Marketing / 02.13.23
How Much Should I Spend on Event Advertising?
As soon as a show’s talent is booked, the hard work begins. We all know a show’s potential revenue hinges on multiple factors, many of which are beyond your direct control (e.g., the weather, competing shows the same night, the performer's willingness to help promote, etc.). However, one of the keys you can control to maximize financial return on an event is budgeting wisely for your marketing campaign.
How much should I budget to advertise my event?
This age-old question has caused headaches for many event producers and marketers. Many follow a general rule of thumb by allocating 15%–20% of their total potential gross revenue at sell-out. For instance, if a show has 2,500 tickets to sell at an average price of $40/ticket, producers stand to collect a total of $100k if all tickets are sold. After applying the 15%–20% principle, the resulting budget is between $15k and $20k for marketing. Although this is a good starting place, you still have to narrow down how much of that budget should go toward digital advertising — currently the most popular and measurable way to sell tickets.
How much should I spend on digital advertising for my event?
Bauer Entertainment Marketing’s squad of marketing mathletes recommends “working backwards” by calculating your digital ad budget based on how many tickets must be sold to generate an acceptable profit.
Example: Let’s say your goal is to earn $45k in ticket sales from digital advertising. At $40/ticket, that equates to selling 1,125 tickets. On average, fans purchase 2.7 tickets per order. To achieve $45k in gross revenue, you’ll need to convert 417 orders from digital advertising.
Typically, 2% of unique clicks on ads convert into orders. Therefore, it will take about 20,800 unique ad clicks to yield 417 orders. Remember, not all clicks are unique. Commonly, the same people get served ads more than once and then click multiple times. Roughly 80% of total ad clicks are from unique individuals, so 20,800 unique clicks equate to approximately 26,000 total ad clicks.
While the average cost per click (CPC) is between $1–$2, BEM often achieves a CPC under $1 through highly effective targeting, graphics and copy. So at $0.50 CPC, we project that 26,000 total ad clicks would cost about $13k. In other words, we project it would cost $13k to sell 1,125 tickets and generate $45k in revenue. For added context, that is a solid 4X return on ad spend (ROAS).
To calculate your ad budget, we suggest the following formula:
Revenue Goal / Ticket Price = Number of Tickets Sold
Number of Tickets Sold / 2.7 Ticket Per Order = Number of Orders
Number of Orders / 2% Conversion Rate = Unique Ad Clicks
Unique Ad Clicks / 80% of Total Ad Clicks = Total Ad Clicks
Total Ad Clicks x $0.50 CPC = Advertising Budget
Voila! We recommend testing various revenue goals, conversion rates (based on your analytics reports) and CPCs to help determine your final budget. With a smartly crafted budget in hand, you can then develop your ad campaign’s strategy (i.e., selecting channels, scheduling and targeting) then launch! But wait — you aren’t done yet…
How should I measure my digital advertising campaign’s effectiveness?
To learn our formula for determining ongoing campaign profitability, we invite you to contact BEM! We’ll help you plan, implement and optimize your event’s advertising for maximum ROI.
This article was sponsored by Bauer Entertainment Marketing
Tags: Marketing , Budget