Everyone wants to know how much a show is worth. It all comes down to how many tickets can be sold compared to how much the show costs. This is precisely why concert promoters are hired. Their job is to sell tickets to the show. How they do that is up to them, but some marketing expenditures bring a greater return.
Promoters are always asking themselves how much they should spend on marketing to make sure it’s a successful (a.k.a. profitable) show. Depending on the promoter, a reasonable marketing budget to promote a small show could be as little as $250 and others wouldn’t consider spending anything less than thousands. What is the best way to set a marketing budget and how should it be spent? We’ll break it down for you.
Setting The Marketing Budget
Something a promoter understands but the average public may not is that the cost of a ticket doesn’t just go to the band they paid to see. There are a lot of industry hands stretched out waiting for their portion of that ticket cost. The Guardian shared an interesting article that dives into the inner workings of the live concert industry. Of course, every concert is different and there’s no way to get exact stats, but there is a formula.
Here’s where they say the money typically goes:
- 10% goes to booking and processing fees, some of which may end up in the pockets of the artist and promoter
- 5% goes to taxes
- 0.1% – 0.8% of what’s left will go to songwriters in public performance royalties
- The remaining 84% goes to artists and promoters
Now, 84 percent sounds great, right? But that doesn’t mean the promoter goes home with that money. Instead, that’s what’s left that the promoter has to work within the budget. That’s 84 percent of the ticket costs they have to spend on fixed expenses, personnel, equipment, and such…and somewhere in there is marketing.
By the time everyone is paid who gets the concert ready and keeps it moving, there’s about 50-70% of ticket sales still remaining. “A commonly quoted figure is that the promoter will take 15% of what is left and the act will get 85%. But it will depend on if the promoter really has to work to get the show to sell out or if they are pushing an open door and demand is so high it sells out in seconds. In those instances, the promoter may get as little as 5%.”
Embedded in that quote is the kicker: marketing. How much does that promoter have to market the show to get people in the door? How much is a promoter willing to spend on marketing to make sure that happens?
The marketing budget requires the promoter to take the gross potential (the total that can be made if every concert ticket is sold), back out the estimated costs to put on the show, then determine the maximum marketing spend from what remains. For instance, if the growth potential is $10,000 and the costs are $5,000, theoretically, there would be $5,000 left to spend. Marketing would be only a percentage of that $5,000, however. The promoter would want to profit something for his/her work, so the take-home pay has to be backed out as well. What’s the minimum ROI that makes the concert worth it?
Set your marketing budget by understanding concert profit potential, subtracting your other costs and the income you want to bring home. Whatever is left over is what you have to play with when it comes to marketing. The more you spend on marketing, the less money will be left over for you.
Now, before you get all cheap on us and decide you’re just going to put out a few Facebook posts to advertise the concert, think again. Your budget is based on ticket sales. If you don’t do enough marketing, you are at a high risk for seats not selling. Your artist may be playing for a half-filled room. This reduces your starting point, your budgets and how much you can take home. If you spend too much, on the other hand, you’ve eaten up your margin and have less to take home as well. It’s an ROI game, one that must be balanced carefully to maximize profits.
How to Spend The Marketing Budget
Once you determine a marketing budget you can live with, the next step is to determine how to spend it. What efforts will generate the biggest bang for your buck? You likely can’t spend the same on every concert. Instead, have a formula or a system where you can modify your base rate. If it’s a well-known artists that already has a lot of notoriety, you may not need to spend a big percentage of your budget on marketing. On the other hand, if it’s a new artist you’re promoting, you may have to be creative in reaching an audience, eating up budget but getting those tickets sold, nonetheless.
Facebook is the number one avenue promoters spend money on to advertise. Facebook isn’t free and if promoters don’t target the right audience with the right message, it can be a waste of money. Promoters must take the time to understand the tricks and tips to get the most out of Facebook. If done properly, paid Facebook advertising can lead to earned media where you pay nothing while your “fans” promote your concert beyond your initial paid media blitz.
A lot of promoters wonder whether print advertising in the form of ads in newspapers and magazines or street teams (posters around town) really work. Print advertising can be expensive, depending on the outlet. For print advertising be a good investment, promoters must identify those publications with the viewership of its target audience. Posters should be hung where that target audience frequents most and in places where posters are easy for fans to take a pic of and share on social media.
Never underestimate the power of radio when it comes to selling concert tickets. While it may seem old-fashioned, particularly if the concert appeals mostly to millennials and younger, the radio exposes a massive audience to the advertising. Promoters can also include music snippets in the ads to help listeners identify the music and appeal to their emotions so they buy tickets. There are several forms of radio to consider, but all give you access to an engaged audience.
Other Digital Media
Other digital media like Twitter, Instagram, and Google AdWords can be effective as well. The only issue with these outlets, particularly social media, is that they require the viewer to follow those pages. Unless they are shared by those in their circle, they may never see the advertisement. Social outlets are great, however, to target specific audiences and when used properly, can be highly effective.
Email is another form of targeted marketing. It can involve internal lists promoters have from fans, followers and subscribers to newsletters. Promoters can also buy email lists from providers to reach more people, however, these lists come at a price.
Most promoters will use a combination of two or more of the above outlets to promote their show. This shotgun approach ensures you can cover a larger population.
“A penny saved is a penny earned” may be the truest statement ever made. While the cost of marketing comes out of the show budget, personnel costs, time and resources aren’t something a promoter can bill back to the show. As a promoter, you eat those costs. That’s why the more you can reduce your costs, time and resources, the more money you take home.
The best way to do this is through automation. When you can automate your processes, you can do more in less time. First, think about how much time and effort you’re spending in personnel doing all the things you need to do. Every phone call, every calendar update, every spreadsheet entry, every report you generate, every settlement you create…all of that and more takes time and your time is money.
The worst part of the promoter workflow is the inefficient systems and processes required to get everything done. Most promoters work from manual spreadsheets, transition to separate calendars, then to a settlement application, financial software and then back to a spreadsheet. There are so many steps and each one is wrought with the risk for human error. When you step back and look at other industries and how integrated their processes often are, it’s amazing to see how the live music industry is still so stuck in the past.
Invest in an integrated platform that brings all of the many tasks you do as a promoter under one, consolidated roof. You’ll be more organized, efficient and productive because everything is in one place. It’s easy to track status, get updates and know where everything is without having to go anywhere else. That, my friend, is efficiency in action and it will enable you to keep more of your share of the concert ticket sales.
As a promoter, what you bring to the table is marketing expertise. You are being hired because you know how to sell tickets. Do what it takes to sell the most tickets and do it as efficiently as possible so you can actually make good money being a promoter.