June 28, 2009

 

INTERVIEW WITH MICHAEL KAISER

Hello everyone.

"And the beat goes on........................"

INTERVIEW with MICHAEL KAISER

I heard Michael Kaiser - head of the Kennedy Center for the Arts since 2001 - speak at the Commonwealth Club in San Francisco last month, and asked him if we would sit for a brief interview. Michael's ideas and positions on a number of issues facing the arts community are thought provoking, and I think you will enjoy his responses to my questions.

Here is a quick bio: Michael M. Kaiser is President of the John F. Kennedy Center for the Performing Arts. Dubbed “the Turnaround King” for his work at The Kansas City Ballet, the Alvin Ailey Dance Theater, the American Ballet Theater and the Royal Opera House, Michael has earned international renown for his expertise in arts management. A Cultural Ambassador for the U.S. Department of State, he advises performing arts organizations around the world, working with arts leaders in over 60 countries. He has created an online education forum for arts administrators at artsmanager.org, where professionals and students in the field can share experiences, seek employment, and post opportunities. He founded “Arts In Crisis: A Kennedy Center Initiative” in early February, which is currently providing free arts management consultation to almost 350 arts organizations across the United States.

And here is the interview:

BARRY: You have gotten a lot of media attention lately about your advice to struggling arts organizations that they should not make cuts to their artistic programming or to their marketing budgets. You’ve said that you think “that the problem is almost always not spending too much, but no development of adequate revenue, and that cost cutting is not a good long term strategy”. At the core of your philosophy is the mantra for arts organizations “to produce great art, well marketed”. For those readers not familiar with your argument, can you please expand on what you mean?

MICHAEL: I believe that the fiscal health of arts organizations depends on a robust inflow of revenue. What creates cash flow? Good programming (artistic and educational) supported by aggressive marketing. And yet, troubled arts organizations invariably cut these two areas first, since they represent discretionary spending. What evolves is a vicious cycle of less programming and marketing yielding less revenue yielding more cuts, etc. etc.

This is especially true in the current environment. When arts organizations are competing for a smaller pool of contributed dollars and ticket sales, they must compete harder, not less hard. This means more interesting programming and more aggressive marketing. When arts organizations are forced to cut budgets, I prefer them to cut these two vital areas last. I prefer to save on everything that does not relate to programming and marketing. Sometimes cutting these two areas is required but it should be a last resort.

BARRY: Following-up - You are quoted in a February of this year piece in the Washington Post as saying that you are: “not as concerned about smaller organizations -- which are used to dealing with difficult situations -- as (you) are about groups that are misdirecting efforts at downsizing.” But for those small to medium organizations that have undergone huge budget cuts due to declining revenues from virtually all of their sources, and thus may have no choice left but to cut either marketing or programming, what would you tell them to do? Many are in danger of closing their doors. Is part of the problem that the arts & culture sector is overbuilt with too much duplication for the marketplace to support? Left alone the marketplace will arguably weed out poorly managed organizations and those that don’t attract sufficient public support – and most of those will likely be smaller or newer organizations. Are we more likely then to see only the larger cultural institutions survive in the new arts landscape?

MICHAEL: What I said was that I am most concerned for the mid-sized organizations because they do not have the flexibility of the smaller organizations and do not have the resources of the larger ones. Mid-sized organizations typically have developed a larger infrastructure that is at risk in this environment. I am very concerned that the organizations that are ‘weeded out’ will be the ones with underpowered managements, not necessarily those with poor artistic product.

BARRY: In your remarks to the San Francisco arts community at a Commonwealth Club address last month you observed that arts organizations, in their attempts to fundraise, too often fail to market “caring about our organizations”. You opined that we should better market the organization’s image and value, and that institutional marketing (selling and branding the organization itself) need not be prohibitively costly. What did you mean by that? Do you have any practical advice to offer organizations to more effectively do that?

MICHAEL: I believe that there are two types of marketing: programmatic marketing and institutional marketing. Programmatic marketing is the marketing we all do – advertising, brochures, web sites, etc – to sell tickets. I am more concerned about institutional marketing – the things we do to get our communities excited about us as an organization. In my experience, it is these activities that drive fund-raising. Example of institutional marketing include major artistic and educational programs, special events, exhibitions, high profile appearances, etc. There is a classic example of the institutional marketing we did at the Alvin Ailey American Dance Theater in my book, The Art of the Turnaround.

BARRY: You also said that you believe ‘individual donations’ are the key to fundraising stability for the arts. I assume you have concluded that the other sources of arts income -- corporate, foundation, and government support, combined with earned income are all inadequate or unreliable – or both. Is that right? Please explain why?

MICHAEL: I believe that grants from governments, foundations and corporations are bounded. Arts organizations that rely only on these sources will not grow with inflation or beyond. There is no limit to the amount of individual donations that can be raised.

BARRY: Another point you made in your talk, was that arts organizations often need a different Board of Director composition at different stages of the organization’s growth, and that the culture of the Board must change as the organization grows. How do you recognize when that culture needs to be changed and how do you get Board members to move on when that time comes?

MICHAEL: I believe it is clear to every arts executive when a board is not functioning properly. Frequently the board is ‘poaching’ – making the decisions that the staff should be making. Or the board members may not be as involved with the fund-raising of the organization as is needed at that point in its history.

