Regional malls have come a long way when it comes to event programming. It used to be the Easter Bunny, Santa Claus and maybe a local bake sale. But today malls are hosting elaborate concert tours, using their common areas as venues to promote new products and holding community events to build goodwill with shoppers.
“Over the last 15 years, I've seen more and more malls hosting events,” says Brian Bender, senior account director with the events group of GMR Marketing, a national marketing firm. “We have done everything, from bringing soap stars into the property to hosting a launch show for a particular product. We've also held concerts with up-and-coming artists.”
There are two avenues mall owners employ. Companies with massive collections featuring scores of malls — Simon Property Group, General Growth Properties, etc. — leverage those portfolios and the thousands of shoppers they reach each week into revenue streams. Companies marketing new products (or musicians hawking new albums) are increasingly willing to sponsor tours hitting these centers. At the same time, marketing managers at regional malls look for local programming, in part to counter the rising popularity of lifestyle centers and mixed-use properties that have put a big emphasis on connecting with surrounding communities.
Companies with large portfolios that feature well-positioned properties have the ability to produce elaborate, nationwide programs in part because they are more attractive to corporate sponsors. William Chipps, senior editor with IEG Sponsorship Report, a publication that tracks corporate sponsorships, points out that corporations tend to look for established shopping centers with the ability to reach a lot of people and experience in putting on shows. A 2003 report in Event Marketer magazine counseled readers to hold events only in malls larger than 850,000 square feet.
That's why Simon Property Group, with its 284 properties (about 180 of them regional malls), created Simon Brand Ventures. Last year, combined revenue from Simon Brand and Simon Business Initiatives was $155 million. (That figure also includes revenue from in-mall advertising.)
Among Simon's offerings: DTour Live, a concert series aimed at teens that this year has featured performers Mya, Cheyenne Kimball, Cherish and The Summer Obsession. It took takes place across 23 malls. Meanwhile, Super Chefs Live! showcases celebrity chefs as part of a nationwide tour. And Simon Mall for You features speakers and displays with content aimed at women. Sponsors for Simon's events include PepsiCo, Coca-Cola Co., Visa USA, Microsoft Corp., Ford Motor Co. Self magazine and Cotton Inc.
General Growth Properties, with its more than 200 regional mall, produces an annual mall tour called The Scene for teens and tweens during the back-to-school months, as well as the Real Simple Festival of Giving, a national event that raises money for the Children's Miracle Network, and Club NOGGIN, a program that targets children ages 3 through 6 with character appearances, games and hands-on activity stations. This year, The Scene will take place at 115 malls and the Festival of Giving at 80.
General Growth estimates that The Scene attracted more than 240,000 teenagers in 2005, while the Festival of Giving brought in about 370,000 visitors and $1.3 million ($1.2 million of that money went to charity). The company's corporate partners include PepsiCo, Sprint, Fujifilm, CosmoGIRL! and Cotton Inc.
“These events are revenue generators for both General Growth and our retailers,” says Doug Johnson, director of strategic partnerships with the company. “They increase traffic, and along with that comes loyalty to the center that's hosting the experience.”
CBL & Associates Properties, Inc., which owns 126 properties in both enclosed and the open-air formats, partners with Coca-Cola to produce the Coca-Cola Racing Family Event at more than 60 of its malls before the start of the NASCAR season. The events, featuring video games and prizes, take palce at properties close to racetracks and according to Barb Ivankovich, CBL's vice president of mall marketing, cost $500,000.
Most mall owners are reluctant to disclose how much money they put into such programs — Ivankovich did concede that promotional events account for approximately 15 percent of CBL's marketing budget — but IEG's Chipps says that owners are usually expected to shoulder the production costs, while the sponsors contribute naming fees.
“The owners can't just say ‘I have an event and I want you to pay for it,’ otherwise the sponsors would just see the whole thing as a sales approach,” Chipps says. “The sponsors will help offset some of the production costs, but it's the mall's duty to cover them.”
