January 2006
Special report: State of the Industry
Will your sector be a leader or laggard in 2006?
The 2nd Annual CEIR Index Report dubs 2004 “The Year of Recovery.” Industry insiders say sustaining growth in 2006 will require a strong marketplace and innovations that deliver value. Whether your sector is a leader or a laggard, remaining relevant will be the supreme challenge.
By Cathy Chatfield-Taylor
The Center for Exhibition Industry Research (CEIR, www.ceir.org) released the 2nd Annual Exhibition Industry Index last September to much fanfare. In 2004, overall exhibition industry performance surpassed the 2000 baseline of 100.0 by 3.6 index points. Finally, there’s proof that the business-to-business exhibition industry is resilient enough to survive an economic downturn.
But what do the numbers bode for the future? The compound annual growth rate (CAGR) during that four-year period was barely 1 percent, and revenue declined by nearly 1 percent. Is the forecast really rosy, or should we just be relieved that the numbers weren’t worse?
EXPO asked more than a dozen industry insiders for their take on the CEIR Index Report and learned what should perhaps be obvious: If you’re in a market that’s flat or declining, it’s tough to grow. But down to the smallest sub-sector, if the industry is thriving, so are its shows. Why, then, do we need the index?
“So many people in this industry have the mentality that we’re the media’s stepchild, instead of saying we’re a powerful force here,” says Bob Harar, Chairman and Founder of Alexandria, VA-based National Trade Productions (www.ntpshow.com). “There’s a paranoia that we won’t match up to the other media channels. I don’t look at it that way at all. I never believed in the demise of the trade show industry. In terms of return on investment and cost effectiveness, we’re one of the most powerful industries out there. The challenge is getting our customers educated. That’s where the CEIR Index comes in.”
Armed with credible historical data about trade show performance, show organizers can convince corporate marketers that exhibitions are a bargain compared with the Internet or publications. The CEIR Index Report indicates that in 2004, all metrics were up, led by nearly 7 percent gains in attendance and exhibit space. Whether the industry sustains such hefty growth remains to be seen, but the prognosis is positive.
“We should be feeling really good,” says Adam Gross, Vice President, Marketing and Communications for the Jordan, Edmiston Group (JEGI, www.jegi.com), the New York City investment bank that provided sector-by-sector trend analysis for the index. “If you look at the business publishing industry, its performance leveled out, after several years of downward movement. Compare this with the trade show industry, which grew nicely in 2004.
“The trade show industry weathered the storm and has now surpassed the baseline numbers. The takeaway is, trade shows are going to be here, and they’ll be able to weather the storm,” he says.
Let’s do the numbers
The CEIR Index tracks performance based on four metrics: net square feet (NSF), number of exhibiting companies, number of professional attendees and exhibition revenue from all sources. The index baseline of 100.0 is founded on 2000 data. Year-over-year change in each metric is reported in index points. The average of these four index values comprises the “total.”
From 2000 to 2004, the total for the overall exhibition industry increased at a CAGR of 0.9 percent, led by a 2.3 percent increase in NSF, 1.0 percent increase in attendees and 0.9 percent increase in exhibitors. Revenue declined at a CAGR of 0.7 percent.
The CEIR Index attributes the lag in revenue growth to fragile corporate marketing budgets and financial pressures on exhibiting companies during the economic downturn. When show organizers are confident that the market can withstand price increases, revenue will catch up with other metrics.
“Market dynamics is a key,” says Gross. “When you look at the consumer goods and retail sector, for example, it’s in need of some core economic fundamentals to change for the metrics to catch up with the overall industry.”
Looking at the year-over-year metrics from 2000 to 2004, it’s clear that the overall exhibition industry is susceptible to traditional business cycles. The index total fell 1.1 percent in 2001 and 2.9 percent in 2002, then rebounded 2.3 percent in 2003, driven by 6.5 percent and 5.6 percent gains in NSF and exhibitors, respectively.
Some sectors — namely construction, government, medical, industrial and food — bucked the downward trend and saw substantial gains due, in part, to favorable market dynamics and inventive promotions, such as Internet marketing, co-location and value-added content. Though it’s impossible to “recession-proof” an event, it’s clear that innovative management can minimize losses.
By 2004, the total for the overall exhibition industry gained another 5.4 percent, led by 6.8 percent increases in NSF and attendance. Even revenue increased 2.0 percent. All indicators point to the upward trend continuing through 2006 and beyond.
“I look at 2004 over 2003, and attendance and space had almost equal growth — they’re both roughly 7 percent. To me, that’s good,” says Skip Cox, President and COO of Red Bank, NJ-based Exhibit Surveys (www.exhibitsurveys.com). “Attendance in 2004 made a very significant turnaround, and we’re seeing the same in 2005. That means attendees are seeing value in shows, and they’ve upped their budgets to allow them to attend.”
