Thursday, September 7, 2017

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.


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.
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