Key Innovations Driving the "Experience Economy" Revival

People are ready to return to revelry, but the experience economy is still in flux. Here is how service brands can find a path forward

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This week marked the two-year anniversary of the first nationwide lockdown in the U.S. due to the Covid-19 outbreak; it also happened to be the opening week for the SXSW festival, which returned to a fully in-person affair. SXSW's return represented a new normal for conferences and major events, where COVID-related measures are mostly no longer in effect, yet the ongoing pandemic still impacts attendance of major destination events that require traveling.

On a more local level, however, consumer spending data suggests that people have started to return in droves to restaurants, theaters, sporting events, concerts, and other leisure activities that they have missed in the past two years. With warmer weather coming to much of the country and falling infection rates helping people feel more comfortable attending events and socializing in-person, pent-up demand for services such as travel and dining are looking at a nice recovery phase ahead.?

Interestingly, the only experience that people are not eager to return to is working in offices. Office occupancy is at about 40% in 10 major cities across the country for the week of March 7, according to data from Kastle Systems, which is significantly lower than other metrics such as movie box office performance and OpenTable reservations.?

Source: Kastle Systems

All in all, it seems like hybrid work is here to stay, and the consequences of this lifestyle shift for knowledge workers will also have a lasting impact on the future of the experiencel economy. Many consumers are adapting to a mix of in-person and remote work. This could translate to higher personal savings and discretionary spending that can be a boost to the experience economy. In addition, the rise of “workations,” where people combine business travel with vacations or extend vacations to include periods of remote work, will continue to free up new leisure time and spending on services.

In an age of hybrid work, the bottom line is that workers want to get out of their homes, but they do not want to return to the same old office full-time. While employers rethink office buildings on the micro scale, cities need to grapple with how to efficiently use their office-dominated downtown areas, which also happen to be the core location for most cities’ experience economy, such as restaurants, nightlife, and performance venues. In short, America’s downtowns will need to go hybrid too, balancing office spaces and parking lots with new spaces and venues for leisure activities that people are eager to go back to, together.?

In particular, businesses in the experience economy can find a path forward by embracing three key trends in the space: frictionless discovery & ticketing, hybrid presence, and post-event engagement.?

Event Discovery & Ticketing Made Social & Frictionless

Starting with the first step in the consumer journey, service brands need to rethink how people are discovering events and booking tickets today. Conventionally, event marketing usually aims to reach local audiences via media channels such as OOH ads, as well as local and regional TV and radio spots. In the digital era, this has translated to location-based hyperlocal targeting, as well as dynamic creative in digital displays based on location data.

However, today’s culture moves at the speed of social media and memes, and for event marketers, social discovery remains an underutilized space for promoting experiences. Even before the pandemic, social media was already driving much of the growth in the experience economy. In a 2018 New York Times article, author Amanda Hess sampled a range of temporary, ticketed experiences in New York City — the Rosé Mansion, Candytopia, the Color Factory, the Museum of Ice Cream’s Pint Shop, etc. — and concluded that the real experience on offer in all those places was great backdrops for social media posting.

Given that social media is already the platform of choice for word-of-mouth marketing, experiential brands should up their games in social discovery, and more importantly, social commerce to ensure a frictionless experience from discovery to booking tickets. Unlike physical goods, however, planning to attend an event or book often entails scheduling coordination between family and friends, so there is an extra step of planning between discovery and booking that social media, most of which also doubles as messaging platforms, is uniquely suited to integrate and streamline the customer funnel.?

For example, Snapchat recently partnered with Ticketmaster to match users with live events near them. Through a new Snap Map layer via Ticketmaster’s Snap Mini app, users can now browse the ticketing company’s vast catalog of comedy shows, sporting events, and concerts in a map view. Once users find where they want to go, they can simply tap to invite others to join through stickers embedded in the Snapchat Camera. The feature also includes a way to buy tickets through the app with an easy-to-use checkout process.?

As part of the pandemic-accelerated adoption of contactless tech, more consumers became familiarized with QR codes, and more venues have switched to e-tickets. Still, scanning mobile QR codes on people’s phones is rather cumbersome and has room for improvement. In a world where Amazon’s “Grab and Go” stores and palm-reading authentication technology exist, attending events could be a much more frictionless experience with biometric ticketing, without necessarily utilizing facial recognition and infringing on consumer privacy.

CLEAR, the biometric security firm popular in U.S. airports and stadiums, recently raised $15 million from VCs to expand their footprint into more event venues and retail stores to facilitate better admission and on-site payment experiences. Some MLB stadiums have already deployed CLEAR biometric tech for frictionless entry since 2019. So far, CLEAR touts 1 million members using biometrics at 21 airports, as well as six baseball stadiums and one NBA arena.?