Another encouraging indicator is that the NSF growth rate is outpacing the number of exhibitors, which grew 5.7 percent in 2004.
“Some companies are taking more space. That’s a positive sign. They’re not just coming back, they’re increasing their investment because they’re seeing value,” Cox says. “Exhibitors will probably continue to control their costs relative to the anticipated return they expect on their investment. Sustaining growth will depend a lot on the level of promotion by organizers, the value that’s being delivered and the relevancy of the show to the marketplace.”
Reading tea leaves
Factors that will affect the exhibition industry’s ability to sustain these gains include structural changes in the buying and selling process in individual industries. Corporate consolidation, off-shoring, shorter product life cycles and changing supply chains will all have an impact.
“The better show organizers will be the ones who understand what those structural changes are, and then react to them in terms of how they improve their show to deliver value and remain relevant to the marketplace,” says Cox. “Companies never drop out of marketing completely. They cut back. From an exhibitor or attendee point of view, if they drop back from three shows to one, you want to be that one show.”
Where do growth opportunities lie in the coming years? The Internet remains an under-exploited opportunity for promotion and revenue generation.
“Large show organizers have tied their trade shows into magazines, online properties and other revenue streams to drive revenue across the community,” says Gross. “There’s more room for improvement in this area of creating a true community within an industry sector, especially with the build-up of the Internet and how that can be used to create a network for a market.”
Going forward, the CEIR Index will be a valuable resource for documenting performance overall and sector-by-sector, though using it as a predictive tool may be ill-advised. Harar cautions: “Individual sectors may be able to do some general predictions, but as we’ve seen in this world, the days of predicting what will happen 10 years, five years or even three years out are over. We know how fragile the economic marketplace is, because we live in a new age.”
Sector perspectives
To look at the performance of events in the CEIR Index Report’s 11 industry sectors, EXPO asked one market-leading show organizer in each sector to talk with us about the major trends, key drivers and market forces impacting the sector and its shows. Find out what this data means for your show and how to use it to sustain growth in 2006.
As a freelance writer and editor based in San Ramon, CA, Cathy Chatfield-Taylor writes about media and technology for business-to-business magazines. She has contributed trend stories, case studies and how-to articles on show management and marketing strategies, best practices and technology since 1995.
Professional Business Services (BZ)
Christopher Gribbs
Senior Director, Convention
The American Institute of Architects (AIA)
Washington, DC
www.aia.org
EXPO: AIA’s National Convention and Design Exposition has been recognized as one of the fastest-growing trade shows for two years straight. What market conditions made your show’s growth possible?
GRIBBS: Architects are required annually to get continuing education to retain their licenses to practice architecture in most states. It started with just two states mandating continuing education in 1996. Today, it’s 33 states. That requirement, combined with the quality of education we offer, has affected the growth of our show. We also know our audience very well and understand how they learn. One of the ways they learn is by experience — going to a city, experiencing the buildings and meeting the architects who designed them. So we’ve made a conscientious effort to move the show around the country. The opportunity to learn from new building projects in different cities fuels repeat visitors.
EXPO: In the BZ sector, revenue increased from the 2000 baseline of 100.0 to 114.8 in 2004. How have shows in this sector made more money?
GRIBBS: For AIA, it’s the value proposition we offer. The benefits of attending are validated by those who attend. Word gets around. It’s also the breadth of the industry. Within the built environment, we cover a lot of elements, ranging from high-tech computer-aided design systems to designing and engineering buildings to withstand a potentially devastating earthquake. Most of the show revenue comes from exhibit booth rental and sponsorships. From 2000 to 2004, our net revenue from exhibit and sponsorship sales grew about 115 percent.
EXPO: The BZ sector experienced a 14.5 percent drop in exhibitors from 2000 to 2002, followed by a rebound of 17.4 percent from 2002 to 2004. Yet NSF remained somewhat flat. What factors influenced exhibitor spending during the economic downturn and recovery?
GRIBBS: We were lucky because we didn’t anticipate growth in 2001 and 2002. The AIA convention was committed to be held in buildings that were too small to accommodate the rapidly growing show. We budgeted exhibitor revenue based on physical limitations of space, but we packed them in. In 2003, we went back to a city that could match potential growth and saw a 24 percent increase in exhibit sales. We grew another 23 percent in 2004. Exhibitors expanded their presence because of the known worth of the convention attendee. The average size of the booth continued to grow year over year through those difficult times. Those that didn’t know the show or experienced difficulties during the downturn stayed away, allowing space for other companies to expand their footprint within the show.
EXPO: What industry trends will drive show performance in the BZ sector over the next 18 months?
GRIBBS: Increased costs due to energy prices will have a huge impact on the overall industry. Watching costs will be critical to the bottom line. Recent storms in the Gulf States and disaster recovery will make or break some sectors. In our industry, it will have a huge, hopefully positive, impact.
