November/December 2003

What’s your risk tolerance?

3 shows weigh the risks vs. rewards of growing in mature markets

By Cathy Chatfield-Taylor

When to be daring, and when to be cautious? When to take risks, and when to hunker down? When to bet it all, and when to hold ’em? Whether you’re for-profit or not, the answer depends more on what stage of life your show is in than it does on the state of the economy, world affairs or unforeseen factors. Mature events on the down side of the growth curve go to greater lengths to stave off a decline.

“Five years ago, show organizers would throw money at a show to make it better. Not only does that strategy not work, it’s also fiscally irresponsible,” says Mary Beth Rebedeau of The Rebedeau Group, Chicago. “People are looking for creative ideas to turn things around.”

As executive director of the Society for Independent Show Organizers (SISO), Rebedeau sees more shows questioning their income and expenses, then taking cautious measures to perk up the bottom line — such as co-locating to create synergy between shows and adding conference programs to generate more revenue.

The most daring are usually those with the most to lose. They’re in industries that have been hardest hit by the economic downturn — technology, telecommunications and, to some extent, energy. Some are restructuring the whole event. “Shaking it up, that’s high risk,” Rebedeau says. “You know what you have when you start, but you don’t always know what you’ll get when you’re finished.”

SISO members are often viewed as being more entrepreneurial than the average group of show organizers. Among associations, measures for mature shows are more cautious, especially in industries that are seemingly unaffected by the economy, such as healthcare, pharmaceuticals and food service.

“Associations are trying so hard to preserve their membership, that wholesale change and risk taking aren’t as prominent,” says Barbara Dunlavey, CAE, CMP, President of BDK Consulting, Lanham, MD, and Vice-chair of the American Society of Association Executive’s Meetings & Exposition Council. “But even the larger, more established shows have to find a way to grow, or they’ll plateau, and plateauing isn’t acceptable.”

To add value for members, associations are partnering with affiliated and ancillary organizations, expanding their reach into new markets. “It’s not terribly costly, nor does it put you out for too much exposure,” she says.

Consumer show organizers report high risk at every stage. “The consumer show industry is a high-risk opportunity, because consumers generally do not have to buy,” says Todd Jameson, President of HSI Show Productions, Indianapolis, and President of the National Association of Consumer Shows. “We are subject to the ups and downs of the economy, and we depend on a substantial paid gate.”

Despite the down economy, his colleagues anticipate a strong turnout this season. At home, boat and RV shows, purchases of big-ticket items are up. As a result, “We’re seeing a lot of energy being put into expanding and doing startups,” he says. Most take a low-risk, show-within-a-show approach. “The economy of scale is there, and it drives a tremendous amount of top-side dollars straight to the bottom line.”

Whether a growth strategy will work depends on the strengths, weaknesses, opportunities and threats to your market position. We asked three organizers to share their growth strategies, then asked industry analysts to weigh in on their likelihood of success. Are the risks worth the rewards? You be the judge.

CASE STUDY: The universe expands
Satellite 2004 embraces end-user market
When the telecommunications industry tanked, the satellite communications sector plummeted along with it, losing 35–40 percent of its value from 2001–2003 in a market estimated at $60 billion.

That was quite a shock for Satellite 200X, the dominant trade show and conference for the world satellite industry, held each Spring in Washington, DC. But as part of PBI Media LLC, Potomac, MD, the show held the line in 2003 after peaking in 2001 and dropping 10 percent in 2002. Now show management expects to grow attendance in 2004 by 10 percent, bringing it back to 2001 levels, and add 5–10 percent per year thereafter.

“We see the confluence of a recovery in the marketplace — generating incremental growth that may or may not take the show up in total numbers — with new constituents coming into the market and potentially expanding the size of the conference,” says Scott Chase, Executive Vice President, Sales and Marketing.
Satellite 200X currently earns roughly $1.2 million in annual exhibit sales and $800,000 in conference registrations. The 2003 edition attracted 5,500 attendees and 190 exhibiting companies to fill about 36,000 net square feet.

The trade show competes head to head in the satellite niche with at least six events, none as large in number of exhibits, but “that satellite activity represents spending that could have taken place at Satellite 200X,” Chase concedes.

The most robust competitors are National Association of Broadcasters’ Spring convention in Las Vegas, featuring a Satellite & Broadcast Technologies exhibit area; the Euroconsult World Satellite Business Week annual Fall conference in Paris, with no exhibits; and JDEvents’ two-year-old Satellite Application Technology Conference and Exposition, held in November in New York.

The unique value proposition for Satellite 200X is its integration with the PBI Media family of information products, including the Satellite Today online news feed; the Satellite News weekly newsletter; and Via Satellite, a leading monthly magazine with circulation of 22,000.

