How Analytics could shine the lights forward for the Performing Arts Organizations
‘Analytics is not a technology issue, it’s a strategy and operational issue.’ — Chris Mazzei, Global Chief Analytics Officer, E&Y.
2020 was a dreadful year for most performing arts organizations, as most performing arts halls have gone dark with the escalation of the pandemic. Many of them, whose main source of revenue has been ticketing sales, are exploring new revenue streams and other strategic changes in the face of huge losses. With an uncertain future and potentially facing post-pandemic tectonic shifts in the industry, many organizations are dabbling with big data analytics to transform how they organize, operate, and create value. One of these organizations is the Mondavi Performing Arts Center (Mondavi Center), a non-profit on-campus performing arts center at UC Davis with state-of-the-art facilities.
I have the privilege to lead a practicum team of four to provide strategic ideas on business transformation to the Mondavi Center, which is our team’s industry partner for the UC Davis M.S. Business Analytics program. As the Project Manager for the practicum team, I have observed four areas in which analytics could be instrumental in transforming business operations and redefine strategies.
Know Thyself:
‘Know the enemy and know yourself; in a hundred battles you will never be in peril.’ — Sun Tzu, The Art of War
One of the focal points in devising a sound strategy is to first know yourself as an organization and understand where your competitive advantage lies. Strategy is an externally oriented concept of how the company could achieve its objectives. It rests on choosing a distinct set of activities from competitors to deliver a unique mix of value and accomplish its strategic positioning. For instance, the Mondavi Center relies on its regional dominance as one of the pivotal strengths in achieving its mission; that is to illuminate, educate, and connect with its advocates, members, students, and faculties in UC Davis and the Yolo County. Tapping on its status as a regional powerhouse, the Mondavi Center has established long-term member loyalty, where a large portion of its bottom line is composed of donations from its advocates.
Analytics can serve as a major identifier to unravel organizations’ strategic positioning. Over the past few months, the Mondavi Center has conducted an identity survey analysis to collect data from its patrons, inquiring about their impression of the Mondavi Center. The practicum team is looking at conducting topic modeling on the survey data to determine what are the common themes, topics, and emerging issues surrounding patrons’ impression of the Mondavi Center, to identify its strengths and areas of potential improvements. Additionally, we are also looking at conducting sentiment analysis on the survey data collected, to uncover the satisfaction of the patrons. The escalation of the pandemic poses a risk, but also an opportunity for various performing arts organizations to have time to explore how to navigate the post-pandemic industry landscape. Other organizations in the industry could employ similar methods to what the Mondavi Center has done, to ascertain their strategic positions.
Business Development:
“The individualist without strategy who takes opponents lightly will inevitably become the captive of others.” — Sun Tzu, The Art of War
The follow-up action to knowing your strategic position is for organizations to pursue data-driven business developments, which accelerates its pace towards reaching its strategic positioning. In its pursuit, the Mondavi Center has unveiled a new product called HomeStage, which is an online product that brings the traditional live performances online at the comfort of our homes.
The purpose is two-fold. Firstly, the coronavirus restrictions prolong the daily average screen time of a person, many of whom are looking for entertainment sources online to escape from the bleak reality. Featuring productions online could potentially capture this temporal trend. Secondly, most arts organizations need to grow specific segments of their audience. By going online, the Mondavi Center also seeks to attract the younger patrons who have the same artistic tastes as current patrons but are comfortable with digital media, to replace their aging customer base.
The practicum team is using Google Analytics to analyze the customer behavior on Mondavi’s ticketing website. We want to find if HomeStage can sell customers an experience as close as a live performance. While there are many details to smooth out, our initial findings are promising. Around 40% of our customers who are watching HomeStage are located outside of the Yolo County region, this means that there are new audiences that could be captured. These are patrons who might not watch a live production at Mondavi Center but could watch Mondavi’s productions online.
Analytics can also be a helpful tool to uncover changing customer behaviors in an uncertain industry landscape. The Mondavi Center is proud of its world-class facilities, and it would like to maximize its advantage and have people back in its theatres. The Mondavi Center is using A/B testing to find out whether having smaller bundles offering the same discounts will be an impetus to drive more people back to the Performance Hall and boost sales. Organizations in the same industry space could also utilize such methods to unravel changes in consumers.
Budgeting:
Budgeting is an important consideration for both for-profit and non-profit organizations, where analytics may have already played a huge role in forecasting revenue and profits. As a non-profit organization, Mondavi focus on featuring productions that are educational to its targeted demographics. Yet, the need to maintain fiscal responsibility remains. In striking a balance between education and profitability, Mondavi needs an accurate prediction in revenue and profit, to ensure a healthier financial bottom-line. A healthier financial bottom-line means that Mondavi can have a higher risk appetite, to propagate productions that are unique in genres and high in value of illumination and education. Likewise, this is an important consideration for the other organizations, where analytics could play a huge role.
Marketing:
As people stuck at home during the coronavirus pandemic, we have been spending more of our lives online, with social networks growing faster than ever, such as Instagram. Many performing arts organizations, akin to the Mondavi Center, have an official Instagram account that can be used to gain exposure and engage with patrons, as well as a channel that broadens their customer reach.
Organizations could make use of the metrics embedded within the Instagram business accounts, to optimize their business strategy. Metrics on the demographics of Instagram users, such as the top locations, age-range, and when they are on Instagram the most, can provide insights to carry out targeted marketing and push targeted content at specific populations. Organizations can also use the aggregated reach and impressions to find out what are the most popular shows for Instagram users and see if those posts resonate with our Instagram followers. Additionally, organizations with more annual productions and data, as well as higher on the analytics chain could also consider building a recommendation engine that makes use of convolutional neural networks, to recommend productions to its customers.
Risk of applications:
Big rewards come with big risks. Gartner reported around 85% of big data projects will fail. This could be due to numerous reasons; organizational change is difficult, and it proves more difficult to change the mindset of how people work, especially for those in traditional sectors that have yet to embrace or undergone full digital transformation. Stakeholders may also be unwilling to sponsor findings that use fancy algorithms that are hard to fathom. There could also be operational challenges. For instance, we were told that many artists are unwilling to have the performance broadcasted online, particularly without a clear and proven structure.
In summary, good use of analytics could shine the light on how performing arts theatres could move forth to accomplish their strategies, especially in unprecedented situations we are facing today. While changes are often difficult, leaders in the field could help to embrace those changes, and set precedence for others to follow. Just like many other industries in the big data era, I believe analytics could be a deciding factor of success for the future of the performing arts industry.
