Competing for Attention: Why Arts Organisations Need Bigger Marketing Budgets or Smarter Targeting
TLDR
Arts organizations spend significantly less on marketing compared to similar industries. CPG companies allocate about 25% of revenue to marketing, and entertainment companies spend over 14%. In contrast, arts organizations often spend less than 10%, sometimes as low as 1.7% in subsidized markets, and up to 8.7% in entrepreneurial markets like the US. Competing with CPG and entertainment for attention, cutting marketing budgets is dangerous. To secure their future, arts organizations must invest more in targeted, efficient marketing.
Arts organisations spend a lower proportion of their revenue on marketing than industries with similarly complex products. While CPG (consumer packaged goods) companies spend around 25% of revenue on marketing, entertainment and media companies spend just over 14%.
Arts organisations spend less than 10% of their revenues on marketing their products and services. This can be as low as 1.7%, especially in markets with high subsidies for cultural institutions (looking at you, German performing arts institutions). In more entrepreneurial markets such as the US, marketing spend can be as high as 8.7% of total revenue.
Arts organisations are in direct competition with CPG and entertainment companies. They target similar audiences and share the same budget (spendable income) and very often are in direct competition of peoples attention and time.
As more and more advertising spend flows into advertising marketplaces, where prices are set based on advertisers' demand to reach customers, the direct competition becomes even more transparent.
As arts organisations already struggle to compete for the attention of potential customers and to ensure that their performances and shows are discovered by audiences, the current trend to cut marketing budgets is downright dangerous.
Reducing resources to market offerings when you are already being seriously outperformed by competitors in the market for attention, especially for not-yet-future customers, will have a massive negative impact on future revenue, recognition and attendance in the long term.
If management wants to secure the future of their organisations, they need to invest more, not less, in marketing their offerings. Reducing marketing resources will further cement their organisation's decline in relevance.
What is needed is more investment in understanding customers and targeting them more efficiently, and more tailored messaging to try and compete with much bigger budgets and teams.
