Artificial intelligence (AI) has often presented as a difficult topic of conversation across numerous industries – music, film and television, and even marketing. How will AI impact the future of roles in these sectors? In ticketing, AI can be used to power decisions and is often entwined with dynamic pricing; where prices fluctuate due to demand. This feature will discuss the merits of AI in pricing, while also talking to a business that decided to opt against using the technology for now.
Simon-Kucher & Partners is a global strategy consulting firm that specialises in growth strategy, marketing, pricing and sales. It has offices across a multitude of countries but is headquartered in Bonn, Germany.
Ana Morillo, senior director and expert in dynamic pricing for Simon-Kucher, tells TheTicketingBusiness that AI is currently a buzz term for the industry, and explains how this technology can optimise revenue generation. Morillo also explains how using AI can lead to further practices for ticketing businesses, such as dynamic pricing.
“With the evolution and rise of AI, dynamic pricing is even more in the word of mouth of executives in the ticketing industry. However, even if they sometimes come in hand in hand, they are not the same thing,” explains Morillo.
“While dynamic pricing is the strategy and art to fluctuate prices in real-time based on demand and customer willingness to pay, AI is the enabler that permits analysing large amounts of data and supporting making fast, better decisions.
“The ticketing industry has still a lot of opportunities to grow via the use of higher sophistication tools to better price and manage demand. To date, only some market leaders have managed to embark on the road towards dynamic pricing and very few have started to enable decisions with the use of AI technology.”
Morillo explains that companies within the ticketing industry utilise past demand patterns, competitor pricing and external factors such as the weather to determine pricing and inventory. But with AI-fuelled algorithms, ticketing companies can also use personalisation to understand previous behaviours and support upselling opportunities.
Ana Morillo, senior director and expert in dynamic pricing for Simon-Kucher
Additionally, monitoring systems that are powered by AI can track real-time sales and capacity in order to adjust real-time decisions, for example relocating resources or changing prices for revenue maximisation.
The impact of AI
“AI is making a great impact in a vast number of industries, and it will have an increasing influence in ticket pricing,” says Morillo.
“Companies in the industry are starting, shyly, to differentiate prices based on rule-based systems, which inevitably requires predicting demand and consumer behaviours. As they advance on the road to dynamic pricing it is inevitable that more companies turn to enablers that support faster decision making, higher forecasting predictions and better market dynamic monitoring to secure the right product and price for the right client at the right time.”
While Morillo says AI will have an increasing influence in ticket pricing, one company decided to opt against the switch to using the technology at this time.
TICTACTIX is a ticketing and live entertainment services provider, headquartered in Montreal, Canada.
Senior partner Eric Valley explains to TheTicketingBusiness that TICTACTIX is not currently utilising AI in pricing, but had previously considered implementing the technology.
“Pricing, encompassing strategies such as yield management and dynamic pricing, constitutes a vital component for live event organisations, albeit some entities still overlook its significance,” he says.
“Nevertheless, the intricate nature of pricing demands considerable time and effort. Tasks involving data acquisition, analysis, and strategy formulation are time-consuming and susceptible to potential errors, incurring costs and necessitating substantial time investment, alongside the requisite data and knowledge.
“Dynamic pricing tools commonly incorporate algorithms that enhance decision-making processes, offering quicker and more insightful outcomes. However, these algorithms are constructed based on aggregations of intricate business rules, which are generally effective but not foolproof. When confronted with novel circumstances or situations beyond the predefined rules, they may prove inadequate. Such tools lack the capacity to handle unknown or unforeseen scenarios.”
Valley adds: “The introduction of AI introduces a compelling dimension, as AI exhibits adaptability to new circumstances, endeavours to identify solutions, and learns from its experiences. While acknowledging that AI is not flawless and may still entail the possibility of errors, its integration undoubtedly holds the potential to elevate pricing strategies to a heightened level of sophistication.”
A layer of apprehension?
So, what has delayed the implementation of AI pricing strategies or dynamic pricing for TICTACTIX?
“The sector is grappling with the integration of dynamic pricing and algorithms to enhance decision-making processes. Regrettably, pricing remains overlooked in numerous organisations, not receiving the attention it merits. Furthermore, there has been adverse feedback from fans who attribute the increased cost of certain live events to these pricing mechanisms,” says Valley.
“Unfortunately, a lingering stigma persists, framing the use of such tools as an ethical dilemma, questioning the rightness or wrongness of their implementation. The prospect of AI as the next progression in pricing adds another layer of apprehension for organisations.
“My assessment of the situation is that the reluctance to adopt AI for pricing is not driven by technological constraints but rather tied to a apprehension about the necessity to rationalise the pursuit of increased revenue by these organisations. This sentiment is particularly pronounced in the realm of arts.”
While TICTACTIX ultimately decided against utilising AI for now, Valley says that AI can provide a number of advantages.
“Even nonprofit organisations stand to gain, as everyone needs to meet their budgets,” he adds.
Insert: Eric Valley, senior partner at TICTACTIX
While some organisations may not be chasing profit as a primary goal, enhanced revenue can allow arts, cultural and sporting entities to thrive by mitigating risks. Additionally, using AI allows them to concentrate on the experiences while knowing that ticket sales revenue is taken care of.
“Moreover, I anticipate that, in the future, AI will not only enhance pricing strategies but also contribute to improving inventory management, distribution, and digital marketing. These advancements will collectively contribute to generating more revenue and expanding audiences,” says Valley.
However, Valley believes that there can be negatives associated with the application of AI in pricing.
“Over-dependence on the tool may hinder them from gaining valuable perspectives and insights about their business, as all analyses, thoughts, pricing decisions, and adjustments are automated,” he argues.
“Reflecting on my experience years ago when my team and I introduced dynamic pricing at Cirque du Soleil, the manual approach, while time-consuming, provided us with invaluable insights into the various factors influencing revenue. This manual process allowed us to comprehend sales patterns more thoroughly and facilitated a more strategic scaling of our venues.
“To address this concern, the utilisation of AI should extend beyond merely proposing pricing strategies and adjustments. It should also serve to inform users, enabling them to enhance their understanding of their own business, fostering a symbiotic relationship between human expertise and AI-driven insights.”
Simon-Kucher & Partners’ Morillo adds that AI can only thrive if the business has the correct strategy in place.
“AI shows great potential for enabling forecasting and modelling and is therefore an aid to take the right pricing decision. However, we must not forget that while the technology might enable the model, the model needs a clear strategy regarding what pricing strategy is right for the business and how to achieve it,” says Morillo.
“Typically, a well thought out strategy integrates vision, technology, processes, and organisation to secure the highest uplift and customer satisfaction.”
Share this