Consumer Goods and Retail Trade (CG)
Joseph Loggia
Chief Executive Officer
Advanstar Communications Inc.
New York, NY
www.advanstar.com
EXPO: The number of exhibiters in the CG sector fell steadily from the 2000 baseline of 100.0 to 82.2 in 2003, then rebounded slightly to 87.4 in 2004. In fact, every metric but attendance declined over this four-year period, resulting in a CAGR of -2.2 percent. What market forces contributed to the decline of trade shows in this sector?
LOGGIA: There were two reasons. First, there was nervousness about the overall economic forecast, primarily due to the tech bubble burst. Quite a few of our customers, especially on the exhibit side, grew more and more concerned about the economy and were waiting for the other shoe to drop. Second, those concerns were compounded after 9/11 and the SARS [Severe Acute Respiratory Syndrome] scare of 2001 and 2002s.
EXPO: The CG sector did rebound slightly in 2004, with total performance up 3.3 percent over 2003. What drove this recovery, and how did Advanstar’s CG sector shows perform?
LOGGIA: We think the reason it recovered slightly, and why it will keep growing, is that there seems to be a disconnect between people’s outlook and what’s happening in the economy. People are worried about a downturn, but it didn’t happen as much as people predicted. In our existing portfolio — which includes fashion, licensing and powersports — powersports wasn’t affected at all. We did have some slight downturn in MAGIC and Licensing International, but the primary reason was that those businesses are more international in nature, and we had a bigger drop-off in the international sectors than the domestic sector.
EXPO: Attendance in the CG sector has remained relatively flat throughout these market fluctuations. What makes this metric more resilient during business cycles in the CG sector?
LOGGIA: The attendee base is very much comprised of retailers. They typically range from big chains to specialty stores, which are all dependent on new products. They’ve incorporated trade shows as an important part of finding those products because it’s the most efficient way to get products.
EXPO: MAGIC is not only the largest trade show produced by Advanstar but also one of the largest trade shows in the country. What will be MAGIC’s key to sustaining growth and/or delivering value going forward?
LOGGIA: MAGIC is growing because, like our customers, we continue to evolve and create new and unique venues for exhibitors and retailers to conduct business, reach new customers and find new resources. Most recently, we have invested in initiatives to showcase new trends in premium contemporary, contemporary streetwear and sportswear markets. We’ve also entered into partnerships with complimentary industry leaders to offer added value and additional convenience and resources for our attendees.
ADDITIONAL WEB-ONLY CONTENT: In just three years, Sourcing and Fabric at MAGIC has become the largest and fastest-growing sourcing event in the United States. In August, the show presented more than 700 exhibitors from 33 countries. Exhibitors in Sourcing and Fabric have an unequaled opportunity to connect with the top fashion apparel and accessories manufacturers in the world. Enhanced with educational seminars, matchmaking and informational services, Sourcing and Fabric at MAGIC is a must attend event for product development teams, apparel designers, brand managers, and sourcing executives from branded exhibitors and private label retailers. The MAGIC Marketplace now provides an invaluable resource to find the materials our attendees need to complete their apparel and accessory collections.
Sports, Travel, Entertainment, Art and Consumer Services (EN)
Dave Kelly
Marketing Director
Florida RV Trade Association
Riverview, FL
www.fRVta.org
EXPO: The number of attendees at EN Sector events skyrocketed from 2000 to 2004 at a CAGR of 10.1 percent. In 2004, the EN sector outperformed every other sector in this metric. As one of the largest trade shows in the industry, how did the Florida RV SuperShow fare?
KELLY: We’ve seen a big increase in attendance over the past 4-5 years. One thing we attribute it to is that our audience, 50-plus adults, is growing faster than any other age group. The baby boomer group is getting older and moving right into the group that we’re trying to attract. We now have a full generation who as children traveled in RVs and want their kids to have the same experience.
On the trade side, it’s stayed pretty flat. We’re about 45 days after a giant trade show in Louisville, KY. We don’t have a lot of people left in January who haven’t been exposed to the product. Also, a lot of manufacturers are doing their own introductions at the plants, bringing in the dealers, walking them through right on their lots.
EXPO: EN Sector revenue increased at a CAGR of 9.3 percent from 2000 to 2004. How did you increase revenue?
KELLY: Part of it is having the show in January in Tampa. We have a huge number of snowbirds looking for things to do. We market it as more than an RV show. There’s entertainment, health checkup trailers and things for families to do. We’re also doing an $8 ticket for adults that’s a 2-day pass. A purchase is a huge decision, and this gives them a chance to go home and discuss it, then come back to look again. If they can’t come back, they can hand the ticket off to a relative or neighbor who might not have come otherwise.
EXPO: From 2003 to 2004, the number of exhibitors in the EN Sector declined 1.6 percent. What will EN Sector events need to do to expand their exhibitor base?