Someone, ideally the Board Chair or the Head of the Nominating (or Governance) Committee will work with the Executive Director to determine a course for re-shaping a board. I have frequently asked a board member to resign a seat to make room for someone who can better serve the organization at that time.

BARRY: One of your suggestions that caught my interest was that arts organization leaders ought to make a list of the 100 people in the community who could change the life of their organization. Can you elaborate on that concept and how it could be used? You also said that a valuable exercise for the leadership of arts organizations is to carve out time each week to consider how to make next year easier. What did you mean?

MICHAEL: I believe that in every community there are 100-300 people who could truly help the organization if they were engaged. I suggest every arts organization make such a list and work aggressively to bring those people to events, meet with them periodically, make sure they see important news stories about the organization etc. A disciplined campaign to reach these people is required.

I believe that what makes next year easier is to do the institutional marketing today that brings new audience members, donors and Board members to the organization and enlivens those that already exist. So making time to do institutional marketing every week is essential.

BARRY: What do you think the role of the NEA ought to be in the current arts & culture economic climate? Do you think the endowment should shift any of its priorities? Do you think it ought to re-think where its’ funding goes? Do you think it ought to launch new initiatives that address specific weaknesses in the arts management ecosystem? Is the Arts In Crisis initiative you have launched at the Kennedy Center to help troubled arts organizations something the Endowment should have done? Why or why not?

MICHAEL: I am not qualified to say how the NEA should function. I do believe that the majority of funding should go to small and mid-sized organizations (and organizations that serve under-served populations). I also believe that all grants should be challenge grants. I am not certain whether the NEA has the people resources to mount programs like Arts in Crisis.

BARRY: You observed that most arts organizations need a new perspective every decade. Do you think senior leadership at arts organizations should have term limits; that key employees should have a sunset date (like the Hewlett Foundation imposes) when they should be required to leave the organization?

MICHAEL: I do believe that there needs to be turnover amongst personnel, particularly artistic personnel in presenting organizations. I do not think that is required in producing organizations, and certainly not in founder-driven organizations. I cannot prescribe exactly how long a term should be.

BARRY: Apart from the economic problems facing arts & cultural organizations, what do you think are the major challenges facing the arts & culture “field” as a whole, and what thoughts can you share about how some of those priorities might be addressed.

MICHAEL: I think our biggest challenge is our inability to increase productivity. This means that we suffer from inflation so much more than other industries. This means that we have to find ways to cover our costs. Historically this was accomplished by raising ticket prices but we have priced ourselves out of the market – many people can no longer to be habitual arts consumers. I believe we have to work to increase our fund-raising capabilities so we can reduce our reliance on ticket prices.

This requires far more sophisticated marketing and fund-raising knowledge that many arts professionals have; we need to spend more on arts management training if we are going to have robust arts sector in the future.

BARRY: You said that you think major donors give larger amounts of money to organizations when those organizations become part of their social lives. I can see that in the largest cultural institutions like the major symphonies, ballets, operas and museums in the major cities. Do you think that works across the board irrespective of the size or the organization, and how do organizations (particularly smaller ones) increase their role so that they are a larger part of their major donor’s social lives?

MICHAEL: Absolutely. I see many smaller organizations, and community organizations, playing a central role in the lives of their constituents. This is something that any arts organization can work to achieve.

BARRY: What has been your experience thus far with your online Arts Manager.com “Arts In Crisis” support program for arts organizations? What insights into the management of our organizations has offering this service taught you? Do you think there ought to be some kind of institutional / systemic training opportunities made (widely) available to arts leaders so that they might improve their managerial skills levels? Looking at that issue from another perspective, how can we mentor younger arts administrators and provide them with quality professional development training and nonprofit business skills enhancement if much of our current senior arts leadership never got that kind of support in the first place?

MICHAEL: I have been trying for two decades to get the funding community to appreciate the need for better arts management training. We spend so much on training artists but so little on training the people who must find the resources for their work. It makes no sense to me. The biggest thing I have learned from all of our arts management training programs is that there is a tremendous thirst for training, and that board members need training as well.

BARRY: I ask this question of every interviewee. If you had one million dollars that you could spend any way you wanted to improve the arts & culture sector, how would you spend it (different from the Arts In Crisis program, as that program is already up and running)?

MICHAEL: I would select ten amazing young, small arts organizations and give them each $100,000 to plan and produce a life-changing set of programs.

Thank you very much Michael.

Have a good week.

Don’t Quit
Barry

June 23, 2009

 

REPORT FROM AMERICANS FOR THE ARTS SEATTLE

Hello.

"And the beat goes on...................."

REPORT ON THE AMERICANS FOR THE ARTS SEATTLE CONFERENCE:
GENERAL OBSERVATIONS:

1. Great turnout: 1200 people attended. Down from the record 1400 in Philly last year, but more than anticipated. General feeling of delegates that the current economic tough times (like the post 911 period) increase the need to gather and network and be around each other. Good cross section representation. More from the west coast than otherwise the norm because of the location. Most attendees continue to struggle to deal with budgets and cuts.

2. Seattle is a beautiful city. Hadn’t been here in five years, but the city continues to shine – beautiful, young, vibrant, easy to navigate. Most memorable view was from the windows of the 35th floor lounge of the Renaissance Hotel where they held the Friday night late night equivalent of prior years’ Hospitality Suite – Bob Lynch on the piano, impromptu vocals by Moy Eng, Marion Godfrey and others (why is it foundation program officers have such good voices?).

