It's a Good Time to Get Into the Face-to-face Biz

Investment firm Veronis Suhler Stevenson and research partner PQ Media recently released a report, "Communication Industry Growth," that pointed to strong corporate travel spending and the value of face-to-face marketing as reasons for a 6.1-percent increase in tradeshow spending in 2006. According to the report, total tradeshow spending last year was $10.3 billion, compared with $9.7 billion in 2005.

Though the rate of increase was smaller than in 2005, which saw a substantial 6.3-percent jump compared with 2004, and is predicted to drop slightly again in 2007, the industry overall will not be slowing down any time soon, according to the report's author.

"Compared to other industries, such as traditional media, that would love to have the growth rates the tradeshow industry has seen, from 6.3 to 6.1 is not of great concern," said Leo Kivijarv, PQ Media's vice president of research. "I think business-to-business media should be very happy."

Steven Hacker, president of the Intl. Assn. of Exhibitions and Events, said that, while he doesn't have a crystal ball with which to predict the tradeshow industry's future, the last few years have seen growth. "It's been very good," he added. "We base all of our metrics and data on CEIR (Center for Exhibition Industry Research), and revenue is up 5 percent from last year and attendance is up 3 percent."

Kivijarv attributed the small dip in last year's numbers to the first impact of what has become the current crisis in financial markets due to the collapse of the subprime mortgage industry. That is also the reason he predicts that the growth rate will be even lower this year.

"We predicted the economy would struggle through 2007, then recover by 2008," he added. "The subprime market is a small share of the mortgage industry, and our economist took that into consideration."

To Hacker, it's all relative. He said the current economy had seen the fourth-longest bull stock market in history, and, even taking a slowdown into consideration, the tradeshow industry would remain strong. In China, he added, the GDP growth rate was down this year to 10 percent, compared with last year. As in the tradeshow industry, the growth may have slowed, but it was extraordinarily high to begin with, Hacker said.

The report also pointed out a shift in marketing dollars to electronic media. B-to-B print publications saw only a slight increase in spending (0.6 percent) in 2006 to $10.94 billion, indicating spending on tradeshows will surpass print in the very near future, Kivijarv said.

While the report predicted print might continue to experience relatively flat growth, it forecast the compound annual growth rate in tradeshows from 2006 to 2011 would go up in several categories:

• exhibit space, 2.8 percent
• average price per square foot, 2.7 percent
• total spending on exhibit space, 5.6 percent
• fees, sponsorship and advertising spending, 7.2 percent
• total tradeshow spending, 6.0 percent

Driving the tradeshow industry's growth are both larger shows and smaller face-to-face events, Kivijarv said. Among bigger shows, the sports, travel and entertainment industries experienced growth, he said, but others, such as those in the food industry, weren't faring as well.

"It all depends on the market the tradeshow is in," Kivijarv added. "Overall, (tradeshows are) a healthy market. The marketers really count on that one-on-one exposure. We think that the fastest-growing part is not really the bigger shows, but the specialized ones."

He pointed to invitation-only events — such as the downscaled E³/Electronic Entertainment Expo to the E³ Media & Business Summit, held in July in Santa Monica, Calif. — as those that are geared to a specific type of attendee.

"They know that people coming to that type of show are CEOs, and not the second-tier buyers," Kivijarv said.

Hacker said more C-level executives were on hand at events. "They are not there to sell, but to meet and greet," he added.

B-to-B companies are also introducing more targeted conferences and seminars, the VSS report stated.

In September 2006, for example, integrated marketing firm ALM launched a conference and tradeshow division that combined a number of acquired conference and events companies into one division. The company expects to produce more than 275 events this year with a combined attendance of more than 40,000 executive-level decisionmakers.

Technology will also play a part in the tradeshow industry's continued growth, according to the report: "The Internet is proving to be a powerful marketing tool to promote events, provide online registration, sign up vendors and provide port-conference support, such as posting presentations and online videos of speakers."

Marketers are utilizing the Internet to attract more people to their company's booths, raise awareness and capture more leads.

As an example, the report recounts Intel's booth promotion at Intl. CES this year in Las Vegas. It allowed attendees to star in their own TV commercial for Intel's Core Duo Processor. Afterward, they could post the video on YouTube.

The report concluded, "Marketers will continue to spend money on events and use integrated media to drive attendance to shows as they introduce new products and seek to drive sales and acquire new customers."