Chipps estimates that a multiple-city concert tour commands upward of $100,000 for the naming rights. Meanwhile, the production costs for a 10-mall tour would be around $250,000, while one-day celebrity appearances range from $5,000 to $20,000, according to Jack Driscoll, group account director with U.S. Marketing & Promotions, the event planning unit of The Marketing Arm.
Alternative strategies
Smaller property owners and managers, however, have to handle most of their event costs themselves. According to Lisa Bell, director of marketing with Urban Retail Properties Co., a firm that manages more than 75 retail destinations, bringing in a popular children's character can cost anywhere from $5,000 to $10,000 for a weekend appearance, while a well-known band or an adult celebrity usually charges tens of thousands of dollars.
| Amount | Company | Rank 2005 | Rank 2004 | |
|---|---|---|---|---|
| $310M-$315M | Anheuser-Busch Cos. | 1 | 2 | |
| $295M-$300M | PepsiCo, Inc. | 2 | 1 | |
| $220M-$225M | General Motors Corp. | 3 | 3 | |
| $215M-$220M | The Coca-Cola Co. | 4 | 4 | |
| $205M-$210M | Nike, Inc. | 5 | 5 | |
| $170M-$175M | Miller Brewing Co. | 6 | 6 | |
| $145M-$150M | DaimlerChrysler Corp. | 7 | 7 | |
| $135M-$140M | Ford Motor Co. | 8 | 8 | |
| $130M-$135M | Sprint Nextel Corp. | 9 | 16 | |
| $115M-$120M | McDonald's Corp. | 10 | 9 | |
| $110M-$115M | Visa Int'l | 11 | 10 | |
| $105M-$110M | Eastman Kodak Co. | 12 | 11 | |
| The Procter & Gamble Co. | 13 | 19 | ||
| MasterCard Int'l, Inc. | 14 | 12 | ||
| $95M-$100M | FedEx Corp. | 15 | 14 | |
| $90M-$95M | IBM Corp. | 16 | 13 | |
| $80M-$85M | Bank of America Corp. | 17 | 15 | |
| $75M-$80M | AT&T, Inc. | 18 | 17 | |
| $55M-$60M | Motorola, Inc. | 19 | 18 | |
| Source: IEG Sponsorship Report | ||||
“We are not opposed to doing something like that, but it's a lot of money up front if you don't get a sponsor,” she says. Simon Property Group, which spent approximately $92.38 million on advertising and promotions last year, and General Growth Properties, which had $63.52 million in marketing expenses in 2005, have an easier time because they have substantial marketing budgets, as well as corporate partners. According to the ICSC's bi-annual SCORE report for 2004 (the most recent report) while 95 percent of the enclosed malls it surveyed had some kind of marketing program in place, the larger centers allocated more funds toward events. For example, centers with less than 500,000 square feet spent $0.06 per square foot on that kind of programming, while those of 800,000-999,999 square feet spent $0.33 per square foot and those of 1 million square feet and greater spent $0.21. Bell says Urban had sponsorship discussions with various corporations in the past, but has not signed any deals.
Rather than rely on external programming, Bell and other owners and managers with smaller portfolios fall back on incentive programs tied to the community. Urban, for example, has developed a School Bucks program — customers with school-age children are informed that for every dollar they spend at an Urban property, their child's school gets a point. At the end of the year, the school with the most points wins a prize.
“This way, we are building loyalty — the hope is that the mom will come in and maybe bring not only her child, but other children and their parents as well, and they will all do shopping and eating at our property,” Bell says.
Forest City Enterprises, which has only 14 regional malls in its portfolio, is also careful about spending.
“As you look at your marketing budget, you have to be very accountable on what will be the return on your investment for specific events,” says Jane Lisy, vice president of marketing with Forest City. “We don't do events for events' sake.”
Thinking locally
The Macerich Co., which has a smaller property portfolio than Simon and General Growth with 73 regional malls, focuses on producing elaborate events catered toward local communities.
