How To Maximize Profits From Events

When I worked for SportsChannel Chicago, we ran an annual kids’ basketball tournament. It was billed as a promotional event. Make no mistake though, it was a profit center. A recent TFM article by Jacobs Media Strategies’ Fred Jacobs got me thinking about that event. While Jacobs’ article relies heavily on radio group examples, it’s also applicable for television.

It’s no secret that TV stations are great at promotion. Stations’ promotional abilities are one of the chief reasons that advertisers trust TV to market their products and digital media enterprises are investing so heavily in video programming or platforms to support video.

This is also the driving force behind a strategic decision by many TV and radio stations to evolve from simply being an event’s media sponsor to running a full-on events marketing operation.

Unfortunately, as Jacobs points out, running events isn’t the same thing as running a station or a network. Events require significant investment and specific financial expertise along with some risk taking. Having overseen a number of conferences and other events for MFM, I can certainly attest to that.

However, the pressure to find new areas of revenue, particularly NTR — non-traditional revenue — has helped coax some stations and groups out of their comfort zone. In fact one radio station group is currently generating as much as one-third of its total revenue from its event management operations.

Stations and station groups are wise to test the waters before diving in headfirst. As Jacobs bluntly explains, most local stations and the companies that own them “are simply not equipped to design and manage a scalable and successful events program. There are hundreds of variables, including talent management, ticket sales and pricing, security and even the weather.” There’s a lot at stake.

Organizing A ‘$3 Million Weekend’

The rewards can prove to be well worth the risk for stations that find the right formula. An early example of a station-managed event that found noteworthy success was a radio-sponsored concert festival, the HFStival, created by WHFS-FM Washington-Baltimore.

“The margins were rough to start,” Robert Benjamin, the station’s program director at the time, recalled for Jacobs. “Breakeven was 40,000 tickets sold. We sold the event out with 57,000 with a week to spare.”

The event went on to sell out RFK Stadium over the next five years — in just two hours — and later accomplished the same goal at both the Baltimore Ravens venue, M&T Stadium (85,000 tickets), as well as a second show at RFK that attracted another 57,000 people. Mel Karmazin, who was Infinity/CBS Radio’s CEO at the time, called the festival “the $3 million weekend.”

Creating Event Marketing Divisions

Jacobs’ article describes how two broadcast groups varying significantly in markets and size have followed WHSF’s lead and established their own event marketing divisions. The first is Townsquare Media, which ranks as the country’s third-largest AM-FM operator, with more than 300 stations. The other is Galaxy Communications, a small, family-owned company with stations in just a handful of markets, primarily in upstate New York.

One thing that both station groups have in common is the fact that they operate in small and medium-size markets. As Townsquare CEO Steven Price pointed out to Jacobs, “Audiences and advertisers in small and mid-size markets are underserved in terms of great media and live event options. They are, therefore, less competitive markets and optimal to build a diversified, multi-product company that has large audiences across all platforms.”

That’s also been the experience for Galaxy Communications, which has focused on its local markets and built a reputation for community service and a strong commitment to the region. “Being a big fish in a little pond really is a good thing,” notes company president Ed Levine.

Owning Events Increases Revenue Potential

Townsquare and Galaxy also place a heavy emphasis on digital marketing and owning the events. “Over the years, I grew wary of being ‘media sponsors’ of an event, which meant we’d get a $2,000 spot buy and the promoters would hang a crooked banner off a stage somewhere,” explains Galaxy’s Levine, a former program director. “So we eliminated the middleman and in many cases, became the actual promoter ourselves.”

At Townsquare, event marketing is part of an even larger game plan, featuring digital content and strong local sales efforts. As its CEO Steve Price explains, the concept is to “operate the largest local digital content business, the largest live event business and the largest digital marketing services business in our markets.”

“So for both Levine and Price, event marketing is part of the equation, but the bigger win is broadening the definition of each company to provide more for advertisers than traditional spot radio campaigns,” notes Jacobs. “Each has a strong affection for the radio business, but sees their respective companies as providing considerably more to marketers.” That sentiment would ring true for many TV stations as well.

Choosing Events

When it comes to deciding which events to own, radio and TV stations are looking at the synergies that already exist between their on-air programming and experiences with prior events. For Galaxy Communications, that means investing in festivals such as “Taste of Syracuse,” and two Long Island-based beer and wine events. Townsquare has pursued a similar strategy, buying up events around the country that complement its local and regional footprint.

There are also many examples of TV stations that have taken the event management plunge. They include the annual “9Health Fair,” operated by Tegna’s KUSA station in Denver, which offers “comprehensive, convenient and affordable health screenings” at locations throughout the state of Colorado.

Several years ago, attendees at MFM-BCCA’s Media Finance Focus annual conference heard from Miami’s WPLG-TV, now a BH Media station, on its decision to transition from its media sponsorship role into managing a number of health, education and community events. Among them is the annual “South Florida Mega Job Fair,” which features more than 2,500 job openings from scores of local employers looking to fill positions.

Regional-level success stories include Raycom Sports’ Belk Bowl, one of the most successful non-BCS bowl games, featuring the ACC versus the Big East. Both the bowl game and the ACC Championship football game are owned by a nonprofit entity, with Raycom involved in operational aspects of both games.

Rewards Can Outweigh The Risks

While making the shift involves a lot of time, money, and event management expertise, these companies are finding it worth the effort. When combined with its other digital media initiatives, event marketing surpasses 40% of Townsquare’s total revenues and it represents more than a third of Galaxy’s.

Last summer, Townsquare received what Jacobs describes as “the MSG seal of approval” when Azoff MSG Entertainment, a venture with the Madison Square Garden Co., acquired an equity stake in the company, giving it a valuable strategic partner for growing the operation.

“Yes, we take capital risk on our events as we are the promoter and producer. And yes, in some cases, we lose money,” Townsquare’s Price told Jacobs. “But in 98% of cases, we make money because we have a disciplined approach to capital allocation and risk mitigation.”

What’s New In 2017?

If you would like to read Fred Jacob’s full article, you can download a copy of the March/April 2017 issue of our member magazine, The Financial Manager, from our website for a limited time. Event marketing is also likely to rank among the NTR topics we will be discussing when the industry’s finance professionals gather for Media Finance Focus 2017, our 57^th annual conference, which will be held in Orlando May 22-24.

In the meantime, I hope you will take a few minutes to share what’s working for your company and how industry resources like MFM and BCCA can help you to take advantage of opportunities for maximizing your event marketing potential. We always find readers’ comments interesting. And, as I have learned both in my SportsChannel Chicago days and again here at MFM, when targeted and managed properly, efforts expended on events are more than worth the risk.

Mary M. Collins is president and CEO of the Media Financial Management Association and itsBCCA subsidiary, the media industry’s credit association. She can be reached at[email protected] and via the association’s LinkedIn, Twitter, or Facebook sites.