“Marketing generates cash flow in the short term, and identifies sources for future cash flow in the long-term” –Roy Young and Allen Weiss, MarketingProfs
Theatre marketing is only about promoting your production, and sending out twitter updates.
It’s about getting posters and flyers up in your local community.
It definitely involves updating your website with your show’s information.
It’s certainly not about looking at numbers & finances.
In order to truly understand and promote the value of your marketing activity, you need to be measuring it against financial objectives.
Firstly, it allows you to see which marketing material is performing well andproviding value for money.
Secondly, it shows your theatre company, that investment into your marketing activity is not being wasted and will provide you with the required information you can use to enhance any request for additional marketing investment.
Your key financial objectives should focus on what is important to the future growth of the company. Not the activities that you do on a day-to-day basis.
Including financial objectives into your marketing strategy will ensure that your company is mindful about the impact that your marketing is having on the overall success of the theatre, and will help you optimise your marketing budget.
As with any objectives, three key questions you need to ask for your financial objectives are:
- What am I measuring?
- How will I measure it?
- When am I measuring?
1. What Am I Measuring?
When trying to understand and set financial objectives, the key area you should focus on is marketing program ‘Performance’.
‘Performance’ metrics should focus your objectives on the incremental contribution of your marketing program.
When looking at a revenue element within these metrics, you’re not measuring only the cost of your marketing, but the positive impact your marketing has had on your theatre’s bottom line, i.e. what revenue it has generated.
In each of these key areas, it’s imperative to think about what metrics andobjectives you’re measuring, and depending which metrics you use, will depend on whether you want to see the past to identify trends, present to look at current snapshots or the future to help you plan your forecasting.
2. How Will I Measure It?
Once you identify your objectives and understand what you want to measure, you’ll be in a position to allocate different metrics to your financial objectives.
Some of the metrics you could utilise are:
* Investment – The volume of budget you’re investing into your marketing activities.
* Return on Investment – The incremental net profit of your marketing activity divided by your marketing investment.
* Response Rates – How many prospects are responding to your marketing against the volume that either receive or see your marketing?
When measuring impact on revenue, it’s important to measure the profitabilityof your audience. Some of the metrics you should be looking at are:
* Average Admission Price – The average sales price you charge for admission, tickets, or even memberships.
* Standard Acquisition Cost – New audience members divided by marketing investment allocated to acquire new audience members.
* Average Revenue p/Customer – The average revenue an audience member spends p/attendance.
3. When Am I Measuring It?
Depending on the size of your theatre will greatly impact on how often you report on your objectives. Generally speaking, the larger your theatre company, the more frequently you need to conduct your reporting.
The three key periods that you will find yourself reporting on, will be weekly, monthly or quarterly.
You can choose to view your reporting objectives as either a snapshot of time, or as a trend.
I find snapshots useful for granular information and weekly reports, but to understand the bigger picture and to get the most out of your report, observing trends will show you where the sands are shifting.
Armed with tight and concise marketing financial objectives, your marketing will become more attuned to what it needs to achieve, and provide you with the necessary insight to enhance your activity.
Not only will financial objectives begin to have an impact on the revenue that your marketing generates, it will also allow you to have meaningful discussions with the budget holders of your organisation demonstrating the financial returnof marketing investment.
Not only will they be less prone to actually cut your funding – with results and information showing how your marketing is adding to the company’s bottom line – you will even find your team on the receiving end of additional marketing budget!
If you’re focusing your objectives on making your marketing cost efficient, and only reporting on the costs of your marketing, you’re only getting better at learning how to spend less on marketing, when you should be learning where to invest more in the future to generate returns.
Marketing objectives shouldn’t just be about digital impressions, Facebook likes, or number of flyers distributed. You need to consider what financial objectives your marketing is driving, and what you’re doing to reach them.
Key Take Outs:
- If you measure your marketing activity on ‘cost’ the finance managers, will see your marketing as a cost expense, and not an investment.
- Try to focus on incremental revenue your marketing is responsible for.
- Less is more. If you’re not sued to setting financial objectives, focus on a key few, rather than too many.
- Snapshots are just that, for immediate use.
- Metrics that focus on past activity provide a view of any trends.
15 Minute Project
- 1. Choose 4 key financial objectives. Don’t overload yourself to begin with.
- For these 4 objectives, outline what success looks like, make concise metrics, and measure ‘success v objectives’.
- Determine against each metric whether you are looking to the past, present or future.
- Against each objective, list how often you will report on your metrics: weekly, monthly, or quarterly.