Theatre and Production Marketing: What should my budget be?

Budgets are always tight, and coming off a year like 2020 that sentence has never been more true. Unfortunately, while your marketing budget is already stretched, here are a few reasons why it is likely too small, and why it is imperative that you find ways to make it a larger piece of your overall spending pie. So, how much should you be spending (and budgeting) for your marketing needs as you plan a season or a production?

Small Business Guidelines

Guidance from the Small Business Administration recommends that companies with revenues less than $5 million spend between 7% and 8% of gross revenue on marketing on an annual basis. That recommendation is for companies that are operating with margin, and have a well established business. What if you're new to the market? The percentage starts to shift depending on if you are looking to maintain your position in the market, or if you are trying to grow. Looking to grow? According to Disruptive Advertising, that means you should aim to have 12%-20% of your targeted revenues earmarked for advertising. The same article from Disruptive Advertising says that if you are looking to maintain your market position, then that number should fall between 5% and 12%, or right in line with the recommendation from the SBA.

"But I'm a non-profit!" I can hear you cry. That doesn't exempt you from these marketing costs. Philanthropy.com recommends a budget right in line with what we've been talking about - 10% on the low end and 20% on the high end. While that number may feel high, there is unfortunately truth in the fact that it does cost money to make money.

A Production as a New Product

Another way to look at the similarities between a more traditional business and a theatre company putting on a show is that every time we put on a show, we are essentially bringing a new product to market. While our company might be itself an established brand, quite likely our audience has not necessarily encountered this particular production before. While this increases the potential risk for producing the show, from a business standpoint it means we need to increase our marketing spend, not decrease it.

When a customer isn't as familiar with a product or offering, that creates an additional hurdle in getting them to the final buying decision. To get over that hurdle, we need to make sure they hear our message even more frequently than they might have otherwise. Small Business Marketing Tools recommends a marketing budget between 25% and 35% when you're launching a new product - a massive number compared to what most companies are spending on marketing for an individual production.

The Rule of 7, or 77, or Even More

The old marketing rule of 7 is out of date in number, but not in principle. Fifty years ago, the average person was seeing a few hundred advertisements over the course of the day, and that number has only continued to grow exponentially to several thousand. For those unfamiliar with the principle, the rule of 7 stated that a customer needed to encounter your marketing 7 times before making a buying decision. With the marketplace more crowded than ever, that number is likely much higher than 7. And all those impressions add up.

But it isn't just a single channel that you want to hit the customer - some people respond well to banners, others to emails, and others to content. The most effective marketing campaigns are going to incorporate multiple styles, multiple channels, and make their way to the consumer over a sustained period.

The sustained period becomes important here as well - even before the pandemic we were seeing audiences make later and later buying decisions, and we've experienced ticket sales nearly doubling the day of an event on our BroadwayWorld Events platform.

In this, data is going to be your friend. The more information you can compile about how your marketing campaigns are performing is important - but you shouldn't be analyzing that data in hopes of a way to cut costs, but in a way to spend more efficiently. As you analyze and shift the structure of your campaigns based on past performance, make sure you're also keeping an eye on how limiting one element may be impacting the performance of another.

Some elements, like content marketing, can be hard to measure the ROI of, and limiting spending on that front could have an impact that is masked by less data. Or your eBlasts might be performing well because of the familiarity with your logo that comes from banner impressions, even if the banners aren't necessarily performing as well as you might hope.

Want to learn more about marketing with BroadwayWorld? Start by requesting a media kit, and one of our sales representatives will reach out to discuss how BroadwayWorld marketing can fit in and enhance your current marketing.

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