3. This year the conference was centered exclusively at the Convention Center (and that worked well ) but with delegates housed at five separate hotels in the area, there was no real sense of the conference in the hotel lobbies and lounges, and I missed that feeling and the ongoing opportunities for casual conversations.

OPENING SESSION:

The great value of this conference over the years has been the networking opportunities. The Opening Session – with a ballroom full of people – many of whom you haven’t seen for awhile produces two feelings: First you are heartened to be back among friends; to see many respected and admired colleagues again; and Second, it is enormously gratifying that there are so many of us in our sector.

You get a real sense of the depth and scope of our reach, and of our potential power. It is empowering and puts the isolation of daily work back home into perspective. In fact none of us are alone. We are part of a huge, dynamic, living sector. It is reassuring to be reminded of this every once in awhile.

BILL IVEY Remarks:

Bill Ivey, Former NEA Chair and Obama Team Arts & Culture Transition Team Captain, shared anecdotal stories of how the Obama team approached the integration of our sector into the launch of the new Administration – including consideration of a future cabinet level position and the $50 million of Stimulus money for the NEA. For the latter, there were apparently plenty of back stage debates and lobbying - and the fear that inclusion of that money for the Endowment would set off opposition arguments against arts funding (which arguments did indeed come to pass) was countered by Bill and his allies to beat back the Coburn Amendment which would have banned any stimulus money going to the arts field (like our jobs aren’t real jobs?). Bill noted that two events helped position the arts well in the new administration: First, Hollywood Producer George Stevens was an out of the gate Obama supporter, and he teamed up with Broadway Producer Margo Lion to launch an Arts Policy Committee to support Obama’s candidacy (and, according to a number of well placed sources I spoke with in Seattle, Margo Lion was the likely force behind the nomination of Rocco Landesman as Chair of the NEA (click here for a link to the story and encouraging news that President Obama wants a “game changer” in the post – www.laurencejarvikonline.blogspot.com ; and second the Americans for the Arts initiative to get the arts on the priority agenda of all the presidential candidates in the New Hampshire primary combined to set the stage for increased awareness of and commitment to our sector by the President (who, Bill described as having an “instinctive cultural presence”). Those two moves are a departure for the arts sector in that they were proactive moves designed as a foundation on which we could build movement. Too much of our advocacy legacy has been reactive to crisis. These two moves are proof that to the extent we can create foundations on which to build, we will reap greater success in our lobbying of government for our needs and the intrinsic value of what we do.

Together with Americans for the Arts and a host of other players, Bill spearheaded the fight to get and keep that $50 million in the Stimulus package and all of those players should be congratulated for their deft and skilled handling of lobbying for arts & culture’s role for America for the future. One observation I found particularly telling, was Bill’s recounting of White House Chief of Staff Rahn Emmanuel’s observation on the economic meltdown: “Let’s not waste this crisis.” There is much food for thought in that observation that we can, and should continue to use. Our economic crisis, while likely to cause sea changes to the way we do business, is also likely to have profound impact (much of it negative) to those communities where we live and work. We need to make sure our communities know exactly what is at stake if we are not included as essential services to be protected during this time. We can’t afford to waste this crisis and let the negative consequences to our sector go unknown to our local publics. Bill observed that he thinks we would have lost the $50 million NEA Stimulus money were it not for the (Americans for the Arts Action Fund led) grassroots efforts of the field that rallied in support of the money when challenged by the (ultimately defeated) Coburn Amendment. Doug McLenann taped a brief interview with Ivey that can be accessed here: www.artsjournal.com/diacritical/2009/06/bill-ivey-talks-about-obama-an.html

Bill also noted in his remarks, his thesis set forth in his book Arts Inc. published last year, that market forces and sloppy public policy have pulled arts & culture away from the public’s best interest. His continuing goal remains to get the West Wing to take on at least a modest portfolio of arts policy objectives and to abandon the practice of thinking of the arts as an “amenity”. He shared his belief that arts & culture will likely, for the first time, be represented on the Domestic Policy Council under Obama, but that there remains a challenge to our community (arts administrators, arts educators and artists) to continue to press Obama and Congress for an expanded role in policy formation. And he noted too that while arts organizations are expert at managing scarcity, we need to stop playing victim.

Finally, Ivey argued that we must continue to make convincing arguments for the contribution of arts & culture to the sustainability, livability and ennobling of our communities and noted the value of tools such as Westaf’s Creative Vitality Index.