KELLY: Look beyond the exhibitor base and open it up to others who might do quite well. In our case, the restaurants and attractions along the road are just as viable an exhibitor as the RV manufacturers. Our biggest attraction is where the booth exhibitors are because we have such a variety.
EXPO: What key drivers will impact your show’s performance going forward?
KELLY: Gas prices, interest rates and how the stock market does are the things that will affect our show’s performance in the coming years.
An RV is a goal, and people are reluctant to let things stand in the way of what they dreamed of as a retirement goal. If they’ve had success with their 401Ks and stock portfolios, they’re more likely to make a purchase.
ADDITIONAL WEB-ONLY CONTENT:
EXPO: What other trends have most influenced performance in your industry?
KELLY: With the expanding marketplace for RVs, manufacturers are putting out a more varied line of products, so they need more space to take care of the displays. We’re also seeing more electronics — flat screen TVs, surround sound systems, DVD players — even the lower end products are putting in higher end equipment, so they’re showcasing those.
Food (FD)
Chris Nemchek
Vice President — Exhibition Management
The National Association for the Specialty Food Trade (NASFT)
New York, NY
www.specialtyfood.com
EXPO: The FD sector outperformed the overall exhibition industry in 2004, with an index total increase of 12.2 percent from 2003 to 2004. What innovations improved FD sector performance?
NEMCHEK: The most important innovation for NASFT has been finding ways to deliver more value for both exhibitors and attendees when they attend the show. For instance, we’ve used prearranged interview sessions for manufacturers to meet with retailers, distributors and importers the day before the show. This boosts the value of the time one spends at our events and keeps them coming back, staying longer and sending more people.
EXPO: The CEIR Index Report mentions co-location as an innovative growth strategy. How did The NASFT Fancy Food Show benefit from the “Power of Five” co-location with The Food Marketing Institute?
NEMCHEK: Co-location helped the Spring Fancy Food Show in both profitability and profile, in terms of square footage and attendees. Through co-location, we’ve provided our members with access to the supermarket buyer that the FMI Show draws, the organic food buyer that All Things Organic draws, the produce buyer that the United Produce Expo and Conference draws, and the international buyer that the U.S. Food Export Showcase draws. We’re able to draw more attendees because of the variety of products available at the collective event.
ADDITIONAL WEB-ONLY CONTENT:
EXPO: The FD sector experienced an 18 percent drop in attendance from 2000 to 2002, followed by a spectacular rebound of 25.2 percent from 2002 to 2004. What makes FD shows more resilient during an economic downturn?
NEMCHEK: In our specialty foods market, manufacturers and buyers are predominantly small, mom-and-pop type businesses. We’ve not experienced a lot of consolidation. That makes us more resilient. In general, American consumers have shown that they’re willing to spend on food, even in a down economy. They’ll treat themselves to upscale or ethnic food products or spend money at restaurants, even if they’re unable to spend on higher-ticket items.
EXPO: Despite improved performance in attendance and exhibitors, revenue remained relatively flat in the FD sector. How can these shows make more money?
NEMCHEK: We made an all-out effort to go after international pavilion organizers. We saw high-growth potential in bringing in manufacturers from different parts of the world that weren’t represented at our show. As a result, our revenues haven’t remained flat. We maintained on the domestic side and grew significantly on the international side.
Government, Public and Non-Profit Services (GV)
Bob Harar
Chairman and Founder
National Trade Productions
Alexandria, VA
www.ntpshow.com
EXPO: The GV sector index total improved 10.9 percent from 2003 to 2004, led by double-digit percentage gains in exhibitors, attendees and revenue. Why did this sector outperform the overall exhibition industry?
Harar: The federal government is driving this growth. In good times the government buys, and in bad times it buys more, making it a very stable marketplace. The growth is coming from a couple of specific sectors that have come into prominence since 9/11: the security sector, which includes physical security for buildings, but also IT security and cyber security. In addition, because of our war on terror and the war in Iraq, there’s a lot of money being spent on defense.
Shows in this sector are seeing the effects of what has taken place in the past three years. National Trade Productions was built on the concept of FOSE, the longest-running government technology conference, and we road the wave of growth in the IT sector. I think security is the IT of the new decade, in terms of where the opportunity is, where the growth is, and where the innovation is.
EXPO: The CEIR Index Report partially credits innovation for the strong performance in key sectors including government. What innovations helped improve show performance in this sector?
Harar: The real innovation has come in terms of reaching and connecting with the audience that’s out there. There’s so much happening in the industry. It’s a matrix of federal, state and local — both physical and cyber. You have to stay relevant and stay in tune with to the constant changes. For that, we look to our innovative government and industry liaison committee that’s representative of the industry and on the leading edge. We’re constantly updating and revamping our committee and our conference programs, so every year there are new people who rise to the top to lead the way in security.
