For quite some time now airlines have been offering users the ability to select their seats online when purchasing tickets. In the past few years performing arts organizations have been implementing SYOS tools on their sites allowing patrons to choose their exact seat locations. As a consumer, I love being able to pick where I am going to sit both when I am planning an airplane trip and planning a night at the theater. As an arts marketer I know that building a flash-based SYOS tool on my website is expensive and resource-intensive. So the question I’ve wondered is: “is investing in SYOS technology worth it?”

Yes, the discussion about discounting tickets on Broadway has become almost dull to even talk about. We say the same thing over and over again. We all know there are hundreds of discount offers sent monthly via email to hundreds of thousands of consumers generating tens of thousands of tickets sold. We all know that our discount email practices are showing a clear trend of a shift in many full-price ticket buyers converting into discount ticket buyers. This is no longer even arguable as there are stacks of data that support this point. The issue has become – what do we do about it?

One answer is to simply do nothing about it. Hey, overall revenue continues to go up for Broadway.

Essentially, as an industry, it seems as though we have moved the top ticket price upward (both prime orchestra and premium seating) which in many ways has subsidized the reduction of ticket prices for the rest of the house through selective discounting. In addition, we have essentially begun to cut out the middleman (either intentionally or unintentionally) – group sales and FIT resellers – and have gone direct to consumer with our messaging and discounting strategies. When you boil all the numbers down, overall attendance really hasn’t changed in quite some time yet the industry today gets significantly more revenue per ticket than ten years ago.

If you look at it that way – is the pricing model really broken? What business wouldn’t love to see an estimated 70% + increase in the cost-per-unit sold column over a 10 year period?

I am one that believes that we should all be very happy with the overall revenue growth of the past but we should also be proactive in making sure we can keep that growth as we move into the future.

How do we remain proactive in advancing our pricing strategy? I’ll give you my novice opinion – feel free to let me know where you think I’m either wrong or completely off-base.

I think to start, I would suggest keeping an eye on three major trends that I think are both happening around us and having a profound effect on business as I type this email.

They include:

Trend: Social media is infiltrating the way we now communicate with Broadway ticket buyers

Effect on Broadway: The discounts that Broadway is sending out via email is now being distributed through a variety of additional channels which is ultimately eating into full-price ticket sales

I think we can now officially debunk the myth that all of those discount email offers that are sent out daily are being delivered to ‘theatregoers’. Simply put, your discount offers are now distributed well beyond email throughout the web whether we like to believe it or not.

Consumers online have become inherently social and Broadway content publishers are being forced to adapt to consumer needs. Our studies show that 50% of Broadway ticket buyers now belong to a social network. Five years ago people wanted to get their offers by email but there is a much larger trend that is occurring – people want to have their content delivered to them in the way that best works for them. Some want it on Facebook, others on Twitter and others by mobile alerts. This has forced practically all of the Broadway and theatre publishers who send out discount ticket offers by emails to now also have either a public listing on their website with those discounts, a Twitter feed promoting the discounts, a fan page on Facebook with discount listings or a profile on RetailMeNot (or other bulletin board websites) listing all of their discount offers. All of these distribution platforms then live within Google where there are tens thousands of searches daily for Broadway ticket related keywords. In short, these discounts are often the first thing consumers see when they are looking to purchase tickets.

Someone sees your TV spot/radio ad/billboard/online ad, then makes their way to Google to find you and lands on one of these discount offers. This is much more common that many people realize. Currently, this means that we are likely leaving somewhere between 30% – 40% of the revenue per ticket on the table through these discounts. I think it’s important to note that many of these people are tourists – the folks we are ultimately banking on to pay full price for tickets.

Over the past few weeks I’ve finally come to the school of thought that we now must really throw out the idea that “going to the booth” is somehow more damaging than sending out a discount offer to an initial email list of 250,000 plus members which is then repurposed indefinitely through a variety of online channels.

There is NO end in sight for this trend and you can only expect the problem to get worse over time. And please, don’t take my word for it – run a few Google searches, run a search on Twitter or simply talk to the folks at your ticketing company. It’s not just my paranoia.

One possible idea to help control discount code distribution would be for Telecharge and Ticketmaster to create a technology that allows for the creation and redemption of one-time use promotional codes. That means if I get a discount code and use it to buy tickets, the offer code ends there. I believe this would instantly crush much of the discount abuse from happening (or at least give us the option to test in areas to start weaning people off the regular discounts). It would put a thorn in the side of some folks in the secondary market and would make bulletin board websites offering discounts less relevant as a channel for ‘guaranteed savings’.

