By Caroline Wright
And if you’re a promoter, you might have had a visceral reaction, even had a twinge of pain, when you saw that sadly obvious, last-ditch effort to build an audience.
Right now, there’s a Living Social deal in my area for a big dance event next week. Publicity for the event seems thin -- its Facebook page has just 20 invitees, of which only 3 have committed to attending the event, and not a word about it appears in local news. It looks as if the promoter, desperate to fill seats, decided to offer slash-rate tickets through a DOD.
However, another local promoter has found a fairly creative and proactive way to harness the true power of deals-of-the-day: as a vehicle for pre-sales.
Though still practically nascent, the BAMP Project of Honolulu has produced successful events with Smokey Robinson, Morrissey, Jimmy Cliff, Cake and other internationally acclaimed artists. When I received a Groupon email for a BAMP event far, far in the future -- a big multimedia show by celebrity chef Robert Irvine of Dinner: Impossible -- I called BAMP cofounder Matty Hazelgrove to investigate. Obviously, BAMP was doing something very, very different with DOD.
IB: What did you know about deals-of-the-day before you started?
Matty Hazelgrove: I’d seen Groupon used before for live events. It seems like it’s usually used for events that aren’t selling to their fullest capacity, and people want to try to invigorate interest by having a deep discount. We thought that looked like an act of desperation, and felt it was unfair to the people who purchase in advance.
We’ve also heard a lot of negative stories about how Groupon negatively impacted some peoples’ businesses, because they didn’t think it through about how it would all work, and next thing they knew, they were getting pennies on the dollar for their product, and they couldn’t really concentrate on regular business because they were so overwhelmed with the business coming through for a reduced rate.
IB: So why did you decide go with a DOD for your Robert Irvine show?
Hazelgrove: We thought long and hard about how we can utilize Groupon to be a benefit for an event. Groupon has a huge database of people who are interested in good deals. We figured the best way to keep the correct image of the event was to do this as a presale.
We looked at it this way: If we can reach a lot of people through a mass mailing through Groupon -- and granted, we’ll be taking a significantly lesser portion of the revenue than we normally would -- but as long as we control it on the front end, we can dictate how many tickets we’ll have available, and at what price level we want to discount those tickets so it doesn’t hurt our bottom line too much. It’s actually marketing that directly pays for itself. We’re only taking a reduced portion of the revenue if the ticket is sold -- but if the ticket is sold, it’s basically paying for itself on the spot. That’s the approach we’ve taken. I think it probably will be our ONLY approach when using Groupon.
IB: Would you have priced tickets differently if you weren’t offering them through Groupon?
Hazelgrove: We lay out all the expenses and revenues up front. For this particular event we have three price levels -- P1, P2, P3. We increased the quantity of P3 and set the location of those tickets in close proximity to the stage. Though the seats are really close to the stage, we’re getting the same amount of revenue we would have gotten for the nosebleed section. We’re not losing out on revenue; we’re accounting for it up front. Instead of selling the $35 tickets in the nosebleed section, we gave people the added value of them being directly behind the $150 seats. It took us a while to figure out how we could make it work for us.
IB: What was your experience of the Groupon organization?
Hazelgrove: They’re very easy to work with. They provide a service, and they definitely want to get compensated for their service. I can’t disclose the exact terms of the deal, but they do require that you offer at least a 50% discount, and of the remaining 50%, there is a revenue share with Groupon.
IB: Is Groupon the only DOD service you considered?
Hazelgrove: Yes. It seems to be the one that has the largest reach. If we’re going to treat it like a marketing expense -- a marketing engine for us, basically -- we want it to reach as many in-boxes as possible. That makes the most sense for us. [Groupon mails to different segments of its database] based on the discount you’re offering, or the type of event. Some deals go to everybody; some only go to a specific segment.
IB: When did your mailing go out?
Hazelgrove: A couple months ago, and it only lasted about four days. We didn’t sell the entire quantity we had allocated, but we sold about 80% of them. We’re pretty happy. We’ve definitely benefited from the Groupon sales.
IB: Any other advice for promoters who might consider using a DOD to sell tickets?
Hazelgrove: Think it through and incorporate it into your business plan on the front side, as opposed to using it solely in a last-ditch effort to fill seats. You just have to make sure you use it to your benefit, as opposed to trying to sell $50 seats for $25 at the last minute, when you really need to sell those seats for $50. It might take a while to figure out how to make it work for you, but if you can give it enough forethought, it can be a very powerful tool.
In four days in April, BAMP sold at least 120 pairs of tickets at $86 per pair, for gross revenue of more than $10,000.