AFTA Annual Report:
As time was short for the opening lunch, Bob Lynch’s AFTA Annual Report was brief. He noted the drop in the percentage of philanthropic donations going to the arts, the 3% dip in attendance figures for arts events and the continuing budget cuts to local arts organizations both public and private. He also noted the number of successful attempts to secure more funding, and the rise to 100,000 enrolled members in the Arts Action Fund and the enormous value those people helped to play in protecting that Stimulus money when it was attacked. (More on the Arts Action Fund below). Click here for AFTA’s 2009 Strategic Plan: www.americansforthearts.org/about_us/environmental_analysis/default.asp

AWARD WINNERS:
Two Californians and long time friends were Award Recipients at the Opening Luncheon: Victoria Hamilton (San Diego Commission for Arts & Culture) won the Selina Roberts Ottum Award for exemplary leadership qualities, and Bruce Davis (Arts Council Silicon Valley) won the Michael Newton Award for innovative fundraising. Other awards went to: Randy Engstrom (Youngstown Cultural Arts Center) 2009 Emerging Arts Leader; Sheila Smith (Minnesota Citizen for the Arts) 2009 Arlene Valkanas State Arts Advocacy Award (Sheila led an outstanding drive to secure dedicated state revenue for the arts); and artist Buster Simpson won the 2009 Public Art Award. The Dallas based company Big Thought won the 2009 Arts Education Award for best arts education program design. Congratulations to all. I think we should have more awards – local and national – for exemplary work. It costs nothing, it raises visibility, and there are more than enough deserving individuals. Recognizing our own is something we should do more of.

GRANTMAKERS IN THE ARTS Sessions:
There were two Grantmakers in the Arts sessions and both were highlights of the conference from my perspective – highly informative with lots of practical information, expertly presented by very sharp panelists.

The first GIA Session was a recap on current research on arts funding – here are some of the highlights: (Go to www.giarts.org/for a complete report on all the listed studies in this first session. Download the Summer 2009 issue of the GIA Reader from the home page)

The GIA STUDY: Based on polling information (and not strict scientific balanced data):

Foundation assets (dedicated to the arts) were down 22% in 2008 – from $608 million to $520 +/-.

• As Foundation money is calculated on a three year average of interest earnings, the figures for 2010, 2011 and 2012 are likely to be worse across the board.
• 2009 total giving will decline between 9 and 12%.
• 40% of foundations intend to keep their funding level with 2008 10% plan to increase funding
• 50% are likely to decrease funding, but aren’t yet sure how to apply any cutback.

Foundations are trying to adjust their grants to help economically challenged grantees by:

• Allowing endowment grants to be used on an accelerated basis.
• Allowing multi year grants to be spent over a shorter basis (e.g. a three year grant can be spent in two years).
• Releasing restrictions on grants and allowing program funds to be spent (in part) on operations.
• Some foundations are dipping into their own endowments and awarding funds beyond the interest earned on those endowments.
• Foundations are cutting back their own operational costs in line with the reductions of their grant pools.
• The arts sector hasn’t historically suffered more than other nonprofit sectors.
• Marion Godfrey of the Pew Foundation noted Pew is husbanding its resources in anticipation that there will be less available funds for grants in 2010 and 2011.
• The most pessimism as to available arts funds is in the Community Foundation community and in the corporate sector.

THE ARTIST TRUST STUDY: Based on an unscientific and somewhat anecdotal survey of 1500 artists in Washington state – Puget Sound centric (i.e., more Seattle responses than rural) with a 67% response rate – 690 individual artists – with more visual than performing artists responding.

The negative economic impact from the artist’s point of view:

• Sales are down
• Demand is down
• Income is down
• Morale has taken a heavy hit

Artists want (in order):

• Small micro “bridge” grants to get by
• Business training (particularly in marketing and on-line skills)
• Access to low cost materials & supplies
• Convened opportunities to network with peers
• Affordable workspace

ARTS AND THE RECESSION – Helicon Study #1 of arts organization responses to the recession:

• 25% are proactive – employing a range of creative approaches to fund raising, program creation, and audience development
• 60% are informed but cautious in their responses and many in this category aren’t sure how to proceed
• 15% are in denial that the sky is falling for them and aren’t doing much of anything different

Other findings:

Funding is down across the board:

• Endowments: down 20 to 25%
• Corporations: down 20 to 50%
• Foundations: down 10 to 25%
• Individual giving: down 10 to 25%
• Many performance based organizations are adjusting their program offerings for more popular appeal.
• Audiences are down, on average, 5 to 10%, but some are as high as 30% in decline

Arts organizations have responded to shrinking income by:

• Freezes on hiring new people
• Cuts in pay and benefits of existing staff
• Furloughs
• Layoffs
• Surprisingly, investments in technology and online capacity are increasing as marketing shifts to the internet
• Most arts administrators think the recession is only exacerbating fundamental problems that have existed for years.

STUDY #2: What are funders doing in response?:

• Concentrating cuts in grants to one or two years instead of letting it flow longer
• Spreading the cuts over several years to lessen the individual impact now
• Rethinking their programs and approaches
• Prioritizing existing commitments to make sure those that expected X dollars can rely on that reliance (which may be bad news for new applicants)
• Cutting their own operations budgets (though few are laying off staff)

FORECASTS:

1. The negative impact of the economic crisis will last well into 2013
2. Many arts organizations will NOT survive
3. The arts sector world will be a different place when the shakeout is complete
4. Rethinking funding sources, what we do and how we do it will be essentially across the board.
5. New behaviors for growth and survival will need to emerge.
6. Funders are likely to invest in fewer organizations and be forced to pick a select number to try to help stay alive and grow.

Quote: “It is not the strongest of the species, nor the most intelligent. It is the one that is most adaptable to change that will survive.”

