Corporate Events: A Clear and Present Threat?
By Heidi Genoist -- Tradeshow Week, 8/9/2004
The talk about corporations putting more money into proprietary events at the expense of their tradeshow budgets has continued since the so-called recovery began. But how much truth is there to the idea that association-owned tradeshows are losing exhibitors to private gatherings? It depends on who you ask — and who you are.
As recently as four months ago, technology-industry exhibitors told Tradeshow Week they would continue cutting their participation in horizontal tradeshows and consider user groups and corporate conferences. Following the July cancellation of former technology tradeshow goliath COMDEX, exhibit marketing company George P. Johnson declared, "Clearly, tradeshows are no longer right for everyone, the realization of which leads us to one of the most valuable questions to arise from COMDEX's cancellation: If not tradeshows, what?" The answer, GPJ asserted, is proprietary events.
Not long after, GPJ released U.S. results of its third annual Global Event Trends Survey, done in conjunction with Meeting Professionals Intl. The survey of 200 decision-making marketing executives found the tradeshow percentage of the overall marketing mix continues to decline gradually, while the percentage allocated to proprietary events continues to increase.
GPJ Vice President of Marketing Michael Westcott said these findings indicate, in broad terms, that money in marketing budgets is being shifted. "But it's happening in different industries and companies for different reasons," he said.
Westcott said fast-growing industries such as biotech and health care are spending fast and furious on tradeshows because they "need tradeshows to bring people together because of their fragmented nature." Other, more mature segments with longer, more complex sales cycles and higher per-item ticket prices are placing increased emphasis on proprietary events. High-tech and automotive are good examples of industries where Westcott sees this happening.
John Spargo, of association-management firm J. Spargo & Associates, said that most of the dozens of association-owned tradeshows his company manages, mainly in the medical and military sectors, have been growing over the last couple years. Meanwhile, the automotive sector — GPJ's specialty — is witnessing the rise of tech fairs, "where all the suppliers will go set up an exhibit at an event for Chrysler customers, for instance. That's become their most important type of event marketing," Westcott said.
Changes made among the exhibition industry's major convention and visitors bureaus and service contractors indicate they, too, are increasingly aware of the revenue-generating potential of proprietary events. Companies like GES Exposition Services, The Freeman Companies and Champion Exposition Services over the last few years have beefed up their corporate events divisions. In addition, the Las Vegas Convention & Visitors Authority has reportedly increased the resources it is putting into luring corporate events to town.
But association-show managers deny that proprietary corporate events are stealing their exhibitors. Chicago-based Hall-Erickson, a firm that handles major tradeshow clients like the American Rental Assn. (owner of The Rental Show) and the Assn. for Computer Machinery (sponsor of SIGGRAPH), reports that among the association shows it manages (accounting for 90 percent of its business), exhibit space sales have grown an average of 7 to 10 percent this year compared with last year. Some of these have seen year-over-year growth in number of exhibiting companies as high as 20 percent, the company said.
Paula Fauth, a show director for Hall-Erickson, said she knew of no companies pulling out of the shows her firm manages in order to invest more resources in private events. "If they're leaving or downsizing, it's because of their own financial troubles or because they're being bought by someone else," she said.
A couple of J. Spargo's shows have decreased, but the company's principal said anecdotal evidence points to changes in buying patterns and industry consolidation, rather than a tendency to shift funds to private show exhibits.
"I've been in this business 30 years, and I've seen talk of corporate competition come and go," Spargo said. "One day, corporate events will be all the rage, and everybody will be thinking about doing them. The next, those companies aren't in business anymore."
Tradeshow Week research appears to support this observation. In a study completed last month, 30 percent of corporate exhibitors surveyed said their management considered non-tradeshow event marketing (such as private events) less important than two years ago. Twenty percent said management considered it more important.
"I'm not aware that this is a major issue, beyond the anecdotal talk of corporate events taking share from traditional shows," said Michael Hughes, TSW associate publisher and director of research services. "My sense is that this may be an issue in certain sectors, but our surveys don't indicate a significant increase in corporate events."
Fauth believes that, if anything, proprietary events help larger, horizontal shows. "Corporate events are geared more toward a vertical, niche market," she said. "They help educate the attendees as to the broad scope of things they might find at one of our association shows."
Using the example of computer-graphics confab SIGGRAPH, she explained that some exhibitors attend corporate events throughout the year to learn about specific products or information, then come to the annual gathering to compare them with others across the broader market and take advantage of a larger pool of educational programs.
Westcott said the associations that use an approach like this — creating the marketplace atmosphere of a proprietary event, while also offering industry members a place to meet with their industry colleagues — are those that have thrived and will continue to do so.
Amy Ledoux, director of expositions for the American Society of Assn. Executives, seconded this notion. She pointed out that exhibition managers of all types have to listen to their clients and respond to their needs more carefully than they did when the economy was booming. "They have to prove to their bosses that exhibiting is a good return on investment," she said.
Indeed, ROI is the concept du jour. Apparently, the tough climate is teaching event organizers how to demonstrate the value of their proposition. In the GPJ-MPI study, respondents ranked events first among all the given types of marketing in terms of their ability to provide the greatest ROI.
In fact, part of the reason companies like Hall-Erickson and J. Spargo are seeing growth in their association-owned tradeshows may be that event marketing overall — tradeshows as well as conferences, seminars, sponsorships, road shows and other activities — is on the rise. According to the GPJ-MPI study, 82 percent of marketing executives plan to include some type of event marketing in their overall marketing mix. That represents a 6-percent increase over last year.
But while events may be on the rise, other items in the marketing mix may be still a threat to them. In a March TSW study, 29 percent of corporate exhibitors said some of their event-marketing budget had been shifted to other marketing mediums.
The biggest culprit could be the Internet. Sixty-two percent of marketers participating in the GPJ-MPI study said they would increase their budgets for Web marketing this year — up from 52 percent last year. Likewise, public relations spending is on the rise.
But an increase in Web ads and PR doesn't necessarily equal the demise of events either. "One thing a lot of companies are waking up to is the importance of integrated advertising," Westcott noted. "If events are integrated with direct marketing, PR and the Internet, then increases in one area ultimately help the entire campaign. What's interesting about these findings is that everybody's using measurable media this year."
The July TSW study similarly found that 75 percent of corporate exhibitors have closely integrated their exhibit marketing programs with advertising and strategic marketing messages and goals.
Overall, there is a sense that events are back. In the GPJ-MPI study, 42 percent of marketing executives said the future importance of event marketing is on the rise. In the July TSW study, 80 percent of corporate exhibitors indicated they were confident that ROI and ROO would increase in the second half of this year. And this optimism extends to association and private events alike.
"Now, associations are growing and investing money back into their shows," Fauth said. "We're really excited about the performance of all our shows across the board."
| Less important | 30% |
| More important | 20% |
| Source: TSW Corporate Exhibitor Executive Outlook, July 2004 | |