EXPO: The Government Security Expo and Conference (GovSec) has been recognized as one of the fastest-growing trade shows in the country. What market forces will influence your ability to sustain this growth going forward?
Harar: Security is a market that’s critical, not just to government, but to the country as a whole. It’s an infrastructure issue. We’re not just talking about terrorism but also natural disasters and how we handle emergency response. This whole marketplace has turned into the wild west. We have companies popping up, testing the waters, and going under. It’s an industry that is defining itself. It will be another 10 years before things finally shake out. That dynamic will allow GovSec to grow and expand.
One thing we’ve looked at is that we’re getting more exhibitor turnover than we do on other shows because there are so many companies thinking government will be an easy sell. Then they realize there is a real difference in selling to the government vs. commercial and they drop back out of the market. There’s churn going on. We’re used to 97 percent re-sign rates on-site. With GovSec, we average 65 percent on-site. We have to be constantly researching, making sure we’re visible, and making it easy for them to find us.
Building, Construction, Home and Repair (HM)
Galen Poss
President
Hanley Wood Exhibitions
Irving, TX
www.hanleywood.com
EXPO: The CEIR Index Report credits the exhibition industry’s improved performance to strong performance in key sectors, including construction. Why did shows perform so well in this sector?
POSS: Residential and commercial construction combined, represent a $1.2 trillion market, and the $729 billion residential market has been growing at an amazing pace. In the past five years, each year set a record over the previous year. If you’re in an expanding market, it will give a lift to all the shows.
EXPO: Revenue rose 1.5 percent in the HM sector from 2000-2004, growing 14.6 percent in 2004 alone. What enables shows in this sector to make money?
POSS: In building and construction, each sub-sector has a dominant trade show that’s the gathering place for that market. When you have big shows, much of the fixed costs are covered. They have a tendency, the bigger they get, to be more profitable.
EXPO: The International Pool and Spa Expo, one of several HM sector shows produced by Hanley Wood, was recognized as one of the fastest-growing trade shows in 2005. What will be the key to sustaining such growth?
POSS: The pool area has become a backyard lifestyle area. We’ve expanded the scope of the show to include deck furniture, lighting, grills, fireplaces — all those things are part of backyard living. We’re expanding our events in natural progression with the marketplace they serve.
EXPO: What market forces make HM sector shows more resilient in an economic downturn?
POSS: We haven’t seen an economic downturn in the residential sector. Even after 9/11, the residential sector still stayed strong. In the commercial sector, which was flat or declined slightly since 9/11, events continued to grow. There are a number of reasons for this. First is the continued need for education, due to changes in construction technology and building codes that have required people to stay current. Second, there has been a significant increase in the number of non-U.S. exhibitors serving the U.S. commercial construction market.
EXPO: What major trends will drive show performance in the HM sector in the next 18 months and beyond?
POSS: In the next 10-12 years, it will take 2 million housing starts per year to cover demand. That demand is driven by the convergence of Baby Boomers and EcHo-Boomers, the Baby Boomers’ children. They’re remodeling, buying new homes and buying second homes. There will also be a significant increase in the number of first-time home buyers from within the minority market, especially the Hispanic community. In the commercial sector, The Brookings Institute believes that 50 percent of everything that’s been built to date will be duplicated over the next 25 years. That will drive the commercial sector.
Industrial/Heavy Machinery and Finished Business Inputs (ID)
Charles D. Yuska
President
Packaging Machinery Manufacturers Institute (PMMI)
Arlington, VA
www.pmmi.org
EXPO: Attendance soared at ID sector shows, rising at a CAGR of 8.0 percent from 2000 to 2004. In 2004, the ID sector led the overall exhibition industry in the number of exhibitors, increasing 24.5 percent over 2003. Also in 2004, revenue rose 18.7 percent. Why did this sector out- perform other sectors?
Yuska: The bottom line is, companies are starting to invest in capital equipment again. People had stopped investing in new plants and equipment after 9/11. Now we’re seeing companies starting to invest more in capital goods and equipment to produce new products and product packaging because their customers are demanding it. In the packaging area, they need to improve efficiency and productivity. That’s why they buy new machinery. The U.S. market for packaging and machinery grew almost 10 percent last year. We’re looking for 7 percent growth this year.
EXPO: What trends are driving show growth in the ID sector?
Yuska: We’re seeing new technologies driving it, such as robotics and radio frequency identification (RFID). For example, Wal-Mart is asking its biggest suppliers to have RFID at the distribution level by 2006. That requires investment, so we have an RFID pavilion at PACK EXPO. Another area is packaging security, which has been a big issue since 9/11. We created a packaging security pavilion. We’re taking a look at the sectors where there’s been growth and gone after them.
EXPO: What innovations helped improve your show’s performance?