I don’t think anyone (including myself) really feels discounting is a bad thing – I think the general consensus is that we need better tools to optimize and control the offers. And, my personal feeling, is that we need to make our discounts make consumers work a little more. Discount offers should be offered for the not-so-great seats or have to be purchased either really far ahead of time or really last minute. By offering open ended discounts in many respects is a slap in the face of the full price buyer and is ultimately bad for long-term customer relationships for the Broadway industry.  Also, which I will cover in the next part of the article, I think we need to keep our discounts at a level that doesn’t undercut the FIT or group sales rate whenever possible to keep our sales partners wanting to work with us.

I know of many shows that will still want their offers to go far and wide like they do today but I also know many others (particularly the bigger hits) would love to find a way to selectively discount.

I know there will be technology limitations to all vendors being able to send out emails using the one-time use coded system – but, like all things technology, when there’s a will, there’s a way. Furthermore, when there is money to be lost if it doesn’t happen, things often work themselves out.

To me, if we expect to continue to advance and improve our discount strategies using some kind of coded system, I think some kind of shift to limitation on specific code usage will be absolutely necessary. Many other industries use this now to protect from the very problem we are currently facing.

Trend: The Internet has revolutionized the FIT business and has completely changed the way consumers research and book their travel

Effect on Broadway: Our current pricing model for FIT business is missing a major opportunity to convert tourists before they arrive in New York City

Attendance really hasn’t changed for Broadway in almost ten years. The FIT business sales figures have risen over that same period but still currently sit at about 20% of total sales (on the higher end). Meanwhile, the rest of the travel and tourism industries have gone
through one of the biggest transformations in how they can now sell their tickets to tourists.

I have some travel clients who sell more than 50% of their tickets through the reseller market – I’m talking millions of tickets annually. They offset their marketing and advertising expense by shifting to a sales commission model – meaning they are paying a commission to a reseller for every ticket they sell on their behalf. While all is not always rosy in selling through resellers, it feels odd to me that we are still only sitting at 20% of sales. We are a category – in fact, we are the #1 category that consumers say they want to do when they visit New York City. Why are we carrying the load of selling the other 80% of tickets by ourselves when there are thousands of OTA’s (online travel agents) booking large numbers of transactions for New York City activities online through a commission-only basis?

If you are a hit – it most likely makes sense to sell directly to consumers which is the current model. Why pay commissions on sales when you have such heat that sales are pouring into you? But, if you have a lot of inventory, why not consider shifting some of your marketing and advertising costs towards subsidizing commissions to resellers who will guarantee you sales for payment?

I believe one reason has been an issue of agreeing on an acceptable commission structure. My general sense (and when you look at most of the current FIT rates), is that many producers are reluctant to give a deeper discount on the ticket or increase the commission to the seller. I don’t fully understand why but I really think now is the time that we need to become more dynamic in how we approach setting and adapting the FIT rate.

Why? Because if you look at just a piece of the FIT business of Expedia, Travelocity and Orbtiz, we have the opportunity to have Broadway brands in front of millions of bookings completed each year from consumers across the globe. Yes, many shows are currently listed on these sites now but just about every show is offering what equates to full-price tickets (or more) to these consumers. These are consumers looking for ‘value’ – and with our current FIT rates set the way they are, we are giving them NO incentive to book in advance by offering them a full price ticket. On top of that, our FIT rate also leaves little incentive for our partners to even want to promote us to their audiences. Until we create and adapt our rates that incentivize both the consumer and our resellers, we will just continue to miss the major opportunity of reaching out to tourists before they arrive in market. And, just to stress one other point – it’s not just Expedia, Travelocity and Orbtiz. It’s rental car companies, hotel websites, airline websites – all of these companies are in search for ancillary revenue and they all currently operate through the FIT model.

Here’s where I get the most confused when you think of how we currently do business as an industry. I’ll do a quick formula which I know is far from completely accurate – it’s just meant to illustrate a point.

Many Broadway shows currently promote a $65 discounted ticket price on popular email lists with little concern. We all know this kind of offer immediately comes with a marketing cost of $60 cost-per-ticket (assuming a $125 ticket price). Then, let’s just layer on an advertising costs of let’s just say $20,000 to send out a few emails promoting the discount offer.

If we sell 3,000 tickets @ $65 per ticket we would yield $195,000 in sales. Currently, I feel the mindset says – we spent $20,000 and made $195,000 in sales – that’s a 10X ROI! In some respects, this is true as many of these seats would have gone dead without the push and the incentive.