Charles Darwin


The Second GIA Session focus was on Federal Stimulus Funding Money available to the arts and on strategies to get some of those funds. There was simply too much detailed information to recount, but the following web sites should be helpful in understanding what is available, and how the processes work:

www.americansforthearts.org/pdf/events/2008/convention/handouts/Recovery/Wisdom-1.pdf

Monitor the funds at www.recovery.gov

Review the items listed in the Catalog of Federal Domestic Assistance at www.cfda.gov and / or www.grants.gov

Funds are available from several federal agencies (and the arts have successfully tapped into these agency funding pools in the past):

Department of Justice
Department of Labor
Department of Health & Human Services
Department of Education
Department of Transportation
Department of Housing & Urban Development
Department of Agriculture

Session leader Bill Cleveland did offer the following general observations to bear in mind when dealing with Federal Government agencies:

1. Most of the money is local in that it comes from the Federal Government to local agencies to disburse at the local level.

2. Securing funds from any of these agencies is “relationship intensive” – meaning that the more of an ongoing and close working relationship you have, or can develop, with the local agency administering the funds, the more likely your chance of getting a piece of the pie. After you identify the source of funds that might be available to you that you think you qualify for, make friends with the local agency people as quickly as you can.

3. The local agencies want to allocate all the money allocated to them. What they don’t disburse locally will only end up going back to the Federal Government. And they are on the clock – there will be a timeline for them to spend the money. The quicker you can make friends with them and make a convincing case that your program will advance their agendas and that you already have substantial local presence and value, the better your chances of getting money.

4. The amount of money can be significant.

5. Details of how to apply and how to get money are likely to vary greatly from place to place.

Arts Innovator Series: The Arts Education Innovator with Wallace Foundation head, Daniel Windham and Americans for the Arts chief, Bob Lynch was one of the best sessions at the conference.

Both men are, of course, extremely knowledgeable and experienced, but what made the session so memorable and enjoyable is that both have a quiet charm and the format of the presentation was to integrate their own musicianship into the offering. Bob shined on the piano, but alas Daniel’s saxophone was apparently damaged in transit. Still, both offered keen insights into how to personalize the arts education messages and how to more effectively advocate on arts education’s behalf. Bob recounted how when very young, he was at a local public swimming pool and what he remembered was seeing a bunch of guys horsing around at one end of the pool, and a bevy of attractive young girls listening to one guy playing a guitar at the other – and that pretty much made up his mind where things were at for him. Daniel told the story of moving from the Boston Symphony in the early evening to acting as a backup for Gladdys Knight and the Pips at the Sugar Shack club.

Bob’s rules for Advocacy are as follows:

1. Determine what you are advocating about. WE want – fill in the blank. But we must be sure to be clear. So we want arts education does us no good. We want passage of AB 101 – a bill that would facilitate arts education does us good.

2. To whom are we talking. We need to know who we are targeting with our advocacy. Far better to identify the members of a legislature that will actually play the decision making role in passing or not passing a piece of legislation, than just trying to lobby any member of the legislature.

3. Why? Why does what we want matter to whomever we are trying to lobby. Not why it matters to us, but why it should matter to the intended decision maker target.

ARTS ACTION FUND PAC RECEPTION:
The good news is that there are now 100,000+ people who have signed up as Arts Action Fund members – not contributors to the Political Action Committee – but activists who were willing to send emails, letters etc. Bob Lynch related the events surrounding the introduction of the Colburn Amendment – which would have prohibited Stimulus fund money from going to the NEA – and told the story of how arts supporting New York Senator Chuck Schumer had voted “for” the Coburn amendment. Deluged with Arts Action Fund emails and calls of complaint to his office, he not only backed off but admitted he had made a mistake, then went on the weekend news talk shows to advocate against the amendment. It is, Bob noted, that kind of massive grassroots response that is essential for political clout. As the number continues to grow, so will the power and clout of the arts.
The bad news is that there were less than 100 conference delegates who were willing to pony up $35 to attend the PAC reception. While the PAC has been successful in raising funds for its political war chest – and while it really doesn’t take as much money to be a political “player” as people might think, the arts still lag far behind other special interest groups in raising PAC funds. I still find it a mystery why out of 1200 attendees, less than 100 are willing to stand up with their pocketbooks. Perhaps more contributed than attended, but I still hope the day comes when the PAC reception has to be held in the Grand Ballroom.

Other people blogged on the Convention:

Check out Janet Brown’s (head of GIA)new blog: www.giarts.org/

And Ian David Moss – a new next generation arts leader I first met last year when he was a fellow at the Hewlett Foundation – is writing a really excellent blog which I strongly urge you to consider subscribing to. Ian is sharp, insightful, and his blog has both style and substance. Check him out at: www.createquity.com

All in all another very well organized and successful conference. Next year AFTA will celebrate its’ 50th Anniversary in Baltimore. And that is quite an accomplishment.

Have a great week.

NEXT WEEK: A BRIEF INTERVIEW WITH KENNEDY CENTER HEAD – MICHAEL KAISER

Don’t Quit.
Barry

June 8, 2009

 

CASTING THE WIDER NET PART II

Hello everyone.

"And the beat goes on............................."

Yes, this blog is long. But I think the subject is important. Speed read or scan if you wish.


Data Mining / Pattern Analysis / Relational Software

Earlier this year I raised the subject of marketing in terms of Casting A Wider Net (which is just another way of saying that we need new potential donors and supporters, new volunteers, new people in our audiences. The question of course, is how to we get those people?

There are, it seems to me, some basic precepts if you want to Cast A Wider Net.

