Experiential marketing programs can range from the small and scrappy to the large and lavish. But how much does a program cost? This is a common question where the answer is rarely clear cut. Estimates are like snowflakes, no two are alike. This is because there are many different elements to consider, methods to execute, ways to cut corners and a wide range of details that impact the bottom line.
Unfortunately estimates and budgets are often defined very early in the process, well before many granular aspects of the project are all worked out. With experiential marketing, these details can have a wide and variable range of costs.
For example, sponsorship fees for a traveling roadshow could range from $500 to $15,000 or more per venue. It’s the difference between a small community outreach event and booth space inside a high-traffic mall. If the type of venue or markets haven’t been selected in advance, budgeting for site fees can be difficult.
In many respects, experiential marketing is comparable to home remodeling. A bathroom remodel needs to be accurately estimated and approved by the homeowner well before the first hammer is swung. Certain items will vary in price and will not be finalized until later in the project.
Like tile. While the labor to install tile should be fairly consistent, the cost of the tile itself can be all over the board. Choices range from remnants in the clearance bin to imported Italian marble. Final material selection won’t happen until later in the project, when the homeowner and contractor spend time reviewing and discussing various tile options together. But the contractor still needs to budget for tile in their estimate.
A great way to create estimates for projects with variable costs is by using allowances. This is a placeholder amount for items that haven’t been selected yet, in order to arrive at a baseline cost for the entire project. With tile, the contractor might consider the overall scope of the project and recommend how much to spend on materials that reflect the goals of the remodel. A light makeover project might have a lower tile allowance than a luxury bath overhaul.
Here’s how allowances can help:
- Establish cost expectations for items before they are selected
- Bring flexibility to the overall budget
- Encourage collaboration and communication to make informed decisions
- Clients have greater financial and creative involvement, because it’s ultimately up to them on how the allowance is spent
The same approach can be applied to experiential marketing budgets. When estimating the cost of a food truck program, many of the variable expenses are in the modifications to the truck itself. For example, what kitchen equipment does a food truck need?
If the truck is preparing hot gourmet meals, the allowance might need to cover a variety of high-end kitchen equipment. If the truck is sampling pre-packaged cold beverages, the allowance may only need to cover an ice chest or two.
General equipment needs can be determined up front with some understanding of what the truck will be doing. Equipment selection likely won’t happen until after the project is approved, and could require additional collaboration to ensure the most appropriate equipment is selected. This is where an allowance can really help.
Of course, allowances are eventually replaced by actual hard numbers. But in the short term, they can help clarify how much a program would cost and provide a starting point for budget planning.