Marketplace consolidation has proved to be a positive sales influence. “As people jockey for position, they feel the need to be represented,” he says. “Our customers are across multiple platforms.” To get their message out, satellite operators, service providers, equipment manufacturers and network integrators are again spending on advertising, supplements, exhibits and sponsorships.

To build readership and attendee traffic for these customers, PBI Media is reaching out to the end-user market. “We’re extending the reach of Satellite 200X to our customers’ customers,” Chase says.

Fueled by the evolution of broadband via satellite, the satellite communications market is delivering Internet services that meet B2B demand for reliable and robust connectivity. “End-users need to know who the vendors are, who the service providers are, and how the whole thing works,” he says.

PBI Media has even launched a new magazine, Satellite Business Solutions, as a vehicle to both educate end-users and drive registration for Satellite 200X. The quarterly publication debuted in August 2003 with a circulation of about 12,000 and has already met advertising goals for 2004. The 10 percent of advertisers who are not exhibitors are prime candidates to buy space at Satellite 2004.

Add to this evolving end-user market the post-9/11 military satellite communications market, and Satellite 200X is positioned to build traffic in two all-new segments. The third leg of this three-legged growth strategy is attendance promotion though the U.S. Commercial Services International Buyer Program (IBP). Satellite 200X is one of 32 North American events that will benefit from IBP’s matchmaking service.

For a mature show in a volatile market, Satellite 200X is proceeding with caution.
“There is no risk in our strategy,” says Chase. “The risks are complacency and arrogance, which happen if you let yourself fantasize that you have a lock on market position. Even though we are the juggernaut of the marketplace, we know there’s always someone chipping away at the perimeter.”

CASE STUDY: Expansion via contraction
The Woodworking Shows pull back from low-yield cities
After three seasons and 119 events, The Woodworking Shows President Todd Rosholt has decided less is more.

“Two years ago we had 54 events. We ratcheted that back to 39 last year, and to 26 this year,” Rosholt says. “Growth going forward isn’t about launching new events, it’s about adding incremental booth space and attendance revenues to our existing core cities.”

Rosholt acquired the portfolio in 2000, after working the shows for nine years. He’s set a goal of 20 percent average growth in exhibit space (show over show) and 12–15 percent growth in attendance for this season. In 18 months he’ll be ready to execute the next phase of his business plan: Expand into Canada and diversify into other enthusiast markets within the next five years.

Based in Los Angeles, the 20-year-old consumer shows serve a market of 3.5 million hard-core woodworking enthusiasts. Shows are held October to April in suburban venues — from the Tacoma Dome in Washington to the Florida State Fairgrounds in Tampa — and draw an average of 7,500 attendees and 75–100 exhibiting companies.

Competing against one organizer who produces eight shows that are a fraction of the size of his, Rosholt characterizes his events as “the 800-pound gorilla” in the market. The challenge, in an industry that’s growing less than 3 percent per year, is to overcome list fatigue and find a new audience among the do-it-yourselfers who don’t consider themselves to be woodworking hobbyists.

“Our core audience is dying,” Rosholt says. “It’s a baby-boomer activity, so we’re trying to figure out where the next generation of enthusiasts will come from.”

In addition to direct mail to a house list of 700,000 names, he’s extending his reach with targeted cable and network TV advertising, as well mass media buys. Additional exposure comes through the official magazine of The Woodworking Shows, Meredith Corp.’s Wood Magazine, with a circulation of 550,000.

A major draw is free educational programs on the show floor. Instead of paying to attend seminars, which brought in nearly $800,000 in revenue two years ago, attendees now see sponsored product demonstrations and how-to sessions. Although the tactic has drastically decreased seminar revenues, Rosholt is confident it was a major factor in driving 18 percent more attendees to the events last season.

The thrust of this year’s marketing campaign is promotion of a 48-page coupon book with exclusive offers available only at the show. Only exhibitors who participate in all 26 events can feature their products — a closing tool for exhibit sales.

Rosholt and his vice president of business development sell to 20 key accounts valued at $100,000 or more each. Six sales representatives sell to distributors, manufacturers and entrepreneurs in three regions. (Two more VPs and seven staffers round out the team that supports operations, marketing, finance and administration — an efficient team.)

An all-inclusive service package simplifies the booth space purchase and logistics for exhibitors, facilitating travel with the show from city to city. Now that there are fewer shows, space sales in the remaining markets are strong, with revenues up by 8 percent last year. This year, Rosholt raised space rates from 5–18 percent, based on market performance.

“We’re putting them into the top 26 events, and they support that with very little price resistance,” he says.