Hybrid Presence Broadens the Scale and Enriches Experiences

One way to potentially solve the accessibility issue that comes with the inherent capacity limits of real-world venues and inflated ticket prices is to embrace hybrid events. In tandem with the accelerated shift to hybrid work, hybrid events are gaining traction as well, initially out of necessity, but more recently because of the benefits they bring to scaling up the events and enriching the experience.?

From TwitchCon to Coachella, different conferences, festivals, and events have embraced live streaming as a way to bring their on-site experience to a virtual audience that is not binded by the constraints of geography and travel costs. Naturally, brands jumped on board as well, as companies like Apple and NBA host their own respective hybrid experiences to engage customers and fans, wherever they are. Instead of overcrowding the venue and making the experience unpleasant for all, the hybrid approach ensures in-person attendees have enough room to move around while offering those joining remotely the best seat in the house.

That being said, the true potential of hybrid experiences is still far from being fully realized.?

The hybrid events of the future would prioritize both in-person and virtual experiences and provide interactive elements accessible to both sets of attendees. Most of the so-called hybrid events today offer concurrent yet completely separate experiences for the in-person and virtual audiences; at best, they will attempt to connect both in-person and virtual audiences to a stage, but still fail at connecting virtual and onsite audiences with each other. In short, hybrid presence is the missing piece in many of today’s hybrid events.?

In order to move from a hybrid event to a hybrid experience, brands and marketers have a lot to learn from esports event organizers, whose audiences have long been hybrid even before the pandemic fast-tracked that into reality. For those events, the presence of the virtual audience is equally important as that of the in-person attendees, often emphasized through comments and emotes on huge jumbotron displays and allowing the two sets of crowds to hype each other up.?

Post-Event Engagement Prolongs the Life Cycle of Events

Selling experiences doesn’t mean there is nothing for consumers to take home. Experiential services have long incorporated physical items like souvenirs and merchandise into their offerings to make sure that the good memory of the experience would last forever. Even most dentists nowadays would entice customers to come back for more services with a dental care travel kit. With the rise of digital collectibles and new subscription-based loyalty programs, experience providers are about to learn some new tricks that will help them prolong post-event engagement and help build a long-term relationship with attendees.?

NFTs have been hailed as a major innovation that has the potential to popularize digital collectibles and tokenize access management. Already, we’ve seen some brand examples in action. AEG, the company behind the Coachella music festival, recently announced it plans to auction off a collection of ten NFTs that double as lifetime passes to the festival. Some of the Coachella NFTs can be even redeemed for physical items like posters and photo books.?

Such experiments with tokenized access are gaining traction in the music industry. John Legend recently partnered with KKBOX to create an NFT platform for musicians to release digital merchandise and collectibles directly to fans. There is even a startup called Royal that enables musicians to sell their albums as NFTs and avoid the record labels taking off a lion's share of the profits. Beyond the music industry, Resy co-founder Gary Vaynerchuk is set to open a members-only fine-dining restaurant next year whose membership is granted and verified via crypto tokens made available for public trading.

Therefore, we’d strongly recommend brands in other consumer-facing categories to exercise an abundance of caution when tipping toes into NFTs and tokenized access, given the growing cultural backlash against crypto and web3 technologies. The swift backlash towards Twitter’s decision to integrate NFT profile pictures is a good indicator. For the general consumers, the reputation of NFTs has been plagued with frauds and fakes, not to mention the general sustainability concerns around crypto mining.?

Instead of jumping on the NFT bandwagon, brands can consider taking a more community-oriented approach that builds the infrastructure to facilitate future experiences and foster long-term relationships. For example, to promote its new series on the backstory of the Lakers team, instead of buying another billboard, HBO Max refurbished an old basketball court (with branded promotion) in Inglewood, a historically black neighborhood in Los Angeles, for the community to enjoy for years to come. During the event that HBO hosted to officially unveil the renewed court, celebrity basketball trainer and show consultant Idan Ravin led a basketball skills camp, teaching attendees the ins and outs of the game.?

Looking ahead, are there also opportunities for leisure brands to create an extended concession stand that will be easily accessible via digital channels and use that to engage with consumers post-event.

It is no exaggeration to say that the events of the past two years have exponentially increased our collective levels of anxiety and stress. As a result, many consumers will uncompromisingly prioritize their wellbeing, which typically translates to increased spending on leisure experiences that bring them joy and rest. In the decade to come, leisure experiences will no longer be viewed simply as an enjoyable way to spend time, but as an investment in longer-term mental wellbeing and emotional fulfillment. And there is a lot more that service providers and marketers can do to help customers have fun.?

If you want to learn more about the future of the leisure business, or simply to discuss the emerging trends that are reshaping the experience economy, the Lab is here to help! Please reach out to our Group Director Josh Mallalieu at [email protected].