In addition to regular Mommy and Me meetings, tree lightings and nationwide Flag Day celebrations, the REIT has produced wine-tasting events and silent auctions at its Village at Corte Madera property in Corte Madera, Calif. to benefit the Marin Cancer Project and at its Vintage Faire Mall in Modesto, Calif. to help the Gallo Performing Arts Center. Star Wars creator George Lucas made an appearance at the Corte Madera event, while the Modesto benefit featured performances by local artists.
At its Washington Square property in Portland, Ore., Macerich also organizes an annual “Tweet of Dreams” event — local celebrities and designers create birdhouses to teach kids about the wetlands.
“People can vote on the best displays and there is a silent auction,” says Susan Valentine, senior vice president of marketing with Macerich. “It attracts certain people who come to the auction, but we also get children and academics and bird-watchers.”
Altogether, Macerich produces more than 300 events a year across its portfolio.
At its Desert Sky Mall in Phoenix the company marks Mexican Independence Day, as well as Dia De Los Madres, a Hispanic version of Mother's Day.
The events were the result of Macerich's “community audit” program. Since 2000, Macerich mall managers have been meeting with local politicians, school districts and other organizations every two years to get input on mall programming.
“We made a decision that Macerich would be the social heart and economic engine of all our communities,” Valentine says. “So we do research, we find out what the community's wants and needs are and we offer them a social gathering place. We look at it as capturing loyalty — be being supportive and engaged, we feel that in the long run, it will drive sales.”
In a similar strategy, Forest City commissions benchmark studies for its properties every three years and then develops programs tailored to specific malls. In 2002, for example, the company realized that the frequency of customer visits and the length of customers' stays were below target levels at its Mall at Stonecrest in Lithonia, Ga. To correct the figures, Forest City doubled its event schedule, bringing in Disney and Nickelodeon characters, concerts and a whole lineup of entertainment aimed at families. When the numbers were taken again, in 2004, frequency of visits was up 13 percent, length of stay up 44 percent and sale expenditures up 17 percent.
To help offset the costs, Forest City partners with local sponsors, primarily car dealerships and media outlets. A newspaper, for example, will handle advertising free of charge, while a dealership might pay performers' fees.
The payoff
Though not all events may be profit centers, all are aimed at upping traffic counts and, in the end, boosting a property's sales. Macerich has been able to gauge how each of its events affects traffic.
In 2004, the company launched a tree-lighting ceremony at its newly expanded Queens Center in Elmhurst, N.Y. When the traffic counts were taken, it turned out the event brought in 2,500 to 3,500 people to the property or 27.5 percent more visitors compared to a regular Friday night. Meanwhile, the Dia De Los Madres celebration boosted traffic 34.2 percent over normal levels, according to Valentine. Tweet of Dreams upped traffic 19 percent.
According to Driscoll, who has worked on the General Growth mall tour in previous years, concerts can bring in up to 20,000 people a night.
Not all visitors, however, are created equal. Driscoll says it's the young mothers and teenagers who are most responsive to marketing, so the majority of events are aimed at them. Fort Lauderdale, Fla.-based Marketing to Moms estimates that there are 82.5 million mothers in the United States with about $1.7 trillion in purchasing power, and they control 85 percent of household spending.
“In terms of events for men, I would still be wary of trying to hold them in a mall,” he says. “We don't spend a lot of time making decisions about what we want to buy and our partners are the ones that help provide some balance.”
Bell concedes that her marketing department concentrates on bringing in women and children.
“Teenagers, once they get old enough to get to and from the shopping center on their own, are good too, but mothers with small children are our primary target,” she notes. “Sometimes during the holiday season we help men shop for gifts, but that's about it.”
That is why shopping centers in suburban areas might be best suited for hosting promotional events.
“With a regional shopping center located in a suburb of a large or medium city you usually have a lot more young families in the vicinity,” Bell says. “The suburbs in general just lend themselves better to those kinds of programs.”