First, you need to identify whom to target. It is inefficient and largely ineffective not to narrow down the “universe” of people to whom you are sending your message. That universe has to be those people who are most likely to respond positively to your message. Trying to sell Hip Hop jewelry to AARP members is probably a waste of time and money.

Second, once you identify your target you have to determine how to most effectively deliver that message.

Third, only then can you craft the specific message for the specific audience you are going after (and just as there may be multiple target audiences, there may also be multiple variations of your message).

The question then is what tools can we employ that will help us to accomplish the first two specific goals – both as a field and as individual organizations? This is the second blog on that subject, and specifically about Data Mining and the value that marketing device might be to the arts & culture marketing efforts. Data mining is (according to Wikipedia) simply the process of analyzing data from different perspectives and summarizing it into useful information. In practical terms it is the automating (via computers) of the process of searching for patterns in data.

I have two barstools that sit in front of my kitchen center island. I was thinking of getting one more, so I went online on Google to see if I could, first, match the stools I have, and then find out if I could get a really good price. I found what I was looking for pretty easily, but decided I didn’t really need another stool after all. But for the next week, whenever I opened the browser connection, there on my home page (which is Yahoo, not Google), there was an Advertisement for Bar Stools.

At the Supermarket (like most people I generally shop at the same market, a Safeway for me, close to my house) last month I bought some South Beach Breakfast Bars. Last week I bought some sugar free Maple Syrup. I am obviously trying to reduce my intake of bad sugars etc. Yesterday, I bought some items that had nothing to do with such a lofty goal, but when I paid for my purchases I got a coupon printed out for a dollar off Nabisco reduced calories cookies.

I’m being watched and monitored. We all are – to a depth we fail to appreciate. Big Brother has begun folks. Seemingly innocent now, but who knows in the future. But this blog is not about the loss of privacy and all that scary stuff; it’s about the arts sector being as sophisticated as it can be in its competition for ever scarcer resources and support. It’s about successfully Casting That Wider Net.

We now live in the age of instant computer generated data mining. At the base level, Data Mining is about purchasing and inquiry pattern analysis. In both of the above situations, the computer identified a ‘behavior’ on my part and its (rather primitive) algorithmic programmed response was to suggest to me something that my inquiry or purchase suggested I might favorably respond to. This is kindergarten stuff.

Data mining software is one of a number of analytical tools for analyzing data. It allows users to analyze data from many different dimensions or angles, categorize it, and summarize the relationships identified. Technically, data mining is the process of finding correlations or patterns among dozens of fields in large relational databases. Data warehousing is defined as a process of centralized data management and retrieval. None of this is new – it has been around for decades. What is new however, is the amount of data being collected and warehoused, and the development of ever more sophisticated software to process the data, analyze it and use it for predictive behavior applications.

Every time you shop at Safeway (or your market) and use your Safeway card, or your CVC Pharmacy card, or Costco card or any one of dozens more you might have; every time you use a credit card, or debit card, every time you make an inquiry or respond in some way on the internet, information about you and your habits and preferences is being gathered and stored. Virtually every consumer decision you make is recorded somewhere and a profile of you is expanded and filed away. From the retail seller’s point of view, they are primarily interested in targeting their budgets to maximize future sales and thus they are interested in what you buy and what you might buy if they can present that option to you in the right way, at the right time. And how they do that differs depending on your age, gender, socio-economic class, education, geographic location and, most importantly, on your buying patterns, and an analysis of trends in your past and recent behavior. What seems clear is that it works.

The amount of data on each of us is staggering and growing exponentially, and the more data available the more accurate the predictive software can be because it has a more accurate profile of the individuals being analyzed (and, frighteningly, data is now being collected on children as young as pre-school and so the data banks will someday go from cradle to grave). Beyond basic demographic information (age, gender, geographic location, etc.), add to your file political and philanthropic contributions, hobbies / interests, clubs and affiliations, political party affiliations, religious preference, financial profile (based on job, property owned, credit reports, DMV info, etc.), education background, personal information from Facebook, LinkedIn, My Space and countless other sites, magazines subscribed to, and criminal history – and that’s just to name some of the information readily available on most of us. But gathering and storing all the data is only half of the equation. What has made this a growth industry and of so much interest in so many quarters is the software that analyzes all this seemingly isolated data and uses it to predict future behavior; software that finds obscure relationships between millions of bits of data to determine connections virtually impossible for human beings to make (even if they could wade through the data). In the retail application, the predictive behavior software also analyzes what kinds of advertisements and marketing approaches actually work once they have narrowed down their targets.

Of course the data being kept on all of us is far more sophisticated than the relatively pedestrian retail / marketing application of this phenomenon. Homeland Security doubtless collects all kinds of additional information on us all – gleamed from public records and – to the horror of many – from private sources including emails, website surfing choices, telephone records, travel, and much, much more. But that is a whole other subject. And there may be serious privacy concerns that raise fundamental policy issues about our sector participating in this kind of approach at all – but I leave that to be discussed and debated. My purpose here is to consider what the nonprofit arts field can do to avail itself of all the marketing tools it might use to improve its bottom line in an ever increasingly competitive world.

