For anyone who has ever run an event of any description, they would understand the nervousness of underwriting ticket sales, hoping that the revenue generated would cover the cost of holding the event, and perhaps even make a small return. Costs can be quite considerable – venue hire, staffing cost, transaction expenses, the cost of the “talent”, as well as catering can all add up quickly. So how does an event organiser ensure that they will not be left holding the can if ticket sales do not cover costs? The answer may well lie in Crowd Funding.
The typical scenario in organising an event is to commit to the costs, and then to start selling tickets. The stresses ramp up as the organiser gets closer to the date of the event, yet revenue from ticket sales still sits short of the income required to cover costs. Many panic at this point, spending more money on promotion, thus raising costs, and discounting remaining tickets, thus increasing the amount that need to be sold to cover the expense of the event. It really is, in many cases, an example of biting off more than you can chew and then chewing like crazy.
Crowd Funding can totally change the way in which events are now run, ensuring that ticket sales meet the requirement to cover costs before a commitment is made to holding the event. It also engages those who purchase tickets to then become advocates for the event, to ensure that the event does proceed as planned. Consider this…..
Imagine you are planning an event, perhaps a concert. You need to commit to venue hire as well as paying your performer, the staff, and food and drinks for the event. Your total costs are $10,000 (OK, I didn’t say that the performer was an A-lister). If your average ticket price (across the cheap seats right through to the front row) is $100, you will need to sell 100 tickets before you no longer have to reach into your own pocket to cover expenses. If you follow traditional protocol, you are committed to holding the event as soon as you start to promote it, no matter if you sell the required 100 tickets or not. The more you fall short of the 100 ticket mark, the more pain you will incur.
But the whole scenario changes if you run the sales process through crowd funding….
You would set up a crowd funding campaign, the project being your concert. In the project description you outline all the details of your event, the performer, etc. You also explain that the campaign, as with most crowd funding campaigns, is conducted on an “All or Nothing” basis. That is, the campaign will only transact and the project will only proceed if you meet or exceed your funding target in the campaign timeframe. Your funding target is then set at the amount which will cover the budget to hold your concert, plus a little more to cover the costs of a crowd funding campaign.
Rewards for such a campaign are relatively easy to then put together. Entry level rewards could be a simple note from the performer, sent directly to those who make a small pledge. Ticket sales are the most obvious rewards, with the various reward tiers being matched by the various levels of ticket pricing. Stretch rewards (rewards for higher pledge amounts) could be made up of corporate recognition, backstage passes, or even recognition or participation in the show itself. Such creativeness takes some of the pressure off ticket sales, as you come up with more rewards to offer which represent alternative and additional income streams.
Promotion of the crowd funding campaign is then done exactly as you otherwise would have done for the concert itself, with two far greater benefits. Firstly there is the benefit of having more on offer than merely ticket sales. You have all the other rewards tiers which you can spruike about, so there is a broader story with which to hit social media, moreso than just the event itself. Secondly, there is the urgency of the concert not proceeding if the funding target is not reached in the campaign timeframe. This is where you can not only build some urgency around ticket sales or pledges, but those who have purchased tickets will also become advocates for you (especially with a bit of gentle prompting) as they tell their crowds to jump on board and pledge, for if other don’t they themselves might miss out due to the event not proceeding.
In the event that the funding target is not reached, it will mean you have not sold sufficient tickets to cover your costs. In this case, the pledges would simply dissolve (you would not have to issue refunds as the pledges would not transact until the end of the funding period and only if the target had been met or exceeded), and those who had bought the few tickets you had sold would completely understand as to why the event was not going to proceed. This way, you are also well placed to opt out of your commitments in terms of the costs (you will have a good indication during the campaign, and not have to wait until the end of the campaign before you start to flag your intentions with your suppliers).
In the event that you reach your funding target, you can always add more rewards, or more of each one already on the campaign. You will have the funds committed so you can make arrangements with your suppliers. You will have the flexibility to upscale as you will know what funds are coming in and when.
Crowd funding – underwriting your creative, commercial, charitable and community events.