Exhibitors may have slashed budgets as the economy flagged, but the overall distribution of event spending saw little change, according to a recent study released by the Center for Exhibition Industry Research.
Spending on exhibitions is projected to total $24.5 billion this year, up slightly from $24.1 billion in 2007, the last year that the organization released its “How the Exhibit Dollar Is Spent” report. The CEIR study is designed to help exhibitors plan their trade show budgets.
Between the two reports, the overall trade show industry shed exhibitors, attendees, gross revenue and square footage, posting three consecutive years of decline before regaining its footing in 2011, according to the CEIR Index, an annual report that compares year-over-year metrics across 14 industry segments.
During that time, new technologies entered the events space, with touch-screen capabilities, mobile applications and QR codes among the innovations. But spending habits changed little. CEIR began to track dollars dedicated to lead management, an area of increasing investment that garnered 4% of the average budget; but among existing categories, only the percentage of the budget devoted to booth space saw an increase. “It's interesting how little the needle seems to move, despite all of the moving parts,” said Doug Ducate, president-CEO of CEIR.
Exhibiting companies devoted 36% of their event marketing dollars to square footage, up 5 percentage points from 2007, according to this year's report, which was based on an online survey of 233 exhibitors.
That percentage is important because it serves as a starting point for exhibitors that are laying out a rough spending plan.
“If you start with a known figure of space cost, you know what your total budget will be,” Ducate said. “It's a word of caution for organizers in terms of price points and what is considered a good value for the exhibit space. They need to be alert and make sure they don't go through an acceptability threshold.”
The increase since 2007 likely reflects a trend toward bundling services into space rental, Ducate said. It's a tactic many show organizers have employed to help exhibitors maintain the size of a footprint and better predict and control costs, especially those costs associated with setting up and operating heavy machinery. Spending on services declined by 2.7 percentage points during the same time period.
“Exhibitors dislike a disruption to their plan budget,” said Gene Sanders, senior VP-trade shows at SPI: The Plastics Industry Trade Association, which saw an increase in the amount of heavy machinery on its NPE2012 show floor after it moved the event from Chicago to Orlando, Fla., and bundled services. “We take away the surprise factor so they can plan what they want to accomplish while they are at the event. They can focus on marketing strategy, not operational costs.”
Exhibitors at NPE2012 stepped up branding initiatives and invested in sponsorships as an economical way to gain visibility on a crowded show floor, he said. Sponsorship sales at the event increased by about 75% between 2006 and 2012. The jump bucked an industrywide trend that saw a dip in discretionary spending categories, including promotions and travel and entertainment.
“We try to make sure [exhibitors] consider [sponsorship] opportunities before they select their booth space, so they can understand the entire landscape before they portion their money,” Sanders said.
New technologies that were expected to cut the amount of product shipped to the show floor did not lead to large-scale changes. “Exhibitors are very interested in making sure they have good interactions at the show site,” said Steve Moster, president of Global Experience Specialists, which organizes 3,000 events and works with 350,000 exhibitors annually. Technology has improved the quality of product demonstrations, educational sessions and other elements of the show. “But that's not always at the cost of bringing product to an event. Having machinery there is still important,” Moster said.
CEIR predicted that event spending will continue to grow. Almost all the survey respondents indicated that exhibitions provide unique value not found in other marketing channels. And though almost half of the event marketers that responded to an online survey of 885 exhibitors conducted by CEIR in April said that their companies had decreased event spending during the downturn, a majority expected to see a modest rebound over the next two years.