Exhibitor Costs: Whose Problem Is It?
By Heidi Genoist -- Tradeshow Week, 4/3/2006
Exhibitor costs were at the top of the list of things that needed improvement during the last downturn. Repeated Tradeshow Week surveys over the last five years have shown the high price of exhibiting as a top concern for show organizers, CVBs and contractors of all kinds.
Michael Bandy, then-president of the Trade Show Exhibitors Assn., told TSW three years ago that his members generally felt tradeshow exhibiting was too expensive. What did they do about it? "They're looking at their show schedules, demographics and results, and making adjustments," Bandy said.
Organizers who recall the shrinking showfloors of 2002 and 2003 don't need to be reminded what those "adjustments" were. But did organizers actually do anything to lower the cost of exhibiting?
Some froze space rates — at least for a while. Firms also began exploring more affordable options for material handling and I&D. Turnkey booth packages weren't just for newbies and small fries anymore. Top-10 TSW 200 shows like MAGIC Marketplace and the Intl. Home & Housewares Show began offering them en masse.
Reed Exhibitions gave exhibitors in its Natl. Hardware Show a flat fee for drayage, and several others firms followed suit. Companies like M¦C Communications and Gartner demonstrated alternative pricing and service models, charging attendees high registration fees for quality content, charging market-leading companies top dollar for sponsorships, then keeping exhibiting itself cheap and simple.
Perhaps the most drastic example of a show organizer taking exhibitor costs into its own hands came with the Packaging Machinery Manufacturers Institute's PACK EXPO shows. Desperate for a way to reduce the humongous material handling fees its members paid to move their heavy exhibitry, PMMI took general contracting in-house.
Although it still had to subcontract labor, PMMI licensed the Expo Group's Single Source Solution as a way of managing the supply chain and, hopefully, reducing exhibitors' costs.
The experiment had mixed results, according to PACK EXPO exhibitors.
"I cannot say that we have reduced overall cost, but areas where we have saved (include) eliminating the drayage cost," said Jane Burbach, marketing communications coordinator for Doboy. "We can now allocate those funds to other show activities that we were unable to afford in the past."
Burbach estimated that Doboy saved about 5 percent on drayage, although the new system has not necessarily made her job at the show much easier.
"With anything new it takes time to work out the bugs, and PMMI is making an effort to smooth out the process," she said.
One thing many organizers learned is, when it comes to cutting the overall cost of exhibiting, there's only so much they can do.
"From a show manager's standpoint, I don't think you'll find anyone who doesn't care about exhibitors' costs," said Natl. Trade Productions' Steve Greenspan, executive director of TS2, the tradeshow targeted directly at tradeshow exhibitors. "It's tough to find ways to do that, when you're stuck with whatever the union rates and hotel rates and space rates are in the cities you go to."
While CVB and city officials in Chicago and Philadelphia have restructured arrangements with local unions in the hope of controlling labor rates charged to tradeshow exhibitors, travel costs are mainly driven by market demand.
Anyway, as Greenspan pointed out, the real problem has turned out not to be cost — but ROI.
"As the economy picks up, it's still challenging to find qualified people to take time out of their office and spend time at our shows," said Greenspan. "There was a lot of talk about the value proposition, but we have to do a better job helping our exhibitors have better shows."
Hence the organizer's recent obsession with improving attendance, which drives exhibitor ROI. Many companies that sent fewer buyers to exhibitions as a belt-tightening measure during the downturn found that they didn't need to start sending more when budgets rebounded, pointed out Susan Friedman, aka the Tradeshow Coach.
In fact, the greatest change to have come about as a result of exhibitors' high costs and shrinking budgets might have been in the exhibiting companies themselves.
At the same time show managers were learning how to improve the ROI offered at shows, exhibit managers were becoming more savvy about measuring it according to their own goals, said Simon Perutz, president of Nimlok.
"It was a huge psychological change," he said. "I remember when Mitsubishi came to us with $400,000 to do a booth. When we asked them what they were trying to achieve, they didn't know. Now, they know exactly what number of high-end machines they need to sell to get a return."
Post-downturn, he said, many companies began to think more carefully about what they wanted to achieve. They understood that their return from a tradeshow had to be equal to the return from other forms of marketing media. When that's not the case, the other media gets more of the marketing budget.
Many, like Perutz and Greenspan, believe the change is good, a correction to a bloated system. In addition to changing exhibitors' reckless spending habits, it's forced some organizers and cities to be more up front about their fees.
"One of the biggest issues, beyond controlling costs, is knowing them; simply being able to budget," Greenspan said.
Still, exhibitors are spending money again — ordering new exhibits, going to more shows. "Companies are being more generous with their dollars," said Friedman.
Do they still complain about the high cost of exhibiting? Every chance they get, sources said. The difference is now — and maybe no matter how good things get — they know how high is too high.
