Marketing Mix: Events Still Rank Highly

By Margo McCall -- Tradeshow Week, 4/3/2006

When American Business Media set out to research whether online revenues were sucking money from members' trade magazines, they discovered something else: Face-to-face events were rated the most effective means of marketing.

The ABM digital media survey, conducted by Forrester Research, found that in-person events were the top marketing tactic to build brands and generate qualified leads, followed by public relations efforts and trade magazines.

"The initial question was, 'Is money flowing from magazines to the Internet?' We came back with a lot of pleasant surprises," said Gordon Hughes, ABM president and CEO.

Nonetheless, online spending is capturing a greater share of marketing budgets than any other category. According to the nearly 900 respondents to the ABM survey, online accounts for 17 percent of marketing budgets, compared with 16 percent for marketing communications and 15 percent each for in-person events, and television and radio. The respondents came from a wide range of industries.

Consequently, the race is on for business-to-business companies to tap into the new streams of online revenue. Advanstar Communications, for example, reported that 2005 online revenue tripled to $2.6 million. During the first nine months of 2005, Penton Media added more than $1.2 million to its online revenue, an increase of 34 percent. For Penton, the revenue was generated through both webcasts and online ads.

A study by research firm Outsell confirms the trend toward higher online activity. Respondents to a January Outsell survey indicated that they would spend more than 18 percent of their budgets online this year, up from 16 percent last year. Rather than boost overall spending, the respondents said they planned to cut back on television, radio and print advertising to make up the difference.

For years, B-to-B companies have been trying to adopt an integrated marketing approach that would leverage the strengths of their tradeshow, magazine and digital offerings.

Hughes said in that model, magazines serve as the brand, which is extended out to tradeshows and digital products. "We look at it as the attendees are the readers, and those that have the booths are the advertisers," he said.

Within the B-to-B industry, abut 38 percent of revenue currently comes from ad pages, 32 percent from events and 12 percent from digital opportunities, according to ABM.

Although it took a while for advertisers and ad agencies to adapt to integrating their spending among events, magazines and Web sites, Hughes said they're finally embracing the new approach.

"It is the advertisers that are asking for it," he said. "Six years ago, our guys were pounding away at taking integrated packages. Today, they're being requested."

Bob Priest-Heck, former CEO of MediaLive Intl., said chief marketing officers and ad agencies initially resisted the integrated approach. "We've been talking about integrated marketing for quite some time. Media companies have been willing to offer it, but advertisers have not been buying that way," he said.

James Lonsdale-Hands, recently named managing director of CMP Media's custom events group, agreed with Hughes that integrated marketing is finally being embraced, especially in the technology sector.

"Clients want an integrated solution. The tendency in the past has been to separate publications and Web sites from the events group. More and more, that solution is changing," he said.

Hughes said B-to-B publications were quicker than their consumer counterparts to expand into events. "The consumer guys are just starting to do tradeshows," he said.

B-to-B firms embraced higher-margin tradeshows out of necessity, he said, to make up for razor-thin margins in trade publishing.

Hughes, who estimated that tradeshows generate $10 billion revenue per year, said events looked like they were suffering a few years back, but ended up recovering more quickly than B-to-B magazines.

"It looked as though face-to-face (communication) was having terrible issues, but underneath it was not. It was still a robust industry with good margins."