Where is all this headed? Far, far beyond the most basic uses of this kind of marketing tool - i.e., Netflix notes you like Pixar Animation movies, so it sends you an email on the release of Kung Fu Panda; or Safeway prints out a coupon for me for some diet product. That’s fairly unsophisticated application of what has developed since then. Data Mining now includes in each folio on each person (and yes, just like you have a credit file, there is a much larger file of information on you that retailers can tap into), relational data on what is sometimes called “tethered individuals” (i.e., family members, neighbors, business colleagues, close friends etc.) By analyzing the data of those people and their profiles and their “relation” to you, Data Miners can get an even better and deeper level of insight into your behavior. Moreover, artificial neural networks (resembling actual biological neural networks in structure) actually learn human behavior patterns through a primitive form of artificial intelligence, and allow increasingly more sophisticated (and accurate) prediction of human behavioral response to specific stimulus (e.g., one advertising approach over another).

I’ve spent months now wading through tutorials on a host of subjects in the data mining area, and I don’t want to confuse you here with a lot of technical jargon because it simply isn’t necessary for us to even understand all the tools that computer scientists have developed to make data mining useful and relevant to a host of applications, including marketing ones the arts & culture sector might productively and beneficially employ. Suffice it to say that there are a host of tools and devices to determine which subsets of data could be the most helpful in trying to analyze variables that might have bearing on predicting future behavior (called Decision Trees). And new tools are being developed constantly. We are at the tip of the proverbial iceberg here.

Retailers from Walmart to Sony Pictures are already using Data Mining on an almost unimaginable scale. From what kinds of stimulus – promotions, shelf placement, advertising, discounts, release dates etc. - have on purchases, to creating new products in response to unmet demands. But Data Mining applications go far beyond retail. Sports teams are accessing data on their opponents play and game plans, identifying trends, and developing strategies to counter performance by opposition teams that may result in defeat. And this kind of game analysis has been going on for years. Only now computers make it easier and faster to accomplish. Thus if the Jets rush the Quarterback on third and long 52% of the time, the opposing team, knowing this, can hold back a tight end for blocking purposes, and thus run a wider variety of plays more successfully. It gets a lot more complicated than that. Anti-terrorism efforts are based largely on data mining and predictive behavior software. It is the analysis of trends and behavior patterns and the interface between that analysis and predictive behavior that is of the most interest.

For our purposes, we want to know which individuals are likely prospects to attend our performing arts events, and which variables influence their decision to attend or not. We want to know which specific consumers are most likely to purchase art. We want to know which people are likely to respond to our pleas for donations (and which donors might give more), and we want to know which elected officials might carry our banner and fight for our needs. And Data Mining can help us get more sophisticated and targeted.

Here’s an example: Let’s say we identify someone who has been to a jazz concert in the past six months, recently bought a jazz CD, and last year bought a biography of a jazz musician from Amazon. Not terribly complicated today for data miners. We could use that information to try to sell him / her a ticket to an upcoming jazz concert. But a more sophisticated approach would be to identify that individual’s “tethered” people, sort out and identify the two that share that interest in jazz, and then develop a mini campaign that packages an entire evening out -- sending email invitations (and the invitation could include a sample concert clip of a song, some background bio info, photos, reviews etc. - and could even include a pre-concert “meet & greet” bonus perk) to the cell phones of those three people to attend the jazz concert (at a 20% discount), followed by dinner at a nearby local restaurant (featuring the kind of food that group likes – with another discount) It could include maps to the locations (including a nearby parking garage – with yet another discount coupon). After the concert it could twitter the those people to push a CD of the concert, tickets to another concert next month, and a coupon good for a subsequent visit to that restaurant or another in the same neighborhood.

That would be neat. Our problem is we can’t identify that (unknown to us) person who went to the jazz concert in the past six months in the first place. We lack the data and the software to analyze the data. But it already exists out there, and is available to us for a price. Our next problem is we don’t have the money, nor do we have the on-staff expertise to know exactly how to deal with this kind of tool. No problem with that second challenge – those who are in the business of selling this data and the software to make it useful are only too happy to help us apply it to our needs, to help us to figure out how to best use it for our purposes and train us in its application. We do have to make some effort to get involved (and alas, we haven’t). The money to afford it? In small applications it isn’t necessarily prohibitively expensive, but we’re financially challenged right now. We need to figure out ways to work together, to act more like a sector or industry and share information, data and most importantly budgets – because the only way we can intelligently and efficiently avail ourselves of data knowledge and application is for us to work together. We’re too small to do it alone as individual organizations.

What should grab our attention as the arts sector is how can we avail ourselves of some of these increasingly sophisticated marketing techniques to sell our products more successfully. If we want to “cast a wider net” and compete for the same dollars and support that scores of other sectors are competing for, then don’t we have to figure out a way to employ the most impactful tools available, and ways to acquire those tools that we don’t yet have? Whether or not we should pursue such strategies is yet another larger policy question that I am not considering here. That we are neither organized enough to be able to employ these marketing techniques, nor able to afford access to them is likely a given. But there are private companies compiling all this data, and firms like Oracle and others writing increasingly sophisticated adaptable software to analyze this data to provide knowledge and information on which marketing decisions can be predicated and with very successful results. This is another area that national service organizations, foundations, state and regional agencies and the NEA ought to be playing a role (at least in investigating the potential in the tools and sharing their findings with all of us.

