Nonprofit Arts Leaders: Just Like the Overhead Myth, Ratios are Ridiculous

Plus: a bonus, non-hypothetical question for you!

Now that the end of the fiscal year has passed, and while you’re busy toting up the red ink and how you’ll hide it from the board and your funders, let’s all try not to make the same mistakes regarding your marketing budget for the coming year, okay?

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This one’s not for the marketing folks. They know what they’re doing. They’re experts at it. (unless, of course, your company decided to cheap out on marketing by hiring a board member’s kid or a recent arts management graduate who may not have been trained well enough for a full-time gig).

No, this one’s for every nonprofit arts leader who isn’t in marketing but still insists on throwing good money after… well, you know.

First, some pertinent questions:

Have you ever used ratios as a way to set up your annual marketing budget for a season of artistic events? Do you still? Why?

Worse, do you use a set figure, non-ratio based, of dollars to spend for every event? Would you spend the same amount of marketing dollars on a Taylor Swift concert in your 500-seat hall as you would for Béla Bartók’s Eight Improvisations on Hungarian Peasant Songs? Why?

And finally, are you that artistic director who gets antsy when you don’t see your posters all over town, despite the real-world analysis of how well that particular event is going to sell?

As you think about your answers, stop for a moment. Pull yourself out of the equation. Your marketing people already have, which is why they’re effective. If they’re strictly sycophants, you have to ask yourself why that is, given that sycophantic behavior in marketing is damaging for the entire organization. If it’s because they fear for their jobs, that’s on you. If it’s because they fear for your job, that’s on you. And if it’s because you hired a marketing team because of their ability to serve as yes-people, that’s on you, too.

If you’re fortunate enough to be running a shop where your marketing people are paid the same as the development people, where the marketing plan comes from them (and not from placing them in a hammerlock at budget time), then good for you. Just know that, incredibly, you are in the minority.

Ratios are not the answer to budgeting. In fact, they are dangerous. Instead, here are some ideas to ponder:

Spend the maximum on the popular shows.

If you have a fixed amount of money set aside for marketing, a good marketing director knows enough to spend the money where it can leverage a difference. If a show is a holiday spectacular (The Nutcracker, for example), they’ll spend a large amount of dollars until it sells out, wall-to-wall, even if they’ve already reached the revenue goal. A popular show — a show that will likely sell tickets because of its title, and to a lesser extent, a popular star — needs a lot of people to know that it can be found at your venue. Spend money to make that happen. A dollar spent here can leverage a ton of revenue, so why not spend a lot of dollars here?

Spend the minimum on the unpopular shows.

If few will ever come because of the title or the popularity of the performers — and no, the actor who plays That Third Cop in That Netflix Show is not popular if people don’t know his name — then there has to be another reason to produce the work. Maybe it’s important to you, but it’s not important to the people in your community. Or maybe it’s a good piece of art, but its content has limited appeal. Just know that chasing revenue with overextended expenses is not going to make someone want to see something they don’t want to see. If you have a season ticket base, market it to them in the usual manner. If you don’t, then take that into consideration when you book the event and spend as little as possible on it.

There are exceptions here, of course. But not many, and not enough to discuss. If your back is against the financial wall and you’ve decided the answer is a massive production of Ralph Roister-Doister starring Oliver Platt because, well, everyone knows who that is, you’ll find yourself shuttering your building right after closing night. And Oliver Platt happens to be a terrific actor. But neither he nor the title are going to sell tickets.

That doesn’t mean, “don’t do the show.” Just plan, during the budgeting process, to give hundreds of tickets away for charitable purposes. Your art, remember, is supposed to be a tool to make your community better off. Ticket sales have nothing to do with that.

Remove seats that don’t sell; replace them when they do.

If you insist on performing only in your venue (you shouldn’t, of course – you should be taking your plays to where people actually are, otherwise you’re feeding into the continuing elitism problem of donors being the beneficiaries of their own donations), find ways to change the setup for every event. Rather than accepting the fact that a particular opera will only sell 50% of the available seats, remove 50% of the seats at the very start. Then, dress the house accordingly. If the event surprises and “sells out” at a performance, perhaps you can replace some seats for the next performance. This will take constant communication between your marketing folks and your technical staff, but remember, a house where 90% of the available seats are sold resembles a hit, even if the capacity has been reduced substantially. That holds especially true when you can omit balcony seating entirely.

“Sold Out” is never a bad thing, even if you cheated to get there.

Determine where those single tickets are coming from.

If you have scheduled an event in the revenue middle-ground — the hardest kind to project — then, pre-budgeting, your marketing people will need to determine, from experience and history, exactly where the single tickets are likely to come from. That will affect where the collaborations and partnerships emanate, not just from a nonprofit standpoint, but from a sales standpoint. But if you fool yourself into thinking that just because you’re producing an August Wilson play, suddenly every Black person in your community will want to see that new all-White David Mamet play, you’re dead meat once again.

Your marketing people know this and so much more, but do you listen to them as a peer or as a lackey?

BONUS! AUDIENCE PARTICIPATION!

A friend runs a small, but established theater company with a decent reputation. The company has budgeted three times the expenditure on ticket marketing than on the projected revenue from those tickets. In other words, they’re spending $3.00 for every $1.00 received. That’s not a typo. Her board passed the budget. What do you think? Would her company be better off giving all the tickets away to unrepresented, underserved, or needy groups in the community, both in the short- and long-term? Or is this a short-term investment opportunity to gain more paying customers later? Remember, the company’s been around for years. Please answer this in the comments. I’m fascinated by this particular predicament.

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