.  One that could have long-term implications on donors' willingness to give gifts to any but a select few institutions perceived as "financially stable".

I don't think that will stop the sale.  

We are sure to see some protracted court battles over whether Brandeis can legally sell these works.  But if the budget shortfall extends out that many years, then school officials were never really considering this a solution for their problems in 2009.  They probably expected from the beginning to sell the collection off over a half decade or more. 

I can't speak to whether they are correct in their assessment of the school's financing, but it appears they saw this as the least painful way to keep the rest of the university operating in a relatively normal fashion.  If and when it does happen, I hope they'll be able to look back and say the results for Brandeis will be worth the damage done to other university art museums.

Your advertising budget can go further in 2009

If you have an ad campaign planned for an event in the first half of 2009, there's good news. Your ad budget should buy you a lot more exposure.

The recession is hitting media outlets hard.   And no medium seems to be immune.  The New York Times group reports that revenue was off 4.6% in August.  Their New England Media division (including the Boston Globe) is down almost twice that at 9% below year-over-year revenues.  

A leading survey of internet expenditures shows sales for display advertising off over 50% in the fourth quarter of 2008.

Prime purchasers of advertising have dramatically cut their budgets, led by car manufacturers and car dealerships.  Nielsen's ad spending reports showed automotive advertising down 10% through third quarter.  And I expect the fourth quarter numbers to show a further decline when they come out in a few weeks..

If you were hearing about lower advertising demand but had a hard time negotiating in fourth quarter last year, keep in mind that many broadcasters and newspapers were still being buoyed by political campaign dollars and holiday retail advertising.  Now advertising sales managers are facing first quarter without those seasonal revenue bumps.  

We've negotiated discounts of 40-50% on some annual print contracts.  Savings on local TV and cable have been smaller but still represent substantial increases in reach and frequency over our normal ad buys.

While I don't advocate beating up your media sales reps just because they are down, you should expect that you will receive more for your ad dollars this year.  Remember to negotiate, ask for additional commercial avails or ad space.  Discuss value added promotions as well.  

One other note, if you typically place your ad buys direct, but aren't as comfortable haggling, you may want to try a limited arrangement with a media buyer or ad agency.  They'll likely have a better sense of what your local market rates should be.  Many times, the discounts they can secure go well beyond the extra fees involved.

Whether you do it yourself or work with an outside firm, take advantage of the opportunity to get more from your advertising dollars while it exists.

NEA report on nonprofit theatres

The National Endowment for the Arts released a study of the nation's nonprofit theatres a few weeks ago.  All America's a Stage: Growth and Challenges in Nonprofit Theatre looks at the period between 1990 and 2005, when the number of these theatres doubled.

No doubt the study's look at performance during and following recessions will get the most interest.  The study reports that, after the 2001 downturn, revenues fell 12 percent for 2002.

For me, that made their findings on increasing ticket prices even more interesting.  The report included statistical models that predict increasing low end ticket prices by as much as 20% would have little impact on attendance.  The models resulted in an attendance downturn of less than 2% when ticket prices increase.

It seems counterintuitive to raise prices in a down economy.  But I'm sure more than a few general managers, executive directors and the like will give some thought to the numbers in this report.  I'll be asking for a little more info on the models they used.

You can read more about the report from the NEA or download it here

and make your own conclusions.

Thriving in a downturn

Ad Age did an article this month called Five Tips to Cope - or Even Thrive- Through Downturn.  It's a reminder that some of the most successful marekting ideas were born during hard economic times:

- American Airlines created a short-term loyalty promotion in 1982 called AAdvantage, the precursor to today's ubiquitous frequent-flyer programs.

- With new car sales lagging in 1975, General Motors capitalized on the desire to keep current vehicles running by introducing Mr. Goodwrench to push parts and service.

One very interesting trend discussed in the article was going upscale in the down market. While general spending goes down consumers still like to splurge in small areas.  How else to explain the successful launch of a premium cat food, Fancy Feast, in 1980.  Or Calvin Klein's 1982 launch of designer underwear for three times the cost of a generic brand.

What sorts of small splurges can you offer your guests?

Maybe a private docent tours for individuals or champagne and strawberries in a VIP area before the show for premium seat holders.  

When fewer dollars are spent on attending events our customers want those events to be memorable.  It's a good time to ask yourself the question, "What can we do to meet that desire?"

Audiences want to get away

I personally believe that during an economic downturn, there is a real desire for some escapism through entertainment.  A recent story out of Pittsburgh says that many museums and theatres there are continuing to have success despite the current economy.

No doubt that having blockbusters on the schedule can make ticket sales easier in 2009, but smaller shows and exhibitions can benefit from audiences' desire to get away from stock market headlines and employment reports, if we position those offerings properly.

Read the article here.

Those that ignore history...

Tough economic times.  Falling visitor counts.  Sound familiar?

Thomas Aageson was the VP of marketing and merchandising at Mystic Seaport in the late 80's.  And they were facing some of the same hurdles we all are facing today at museums and theatres around the country.  

How did they address the issue? They went back to basics.  They started with some street-level market research that assessed the current environment, created a strategic plan and developed advertising and promotional efforts that were based on the plan.

His excellent account of their efforts is here on the American Association of Museums website.

If you haven't looked at your strategic marketing plan in the last few months, go back and check your assumptions about the market to see if they still hold true.  As the Mystic Seaport example shows us, it's not a new idea, but it's a good one.