As much as he’d like to surpass $10 million in annual gross revenue, he’ll be satisfied with doubling his margins on the $7.5 million he makes now. By focusing on doing what he does best in his core markets, Rosholt plans to deliver an efficient, turnkey package that adds value for exhibitors and attendees.

“I think this is less risky than staying with the status quo,” he says. “Market conditions have changed. The end-user can go to Amazon.com and have a table saw shipped door to door at no extra charge. We’ve got to adapt and stay one step ahead of major retailers.”

CASE STUDY: Joint venture/shared risk
ICIA partners with CEDIA and NSCA on new show brand in Europe and Asia
In the 50 years since educators organized an exhibition on visual communications for the classroom, InfoComm has become the place to see everything audiovisual. The International Communications Industries Association (ICIA) now hosts more than 17,000 AV professionals and 560 exhibiting companies at its annual trade show, serving 2,700 member companies in 56 countries.

Buoyed by a strong domestic event and a membership seeking global opportunities, ICIA expanded overseas with InfoComm Asia (1995), Europe (1999), Japan (2000) and China (2002). Now the association is exploiting another international opportunity created by the convergence of professional, residential and commercial markets for electronic systems integration.

In an equal equity partnership with the Custom Electronic Design and Installation Association (CEDIA) and the National Systems Contractors Association (NSCA), ICIA is launching Integrated Systems Europe, Feb. 3–5, 2004, in Geneva. The association is also rebranding its InfoComm Asia and InfoComm China events under the new Integrated Systems moniker in conjunction with its partner company in Singapore, InfoComm Asia Parties Ltd. CEDIA and NSCA are co-sponsors of the Integrated Systems Asia shows.

The joint venture is expected to expand the three associations’ international memberships by 5–10 percent next year.

“The primary reasons we decided to launch these shows are to serve our members internationally, expand membership internationally and create business development opportunities for our members,” says Jason McGraw, Sr. Vice President of Expositions for ICIA, Fairfax, VA. “We’re also interested in increasing brand awareness of our associations and our shows, and that will help us promote our U.S. events internationally. It’s a bi-directional marketing opportunity.”

Goals for the inaugural Integrated Systems Europe are modest: 5,000–8,000 visitors and 100–150 companies with more than 64,500 net square feet of exhibits. The venue and dates are expected to position the show within the competitive landscape of more than a dozen European events that overlap in niche markets, including CeBIT in Hanover and MusikMesse/ProLight+Sound in Frankfurt, Germany, in March; IFA in Berlin, PLASA in London, photokina in Köln and IBC in Amsterdam, all in September.
In China, where InfoComm launched with 11,500 attendees (including exhibitor personnel) and 75 exhibitors in about 30,000 net square feet, the 2004 event has already sold 60 percent more space than in 2002. (The 2003 event was cancelled due to SARS.) Integrated Systems China is scheduled for May 12–14, 2004 in Shanghai.
“With the addition of our partners as co-sponsors of the new branded event in China, we fully expect to come close to doubling the size of the show, both in terms of exhibitors and floor space,” McGraw says.

The outlook for InfoComm Asia, Oct. 29–31, 2003 in Singapore, isn’t as rosy. The biannual event has lost about a third of its floor space to SARS and the ailing economy in southeast Asia. Expecting only about 5,000 attendees and 100 exhibitors occupying 27,000 net square feet this year, McGraw anticipates a rebound for Integrated Systems Asia in 2005.

The measure of success for all the Integrated Systems events will not be size, revenues or profits, but value delivered to members. “If each of our three organizations educates hundreds of members in a region, signs up new members, helps our members create new business opportunities and exposes our industry to thousands of attendees, that’s a success,” McGraw says. “If we have that kind of success, we’ll have monetary success as well.”

That said, CEDIA, ICIA and NSCA pride themselves on staging events that make money. “Every single event that we’ve produced or been involved with internationally since 1995 has made a profit,” McGraw says. “Even though we’re not-for-profit trade associations, one of our top goals, of course, is to derive revenue from these events.”
McGraw is liaison for the three associations and the Integrated Systems Events show partners and staff. Sales, marketing and operations are handled by a global team of U.S., Munich and Singapore staff; contract employees; a European public relations firm; a Chinese marketing and public relations firm; and sales agents in Asia, France, United Kingdom and Germany.

Regardless of how successful the Integrated Systems brand is overseas, the partners have no intention of rebranding or co-locating their respective U.S. events, which are expected to benefit for the international exposure.

“Some say, ‘You’re crazy. The economy is down. You should be circling the wagons and focusing on your U.S. events,’” McGraw says. “But we see it as the right time to launch events and position ourselves for growth, when the competition is not in our market niche.”

Cathy Chatfield-Taylor is a freelance writer/editor. E-mail cathy@cc-tunlimited.com.