Yuska: At PMMI, we created our own company, PACK EXPO Services. We packaged drayage and charged a flat drayage price. Buyers come to see live, running machinery. If we can make it more cost-effective for exhibitors to bring more machinery, we will; and they have.
ADDITIONAL WEB-ONLY CONTENT:
EXPO: Analysts say fuel prices are the wildcard in this sector. How will fuel prices affect the industry in 2006 and beyond, and what will be the impact on PACK EXPO?
Yuska: Energy savings at the plants is becoming an issue. Plants and equipment have to use less energy. I don’t know if there is a niche there yet or not. There may be.
Communications and Information Technology (IT)
Gary Shapiro
President and CEO
Consumer Electronics Association (CEA)
Arlington, VA
www.ce.org
EXPO: In the IT sector, performance plummeted from a baseline total of 100.0 in 2000 to 77.1 in 2004. During this four-year period, IT sector shows contracted at a CAGR of 6.3 percent. How did International CES, the largest trade show in the country, perform by comparison?
Shapiro: The IT sector peaked artificially with the Internet bubble. More money was thrown at marketing more Web sites. Many of these marketing dollars went to trade shows. The International CES had few, if any, of these exhibitors, so our growth was steady rather than sporadic.
ADDITIONAL WEB-ONLY CONTENT: The International CES showcases the breadth and depth of the consumer electronics industry, including new services and technologies. Part of the reason for CEA/International CES’s success in the traditional IT categories is that the consumer segment is the hot area of interest for IT companies. A lot of development and emphasis is being placed on the digital home. Since many other IT shows were more about the business-to-business market, they didn’t make a good fit for the more consumer-oriented efforts.
The International CES has seen healthy increases in attendance, exhibitors and square footage. Attendance jumped from 99,961 in 2002 (the post 9/11 show) to 145,000 in 2005. Our square footage has also steadily increased, from 1.2 million NSF in 2002 to 1.5 million NSF in 2005. The number of exhibitors has increased from 1,977 in 2002 to 2,500 in 2005.
EXPO: From 2000 to 2004, IT sector revenue shrank at a CAGR of 7.9 percent. What will it take to make money in this sector again?
Shapiro: The base year you [CEIR] used reflects not only the false hopes of the Internet bubble, it reflects the Y2K investment hysteria to buy new IT systems.
By comparison, CE growth has been steady — in new products, new technologies and new services.
For example, wireless and high speed. What we had in the late ’90s was a huge telecom build-out. Truly, the “bubble” was a telecom bubble. With the capacity in place, consumers increasingly want to take advantage of wireless and high-speed Internet access. They’re demanding more powerful devices and more creative approaches to utilizing the Internet/wireless access available to them.
EXPO: One bright spot was the modest 2.5 percent improvement in NSF from 2003 to 2004, though the number of exhibitors remained relatively flat and attendance declined 2.6 percent. What market forces were at work here, and what will happen if space continues to outpace attendance growth?
Shapiro: While there are key “fragility” issues facing the global trade show industry, related to economic and travel-related factors, the International CES is seeing increases across the board, from square footage, exhibitors and attendees. We took a calculated risk for our 2006 International CES and took additional space at a new venue — the Sands Expo and Convention Center. CES’s Innovations Plus at the Sands will house our emerging technology exhibits, more than 12 TechZones focused on emerging technologies and trends, and our high-level speaker sessions called Industry Insiders. More than 75 conferences and more than 20 product categories will be on display here.
EXPO: The U.S. Department of Commerce predicted a recovery in the IT sector in 2005. What major trends are fueling this recovery, and how are they affecting IT sector trade shows in general and International CES in particular?
Shapiro: Growth is being driven by digital IT and CE products. When you look at just one product category, high-definition TV (HDTV) sets, we have seen exponential growth in sales for this product. For instance, we have seen 5.2 million HDTV unit sales through August 2005, which is a 43 percent increase over the same timeframe in 2004. This amounts to $6.5 billion in total 2005 sales.
In addition, convergence is driving product sales. Cell phones in digital cameras, video capability in MP3 players, digital video recorders in HDTVs — these are just a few examples of the innovation within the industry and how the industry is delivering cool new products that consumers want.
ADDITIONAL WEB-ONLY CONTENT: The International CES is all about the convergence trend and showcasing the latest and greatest from the CE industry. The CES has become a must-attend event, first thing every January, to see new product introductions from the industry and to preview the emerging technologies at CES at the Sands.
EXPO: Where do you see your industry, and your show, in five years?
Shapiro: CEA predicts that U.S. sales of consumer electronics will total $157 billion in 2009. As far as the International CES, we continue to work towards the smart growth of our trade show as we take a big-tent approach to representing the breadth and depth of the CE industry.
Medical and Healthcare (MD)
James Spargo
Sr. Vice President
J. Spargo & Associates, Inc.
Fairfax, VA
www.jspargo.com
EXPO: What innovations helped drive show performance in the MD sector?
