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Measuring Return on Event Entertainment (ROEE): How Do
You Know If It Is "Worth" It?
How can you change your meeting or events department, whose
expenditures always seem to be a drain on the company or association,
to a profit-making department? You need to show your management
or your board of directors a positive return for their money
from the events you produce. This profit stream may not be
obvious right away and may take days, weeks, or months to
materialize. For example, if a convention and visitor's bureau
(CVB) sponsors an event outside of their jurisdiction with
the sole purpose of bringing business in to their destination,
how can that be seen as having profit potential? Imagine that
there is a proviso that the CVB will have an allotted presentation
segment at the event that will feature the CVB's president
or the city's mayor speaking at the event while showing a
video or multi-media presentation featuring their destination.
Isn't this opportunity worth underwriting a luncheon or dinner
for a ballroom full of meeting or event planners? To justify
the cost in dollars and cents, how much expense would be involved
in locating the name and address of each of those planners
and printing and mailing a media kit to each of them? Probably
about the same, but in our example, the presentation is done
in person by a city official, the attendees receive VIP treatment,
and the event is memorable. It's a win-win situation for everyone
involved.
Nonprofit organizations are not the only ones who want to
see a positive return on the event entertainment investments.
"It's not just a party anymore. Your events must contribute
to corporate goals. Each event must be integrated into the
marketing plan so that it contributes to overall corporate
objectives. A corporate event is an occasion that is designed
to communicate critical organizational messages and themes
in highly personal, entertainment ways that maximize retention"
(Doyle, March 2002).
Stanley Aaronson, CSEP, and the Project Manager for Mark
Sonder Productions and ViewPoint International™ Destination
Management Companies USA shares his thoughts on ROEE.
"Only the client can quantify and measure ROEE, since
ROEE is either an increase in the service or goods demanded
or a decrease in the cost of supplying those goods or services.
First, the client needs to see the difference between explicit
and implicit costs. An explicit cost requires an outlay of
money by the firm. Implicit costs are input costs that do
not require an outlay of money by the firm; ie, the opportunity
cost (whatever must be given up to obtain some item) of the
financial capital (foregone income) that has been invested
in the business or in our case, in paying for the meeting
or event. By considering both implicit and explicit costs,
we can determine the economic profit as opposed to simply
the accounting profit, which takes into consideration only
the explicit costs. A short run economic profit is generally
considered to be a positive return on investment.
"Next, (based on the factors contributing to economic
profit or loss) we can run a cost-benefit analysis that compares
the costs and benefits or improvements to a firm from the
investment in a sales promotion, sales meeting, stakeholders
meeting, convention, conference, exhibition, hospitality function,
or other in-face event. A positive return on investment occurs
when the benefits are perceived to be greater than the costs.
"Last, the client needs to see the advantage of taking
into consideration the accumulation of investments in people
and the firm's relationships with people; such as client orientation,
professional development, leadership development, continuing
education, and on-the-job training. Generally, accumulating
investments in one place, such as a client or employee, result
in a positive return on investment (ROI). Customer relationship
management (CRM) practices have demonstrated the intrinsic
value and short run return on investing in alliances that
meet corporate and business goals and objectives."
In their Year 2000 Annual Report, MicroStrategy claims, "For
any business or organization operating in the Internet Age,
information is currency. The ability to realize the potential
of your information assets--turning data into intelligence--will
be vital to the evolution and success of your business."
Tom Carrier, Senior Meeting Planner, IQ Solutions, agrees
with the MicroStrategy philosophy, "Management by spreadsheet
alone without regard for long term impact on customer habits
and thus overall asset and/or brand value is a poorly conceived
choice. Perhaps now we can re-introduce hospitality in the
hospitality industry."
 Mark
Sonder, CSEP is the Chief Entertainment Officer of Mark Sonder
Productions, the leading national entertainment agency providing
headline talent and production services for large venues,
corporations and associations. In addition, Sonder sits on
the faculty of The George Washington University Event Management
Certificate program. Event Entertainment and Production. is
the book published by John Wiley & Sons authored by Sonder.
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