But, when you factor in the true cost-per-transaction, it tells a VERY different story. When you factor in the discount given on each ticket, you then have an additional opportunity cost of $180,000 that needs to be factored in to the total marketing cost. So, the $180,000 cost of the discount and the $20,000 cost in the advertising, makes it a long-term losing proposition. That’s $200,000 cost for $195,000 in revenue. That is a marketing cost of $66 to sell each-ticket at $65. That’s not sustainable even though it helps reduce losses in the short-term.

With this knowledge, why can’t we be more aggressive with the FIT rate? With the average FIT rate of $95, we still have about $20 worth of wiggle room per ticket when you take out the appropriate commissions to make our resellers work harder for us and still be ahead on selling $65 discount tickets. Why don’t we tier the commission structure? Sell more than x tickets, we’ll give you a rate $85 per ticket. Sell x (+y) and get a rate of $75 per ticket.

If they sold more tickets, you would ultimately have to spend less in marketing and advertising and most likely fill houses further in advance.

I could be totally wrong here – but, at a minimum, I think this needs to be explored. It’s a standard formula being used outside of Broadway in the live event and travel space and my gut just says it’s an opportunity that really needs to be taken advantage of on Broadway.

Trend: The secondary market has continued to become incredibly savvy and efficient using online technologies

Effect on Broadway: We are losing control of the most critical point of the Broadway buying experience – the conversion

Personally, I feel that every ticket sold in the secondary market represents an incremental revenue lost by the primary market. Have you noticed how sophisticated some of the secondary market ticketing engines are? They have wide ranging affiliate programs reselling Broadway tickets on thousands of websites. They are price aggregators giving consumers the best options to search for availability. They aggressively purchase search terms and have incredible organic search placements. They are so far ahead and only getting further ahead in terms of using technology to drive ticket sales. What’s more impressive when you really think about it – they are, for the most part, selling a significant number of tickets above face value.

I think it’s quite telling when you Google ‘Broadway’, ‘Broadway shows’ or ‘Broadway Tickets’ and the number one listing is Broadway.com. All data points to Google being the primary driver on how consumers ultimately connect with brands. As an industry, we spend over a hundred million dollars every year promoting Broadway shows but where these consumers often end up is at a cash register where we most often have the least control.

I wish I had even a possible answer to this problem. Is it a ‘best rate guarantee’ that is offered on the official ticketing sites? Is it a push to stress our legal muscles a bit more to block the way our brands are marketed without our control?

I think it’s something that really needs to be explored as we can only expect technology to advance rapidly and these secondary market folks to be at the forefront of many of these changes.

So, those are just three trends that have concerned me the most as of late. While I like to consider myself a practical optimist, I’m not foolish enough to believe we will be able to adapt to these trends overnight. But I am hoping to begin a conversation with many of our clients and folks within the industry on how we can reduce the amount of money we are leaving on the table and to protect the value proposition of seeing a Broadway show.

I sincerely believe we are at a boiling point calling for change – I hear from folks across the industry who continue to sound the alarm on the problem yet little change is being made. If I can get my head together,
I will organize a meeting of the minds particularly around the FIT side of the business in the coming months

Would love to hear your opinion on all of this.

Let’s pretend I’m the Producer of a show and ‘Jeff’ is a travel agent who sells Broadway tickets. Like most shows do, I send out an email blast with a special discount offer of 2 for 1 tickets to a …

We have seen show websites generate thousands of group sales leads.  The tricky part is converting those leads into actual purchases.  There are so many variables to consider when trying to close a group order that every show must listen to closely to the group sales agents to hear what issues may be holding your show back from closing new sales.

Continuing the conversation on the current state of group sales, we spoke with TDI’s Janet Robinson to get some of her thoughts on questions we have relating to group sales.

(theSITUATION): How would you say the Internet has affected the group sales business?

(JANET ROBINSON): We get a lot of inquiries through the Internet.   As there are many questions, answers and detailed information that is required for a group sales order to be processed, we often have to communicate with the client by e-mail or telephone. It is rarely a simple transaction of just placing and filling an order. 

(tS): Is there a recipe for a type of show that will do well with group sales?

(JR): In general, musicals and comedies are most popular.  If we are selling to a student group (which is a very large component of group sales) a show that has some educational factor will often have great appeal.  Shows with stars and long running shows also have great appeal with tourist groups as they have proven the test of popular staying power.

(tS): Is there an ideal time that producers should start pushing forward with their group sales outreach?  Has this timeline changed over time (i.e., are people booking earlier, later, etc.)