SPARGO: Speaking about the ASCO (American Society of Clinical Oncology, www.asco.org) Annual Meeting and Exposition, which we manage, it’s a combination of innovations in information dissemination such as Webcasting, virtual meeting technology, etc., and ASCO continually striving to produce an event with the highest-quality programming and speakers, thus truly attracting the world leaders in the field of oncology. Recapping or repeating key sessions on site at the meeting permits more attendees to participate in these sessions without reducing their session quantity. This “repetition” of key sessions also permits the attendees more opportunities to visit the exhibits.
EXPO: The MD sector outperformed every other sector in terms of gains in NSF, increasing at a CAGR of 8 percent from 2000 to 2004. From 2003 to 2004 alone, NSF rose 15.4 percent. What drove exhibit sales?
SPARGO: At ASCO, we’ve seen a 67 percent increase in NSF from 2000-2004. Pharmaceuticals are driving a lot of that. Pharmaceutical company marketing is driven by what drugs are in the pipeline and what stage of approval they’re in. That said, the PhARMA Code on Interactions with Healthcare Professionals (the “PhARMA Code”) is the single biggest influence on marketing techniques in the healthcare field right now. It’s impacted how pharmaceutical companies can interact with doctors not only at the meeting but away from the meeting as well. ASCO is active in working with exhibitors to ensure we maintain a professional educational atmosphere throughout the meeting while maintaining maximum exhibitor/attendee opportunities for information exchange, such as convenient exhibit location in the facility, extra-wide main exhibit aisles, exhibit location maps, locator kiosks, etc.
EXPO: Attendance at MD sector events rebounded more quickly than for the overall exhibition industry. From 2000 to 2004, the number of attendees increased at a CAGR of 2.7 percent in the MD sector. Why is the MD sector more resilient during an economic downturn?
SPARGO: The need for quality care and cures is there, whether the economy is good or bad. It’s almost a recession-proof industry.
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EXPO: The ASCO Annual Meeting and Exposition is one of the largest medical shows in the country. What major trends will drive this show’s performance in the next three to five years?
SPARGO: The overall growth and success of ASCO is tied to offering the best programming, advancements in the field of oncology, and the total commitment to winning the war on cancer.
Raw Materials and Science (RM)
Barbara Voss
NPE 2006 Show Director
President
VossWorks
Chicago, IL
EXPO: Every metric for the RM sector was down from 2000 to 2004, except for NSF, which was relatively flat. What major trends have impacted performance in this sector?
VOSS: At the Society of the Plastics Industry Inc. (SPI, www.socplas.org), which produces the triennial show, NPE The International Plastics Showcase (www.npe.org), we focus strictly on the raw materials part of the equation. We believe that, in our case, not only was the NSF down, but other metrics such as number of exhibitors were also off from 2000 to 2003. While we’re trending similarly for 2006, our international number of exhibitors has grown significantly, and we’re also pursuing vertical and emerging markets to offset reductions. We do expect our number of exhibitors and attendees to be higher than in 2003, but our square footage could be off slightly — between 5 percent and 8 percent.
EXPO: How will the escalating price of crude oil impact the future growth of the plastics industry, in general, and the NPE, specifically?
VOSS: If crude and natural gas prices continue to escalate, the plastics industry, which is critically dependent on both resources, will suffer staggering losses. The trade show will feel a direct correlation to that effect.
EXPO: From 2003 to 2004, the RM sector’s 1.9 percent rise in NSF and 1.5 percent increase in number of exhibitors were not enough to offset decreases of 3.5 percent in attendance and 2.8 percent in revenue. 2004 closed with a 0.7 percent decline in total performance. What will it take for trade shows in this sector to rally in the coming months?
VOSS: If trade shows understand that quality of attendance offsets shear numbers and market the phenomenon as such, the exhibitor participation should continue to grow, which will generate sustained revenue growth and hopefully generate attendance growth.
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EXPO: Revenue for the RM sector decreased at a CAGR of 2.1 percent over this 4-year period. As one of the largest trade shows in the country, how has NPE fared during the economic downturn and recovery?
VOSS: The RM component of the NPE showed a corresponding revenue decrease. The NPE is sensitive to the economic instability that has affected the trade show industry overall, but our recent implementation of a strategic recovery plan shows promise in shoring up our position and setting the stage for growth in certain areas for NPE 2006 and overall growth for our 2009 event.
Transportation (TX)
Peter MacGillivray
Vice President, Marketing and Communications
Specialty Equipment Market Association (SEMA)
Diamond Bar, CA
www.sema.org
EXPO: From 2000 to 2004, the TX sector total increased at a CAGR of 4 percent. Attendance and revenue led the performance metrics, with CAGRs of 6.2 percent and 5.1 percent, respectively. What market forces drive attendance in this sector?
