Should brands be charging for brand experiences?

Exterior shot of the Bumble Brew Cafe featuring yellow bricks and floral arrangements

Paid-for experiences can make an impact on people's perception and engagement.

From Kraken rum's Halloween haunted hotel to Ford's go faster stunt driver experience, the world of brand experiences is richer and more varied than ever before. From entertainment and gaming, to pop-ups, theme parks, edutainment and more... brands across all sectors are increasingly turning to experiences as a core pillar of their marketing activity. It makes sense, given that the appetite for experiences continues to grow – by 2023, the experience economy is expected to be worth $12bn.

But one of the most interesting developments taking place in brand experiences is the rise of the ticketed, paid-for experience, whereby brands are moving into the world of the experience economy, attaching economic value (literally charging an entry fee) to their brand experiences.

At Imagination, we carried out some research to understand how this might change people's perception and engagement, and whether this strategy creates increased value for people who pay to participate and the brands that stage them. We wanted to determine whether people's expectations shift because they are being charged and how that might affect the brand.

The research looked at 40 paid-for experiences across the UK and US, sampling 30,000 data points, which were then analysed using AI-based natural language processing to understand engagement and sentiment.

The findings were stark: for instance, 17% of conversations around paid-for experiences were recommendations, compared with just 1% for a free experience; and paid-for experiences achieved double the rate of brand and product mentions, compared with free ones.

Across the analysis, we see four key findings:

  1. Paid-for experiences drive deeper engagement – people talked more holistically about paid-for experience, whereas the conversation was more tactical for free ones. Analysing the length of the conversation we found shorter sentences, more focused on short-term gains, were used for free events, whereas with paid-for the reviews were longer and the language more emotive.
  2. Higher-quality leads – the ticket prices act as a filter, meaning that attendees to paid experiences are predisposed to the brand. The ticket price filters out non-target and out-of-category attendees as well as dramatically reducing no-shows.
  3. More valued by customers – behavioural economics research has found that people tend to attribute more value to things they pay for – we saw this confirmed when we analysed the type of language used to describe the experiences. Paid-for experiences resulted in a higher rate of superlatives and adverbs, compared with free experiences, and a corresponding higher rate of recommendations.
  4. Brings people closer to the product – paid experiences drive twice as many mentions of brands and products than free events.

Why is this happening?

Based on existing behavioural economics research, combined with these findings, we believe that by charging an entrance fee to the experience, people are shifted into a different mindset – they have invested in the experience and are more willing and open to engage, to be entertained, to learn something new. Contrast this with emerging insights into consumer perception of "free" – we are increasingly savvy in recognising that if something is free, there may well be a catch – there's the old adage "if it's free, you're the product".

We see two broad categories for paid-for experiences – ticketed experiential marketing and business model innovation. The former is simpler and closer to existing experiential marketing. In this case, the experience is ticketed but does not necessarily need to stand alone as a business, or even be commercially viable. For this, the ticket price is a strategic play to attract a particular type of audience and to shift them into a particular mindset. The "Ford go faster" experience is an example of the former, with players charged $100 to enjoy a stunt driver experience lasting several hours in which they go behind the wheel of the vehicle for a "not normally possible" experience, followed by a unique video souvenir.

Business model innovation is where brands shift more fully into the experience economy, developing experience-based business models that are outside their core business model.

An example might be the "Bumble brew cafe" created by dating app Bumble (pictured above). While some might see this as a PR stunt, it may well turn out to be the first move into a new offer for the brand, positioning it as the social connector for various aspects of people's lives – business, friendships, romance. It extends the brand, shifts perceptions, complements the core business as well as creating a new revenue stream.

Both types of paid-for experiences are helped by the blurring of categories. We're comfortable with brands getting out of their "swimlanes" – think Red Bull, who shifted from energy drinks to inventing sports – so people are comfortable (and genuinely excited) with brands turning up in different places. Similarly, there's more acceptance and excitement around collaborations giving brands permission to do interesting things and to try out new ventures.

So why has this happened, why now? We believe the willingness from consumers to pay for branded experiences is due to a convergence of factors: the trend for dematerialisation – where people want to own less stuff and are choosing experiences over things – means experiences are valued higher than ever before. In addition, we've seen a pandemic reaction that has increased people's desire for human contact. Lockdowns and isolation have made people reflect on what they value from life and in-person experiences are a benefactor.

And lastly, as social media continues to be an important means for people to craft their identity, people are searching for experiences that can give them more personal stories, more unique "you had to be there moments" that they can share.

What does this mean for marketers, brand managers, innovation teams? First, they need to be clear about what they're trying to achieve from the paid-for experiences – the dynamics at play make them right for some activities, but wrong for others. Second, then think and design in terms of propositions. Ask yourself: "What's the value exchange that will make people willing to part with their cash? What's the value of what people are willing to pay for and what can you charge for it?"

If you can answer these questions with confidence, now is the right time to explore how paid-for experiences can fit into broader brand and business strategies.

Tom Gray is chief strategy officer at Imagination

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