(JR): As soon as a show has a definite opening date and a price scale, it is time to get the word out to groups (an actual theatre is not always necessary)   Student groups have the problem of not being able to pay for their orders if it is not within their actual calendar year but (other than that exception) it is never too early to advise groups about an upcoming show.  Some tourist groups are booking later than in the past. 

(tS): How important is the pricing strategy in group sales?  Do shows that go out with a steeper discount perform noticeably better?  Can it hurt you long term if you go with a steeper discount too early?

(JR): Many groups (particularly students and seniors) are price sensitive and will do much better with discount tickets than full prices tickets.  A big hit will still do well with full-price tickets but will see a big group increase when they begin to discount their tickets. Pre-opening discounts or “seasonal” discounts can be a great advantage to shows and should have no negative effect on the shows longevity if used judicially.

(tS): What’s on the horizon for group sales business?

(JR): We are certainly using the Internet as a marketing tool to a much greater degree than in the past.  We, of course, will continue to use traditional tools such as regular mail and advertising but, clearly, a much greater part of our client base is now coming through the internet.

Group sales are a critical component to the overall success of a Broadway production.  There are so many variables that play into a successful group sales strategy that we went straight to some of the key players in the group sales market to get their answers to some questions we had.

First up, Charlie Flateman from Telecharge.com.

(theSITUATION): How would you say the Internet has affected the group sales business? 

(CHARLIE FLATEMAN): As with every other product or service, the wide and nearly instant distribution of information through the internet has provided group leaders with much more information about the show they

Fandango, the nation’s largest movie ticketing service, has partnered with TicketsNow.com to begin selling Broadway tickets.

So, is this good news for Broadway? Well, not exactly. We ran a search for a Wednesday night for a show that is currently …

Click here to take a look for yourself.

Ah, the great topic of ticket pricing. Do we raise our top ticket price? Do we offer more affordable pricing for sections of the theatre.

Now, the new hot topic may become variable pricing.

As we are sure many of you read last week in The New York Times, the concept of variable pricing may be hitting movie theaters in the near future. According to Peter C. Brown, who runs the nation’s second-biggest theater chain, AMC Entertainment, “I predict we will see it within a year.”

What is variable pricing? Well, in the case of the movie theater industry, it simply means you will pay more for a ticket on the weekends and less on weekdays. You’ll be able to buy a reserved seat in the center of the theater for a few extra dollars.

Should Broadway be next to follow? Should a ticket to a Tuesday night performance cost the same as a Saturday night performance? Should one show that opened to rave reviews have the same pricing structure of one that is simply not as “hot”?

Or, is this pricing strategy dangerous for Broadway or simply not feasible?

What is the discount price that tips prospects into paying customers? There is no blanket answer to this question but there are trends we see in response rates that we believe can help us maximize our marketing efforts. Months back, we tested a campaign for a Broadway musical and wanted to share some of our findings that could help shed some light when formulating your next discount ticket offer.

The scenario:
A Broadway musical was looking to fill select performances that they felt were weak in attendance. In order of priority, we were focusing on Tuesdays, Wednesdays and select Thursdays. It closely resembled the airline industry’s approach of selling airfare.

The solution:
To target building sales for select performances on the official website. A tiered discount was offered on eight performances. Four performances were for $65 orchestra seat tickets. Four performances were for $75 orchestra seat tickets.

The results (after 7 days of the campaign):
$65 Ticket
Total of 4 available performances on a Tues or Wed
# of tickets sold: 115 tickets

$75 Ticket
Total of 4 available performances on a Wed or Thurs
# of tickets sold: 16 tickets

$101.25
All non-discounted performances
# of tickets sold: 41 tickets

Our conclusion:

• The discount price ruled over all other variables.
• There was no movement on the second-tier price ($75). It seems as though people either wanted the best price or the most convenient performance to attend.
• People were willing to purchase tickets for an immediate performance with the discount.

Moving forward:
What we felt was most interesting about the campaign is that this helps support the theory that discounting specific performances based on demand (similar to the travel industry) has legs. A Tuesday of this week could be $65 and next week could be full price if the market conditions support it.

Each show has different buzz levels, audiences, marketing channels, etc., so it’s difficult to draw one final conclusion moving forward. But, for now, it’s something to consider when putting together that next discount mailing.

With all of the hype surrounding the Las Vegas theatre market, we decided to do some research of our own on the Las Vegas market.

We came across a research study that was available for free from MRCGroup Research. Now, …

Click here to read more from the study.