MacGillivray: To a certain extent, our industry is a fashion industry because trends are changing so quickly among core enthusiasts. Unlike other automotive shows, our show is made up of small to midsize businesses. The majority of our exhibitors are enthusiast entrepreneurs. They’re quick to react and quick to tap into emerging trends and technology. The SEMA Show is where the industry goes, big and small, to find out where those trends are going.
EXPO: In 2004, NSF slipped 3.4 percent, underperforming the overall exhibition industry. Analysts noted signs of possible weakness in this sector in 2005. What factors will influence the amount of space exhibitors buy, if not the numbers of exhibitors, in the coming months?
MacGillivray: In that same period, the SEMA Show actually grew more than at any point in our history. We had the largest participation of exhibitors in 2005. It’s their new ideas and passion that will continue our success. We have mechanisms in place to encourage new businesses that are doing well to participate in our show. That’s why we’re better positioned to ride out the rough times.
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EXPO: CEIR reports that the automotive aftermarket was the hottest sub-sector in the transportation industry. What trends have influenced the SEMA Show, one of the largest and fastest-growing shows in the country?
MacGillivray: The aftermarket can be defined into two categories: “repair and replacement” and “accessories.” SEMA represents the accessories side of the aftermarket. Our category is becoming part of the mainstream. We’re getting a lot of interest from OEMs (original equipment manufacturers) who want to be part of our show because mainstream consumers are getting into the whole notion of personalization and customization. The OEMs want to tap into that enthusiasm and those trends.
EXPO: What innovations will help TX sector shows, in general, and the SEMA Show, in particular, to sustain growth during a possible weakening in this sector?
MacGillivray: Our culture is to take care of the small guy. We become their advocate to over deliver in terms of value. For example, SEMA supports such programs as putting pictures of every first-time exhibitor on our Web site. We sent press releases to their home newspapers, our new product showcase is free, and we go to great expense to send new product releases to the 2,000-plus media that attend the show. Not only are we active about promoting their businesses and their products, we also make sure they know that’s we’re doing it for them, by collecting the press clips and sending them on.
The CEIR Index breaks down the 10,000 business-to-business exhibition universe into 11 sectors:
Professional Business Services (BZ) — accounting, advertising and marketing, architecture, audio visual, banking, business, engineering, financial and legal, insurance, plant engineering and operations, printing, safety, security
Consumer Goods and Retail Trade (CG) — apparel, gifts, hardware, housewares, jewelry, laundry and dry cleaning, leather goods and luggage, lighting, office equipment and supplies, photography
Sports, Travel, Entertainment, Art and Consumer Services (EN) — amusement, art, beauty and healthcare, boats, fishing, funeral industry, hotels and resorts, real estate, recreational vehicles, religious, rental and leasing, sporting goods and recreation, toys and hobbies, travel industry
Food (FD) — food and beverage, food processing and distribution, restaurants and food service
Government, Public and Non-Profit Services (GV) — associations, education, fire and fire protection, government, libraries, military, police
Building, Construction, Home and Repair (HM) — building and construction, home economics, home furnishings and interior design, housing, landscape and garden supplies, stores and store fittings, woodworking
Industrial/Heavy Machinery and Finished Business Inputs (ID) — air conditioning, heating and refrigeration; manufacturing; metal, woodworking and coatings technology; packaging; robotics; sanitation and waste management; welding
Communications and Information Technology (IT) — communications; computers and computer applications; electrical and electronics; publishing, radio, TV and cable; telecommunications; telephone
Medical and Healthcare (MD) — dental, industrial, medical and healthcare, nursing, pharmaceuticals, veterinary
Raw Materials and Science (RM) — agriculture and farming; ceramics and glass; chemical; energy; floriculture and horticulture; forest products; mining; ocean science and equipment; paint; paper; petroleum, oil and gas; plastics; pollution control; science; textiles; water; wire
Transportation (TX) — aerospace and aviation, automotive and trucking, physical distribution, railroads, transportation
The CEIR Index benchmarks business-to-business exhibitions in the United States and Canada with at least 3,000 net square feet of exhibit space. The accounting firm of Johnson Lambert (www.jlco.com) collected data from a representative sample of 258 exhibitions held between 2000 and 2004, then grouped the events into sectors so that there was a statistically significant sample in each sector.
Johnson Lambert’s sister company, VERIS Consulting (www.verisconsulting.com), did the statistical analysis. Data was interpolated for biennial events, and outliers that would significantly skew the index were capped at a maximum percent change of +100 percent or –50 percent.
Order the 2nd Annual CEIR Index, 2005 Edition, online at www.tradeshowexecutive.com, or download the order form at www.ceir.org. The 50-page report costs $295 ($195 for CEIR members), plus shipping and applicable sales tax. The included CD-ROM enables you to pull data from the report.
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