Arguably any process or procedure that allows any enterprise to more successfully market its goods and services will help its’ bottom line. We could never amass the necessary data on our own. Few sectors or industries could. We’re talking terabytes of data here, which is like trying to imagine the planets in all the galaxies in the universe. The collection of data is already a new industry itself. Data already exists, and software is available, that could help performing arts organizations to more successfully target potential audiences than their current efforts at casting that wider net. We don’t use that which is available in part because our level of sophistication is remarkably low in the marketing area, and, of course, our budgets (even of our most well heeled cultural giants) hardly provide adequate funding to tap into the latest tools. And, of course, we tend to want to market our products in ways that address the experiential level of our consumers, even if such a subjective approach is difficult, if not actually impossible, to quantify.

In fact, our marketing expertise is rooted (and many would argue, stuck) in a much earlier time. We collect precious little data of our own, and that which individual organizations do collect, is relatively simplistic, and even that limited data we are loathe to share with each other. Most performing arts organizations know very little about their audiences. Oh, they might have some basic demographic information but it is spotty, not collected on any on-going basis or updated regularly, and it is virtually never analyzed using anything anywhere near the level of sophistication as algorithmic predictive software. (Hell, we don't even systematically collect the email addresses of all those people who intersect with us at one point or another - and how insane is that?) The same can be said on the data we collect on our donors and other sources of fundraising. For an industry so heavily dependent on specific sources of cash flow and income, we are remarkably primitive in the way we collect, store and analyze the data that may be right out there waiting (begging in today’s world) to be analyzed. Alas we can’t, for the most part, even tell you the basic generational composition of our core audiences – at least not on an individual organizational basis – let alone which of our small donors are likely candidates to give more -- and it is at that level that we need to empower ourselves towards greater success.

Data Mining’s applications to our sector are limitless. Thus, for example (and I am not suggesting this would be a priority application – but it IS something that would have long ago been done in the private sector) it would be relatively easy today to identify what grants the top 100 arts funding foundations have made over the past five years, the backgrounds of those foundation’s current senior arts program officers, and the foundation’s Boards of Directors (and what both of those groups in each foundation favored in terms of allocation of funds), and with very great accuracy, analyze that data using off-the-shelf software that could be adapted to the purpose easily enough, and predict the odds of any given arts organization getting a grant from any specific foundation for a specific purpose. How much grant writing time could be saved? Ah, but that raises all kinds of other questions and problems Barry. Yes it does. But my point is simply that we ought to discuss these things. Aren’t you tired on being a 21st Century person living in a Jurassic world?

More to the point, here’s a better example. We could easily enough (in partnership with AE) analyze what percentage of American Express cardholders (and which ones specifically) in a defined subset of an identifiable category (based on age, income and educational levels – and ones within a set zip code) would be likely purchasers of season tickets to a growing theater company – and, what would be the best way to target those people with the theater company’s message (i.e., direct mail, email, phone call, AE Card bill insert etc.) Or we could run a state by state analysis of how local government (from city councils to boards of supervisors to state legislatures to members of Congressional delegations) not only voted on support to the arts, but where they appropriated money from (a variety of funding pools -- e.g., Education, Transportation, Parks & Recreation and General Fund budgets etc.). Add variables such as political party policy positions and platforms, and a host of other relevant data that the software can identify – and all of that data might suggest which elected officials we should target with our support and messages, and that info might be valuable to us in crafting a real strategy to reinstate government support for the arts. We don’t do that. At best we know how the national Congress and some State Houses vote. That’s pretty much it. And, but for the AFTA Action Fund, for the most part, at best, we send them letters and invite them to our gigs – usually when there is a crisis and we are trying to save something. That’s not a very sophisticated 21st Century political lobby / advocacy strategy. You can bet that other special interests groups are more sophisticated than that. And we are in direct competition with them. The point is there is data out there that can help us, really help us in developing specific strategies, and we are not using it.

We talk a lot about strategic planning, but much of our planning isn’t strategic at all. It is mere guesswork - long on speculation and short on verifiable data. In some ways it’s almost as though we continue to try to sell snake oil out of the back of a wagon. In successful advertising and marketing, mere repetition of a message is still necessary, but what the most effective message is, when and where to apply it and a host of other questions make that whole strategy much more complicated.

So if we are to cast the wider net and succeed in growing our audiences, expanding our donor bases, increasing our number of volunteers, we must consider using the most sophisticated tools that exist, and to be able to do that we are going to have to first figure out a way to cooperate and collaborate and share data, budgets and leadership in gaining new expertise and understanding. Our marketing savvy is just too primitive as compared to those who compete against us. We can’t go it alone anymore. In terms of marketing, the whole arts sector needs to be much more collaborative.

Casting the Wider Net by using Data Mining techniques is just one aspect I think in a much, much larger picture of what Arts Marketing is, or should be about, now and in the short term future. It will take time for us to get up to speed, but this is another one of those areas that we need to start now if we are ever to move down that new highway. We can’t continue to market the arts like they were marketed in the last century. Some of the fundamentals may remain the same, but too many of the variables have changed, and unless, and until, we are using the latest tools we will not be competitive.

I am trying to develop some basic outlines as to how arts organizations might employ Data Mining so as to share information with you on this tool. More on Data Mining and Casting the Wider Net – including how to craft the right message -- to follow in a later blog.

I would love to talk to people more about this subject and so if any of you marketing people are going to Americans for the Arts in Seattle in a couple of weeks, please come up if you see me and let’s talk.

Have a great week.

Don’t Quit
Barry