Is Your Event Profit Proof?

What's the "inconvenient truth" about selling online?

You'll go broke, says blogger Steven Dennis.

"Only a handful of venture capital-funded “pure-plays” have (or will ever) make money," Dennis says.

The rest (including Amazon) operate at below-average margins for the retail industry, amassing huge financial losses year upon year.

Of themselves, free shipping and liberal return policies guarantee these companies will remain "profit proof," Dennis says.

Worse yet: the cost to acquire a customer. When it comes to customer acquisition, web retailers suffer "diseconomies of scale," Dennis says.

"Many online brands attract their first tranche of customers relatively inexpensively, through word of mouth or other low cost strategies," he says.

But then, marketing costs start to escalate.

"As brands seeking growth need to reach a broader audience, they typically start to pay more and more to Facebook, Google and others to grab the customer’s attention and force their way into the customer’s consideration set," he says.

"Early on customers were acquired for next to nothing; now acquisition costs can easily exceed more than $100 per customer."

The higher the acquisition costs, the lower the gross margin on the resulting incremental sales, a dynamic that eventually lands the business in hardship.

Whenever I plan an attendee acquisition campaign for an event producer, I budget the marketing efforts using, give or take a few bucks, the same amount of money Dennis mentions—$100 per attendee.

Want 500 attendees? Plan to spend at least $50,000.

Some event producers balk—How can it cost so much?

But after more than three decades in the event-promotion business, working on events large and small and in a variety of industries and professions, I've found it a real-world rule-of-thumb.

And most producers who spend that kind of money on marketing can, in fact, run a successful event and go home with a tidy profit.

The "diseconomies of scale" only enter the picture when registration fees are low ; or when producers discount and give away registrations; or—the worst case—when admission to the event is free.

Of course, attendees are a necessary evil: without any, exhibitors have been known to complain. But they need not have "negative value" when registration fees are low (or nonexistent).

Attendees can be little ambling profit centers.

How?

Sell attendees livestreaming.

Events are cornucopias of content. When you capture that content on video, you can sell it to attendees for post-event consumption. None of them can be in two places at once, so none can possibly imbibe all the content you offer. What's more, every attendee loves to share good content with colleagues "back at the ranch." Why deny them that pleasure?

And why make your event "profit proof," when it can be enormously the opposite?  "Back-of-the-room" sales of livestreaming come cheaply, because attendees are already in your "store." The gross margin on the incremental sales you make will come at an extremely low rate—almost for free, if you already videotape content for projection purposes, as most producers do.

Want more food for thought? Check out my posts "Conference Planners: There's No Sin in Syndication" and "Just be Willing to Believe."

NOTE: CEIR reports that average attendee-acquisition costs currently range from $14 to $20 per person. But I don't believe the figures are reliable. My own past research, done in the 2000s, showed acquisition costs to range from $68 to $80 per person. CEIR's report, nonetheless, can help any producer get a grip on event-industry spending trends, and is worth studying.

Outside the Lines

Companies aren’t looking to sponsor events, they’re looking for marketing opportunities.

Ed Lord

Event producers are lousy, on the whole, at designing 21st century sponsorships, and at helping sponsors activate them.

Far too often, they pitch sponsorships as if they were seeking the charitable funds necessary to defray operating costs. And just as often they vamoose after the sale, leaving sponsors feeling like castaways.

But sponsors don't want to be funders; they want to be thought leaders. And sponsors don't want to blend into the wallpaper; they want to be integral to the attendee experience.

The good news: one in two event producers wants to improve, according to research by GES. "They're willing to take a look at new opportunities that allow sponsors to customize the relationships they have with eventers—resulting in a win-win-win connection," says EVP David Saef.

Event producers who are delivering win-win-win connections are coloring outside the lines—some outside their industries; others, outside their venues.

Live Nation, for example, wrapped a sponsorship with Hertz around attendee hospitality and privilege.

Live Nation partnered with Hertz to enable concertgoers to rent cars when they bought concert tickets on line. Live Nation then cordoned off the parking spots in front of each concert venue—the best ones of all—for exclusive use by Hertz rental customers. The company also allowed the customers to go backstage to meet the performers.

Wound Ostemy and Continence Nurses Society created a 21st century sponsorship for device manufacturer ConvaTec by leveraging event content.

The society partnered with ConvaTec to livestream its annual conference to nurses unable to attend the face-to-face event. An average of 150 nurses attended each livestreamed conference session, generating brand awareness and leads for ConvaTec outside the venue.

Cash Cow

Event producers are gaga over a cash cow who never stops lactating.

It's the broadcast technology known as live-streaming.

American Association of Occupational Health Nurses exemplifies those bullish producers.

AAOHN wanted to engage the 80% of members unable to travel to its 2016 annual conference, says David McMillan of PCMA. So it live-streamed the content, charging the same price for the virtual as the face-to-face experience. Sixty members ponied up the $500. Better yet, a sponsor paid $25,000 for the right to hand out free tickets to customers.

With more footage in the can, AAOHN is "sitting on a stockpile of additional educational content and potential revenue," McMillan says.

But live-streaming does more than immediately monetize events; it publicizes them.

Live-streaming "operates far beyond the traditional broadcasting model," says Tom Owlerton on CMO.com. 

"At its best, live-streaming helps brands go from storytelling to storyliving; they can broadcast behind-the-scenes at big, topical events to share footage that people wouldn’t otherwise get to experience first-hand."

Live-streaming from events, due to the buzz it creates through social media and word of mouth, "can create a huge impact."

The kind that converts to moo-lah.