October 2007
Exhibitions Hold Their Ground
In the b-to-b world, show revenue growth far outpaces publications, but it’s still no match for sizzling e-media, according to Veronis Suhler Stevenson’s Communications Industry Forecast

By Heather Kirkwood

Show organizers will find plenty to celebrate — and revile — in this year’s Communications Industry Forecast from Veronis Suhler Stevenson (VSS).
For the first time, spending on exhibitions in the United States surpassed the $10 billion mark in 2006, increasing 6.1 percent to $10.30 billion. This growth rate far outpaces the 0.6 percent increase in business-to-business publication spend in 2006, which totaled $10.94 billion.

E-media, however, is the fastest-growing b-to-b media sector, capturing market share from both print and exhibitions with its targeted messaging and tracking capabilities. Spending on e-media soared 25.4 percent in 2006 to $2.34 billion.

From 2006 to 2011, VSS (www.vss.com) projects that the b-to-b media sector will grow at a compound annual growth rate (CAGR) of 6 percent, scaling $31.53 billion in 2011.

But the big news is that by 2008 spending on exhibitions will surpass spending on print media.

Exhibitions
The report attributes continued exhibition growth to increased corporate travel budgets and the value marketers place on face-to-face contact with customers. According to the National Business Travel Association (www.nbta.org), more than 87 percent of corporate travel managers saw travel budgets increase in 2006 — the last year for which there is data — and 67.7 percent said their companies’ travelers would be taking more trips in 2007.

Face-to-face contact generated by trade shows is also holding its value. When it comes to the overall marketing communications budget for b-to-b companies, trade shows with 23.6 percent garner more than other media, according to preliminary results from a survey conducted by the Business Marketing Association (www.bma.org) and Catalyst Exhibits (www.catalystexhibit.com).

Despite healthy growth rates in 2006 and 2007, however, the exhibition industry is showing signs of deceleration as the economy begins to slow down, notes the VSS report. Attendance at exhibitions increased 3.1 percent in 2006, compared with 3.5 percent in 2005. The trend could continue as marketers divert more of their dollars to online media.

Most show organizers aren’t just looking for ways to increase attendance, according to the most recent AttendTrend survey produced by the Frost Miller Group (www.frostmiller.com) and Jacobs Jenner & Kent (www.jjkresearch.com). They are also seeking to enhance the quality of attendance. In 2006, international attendees, VIP power buyers and first-time attendees were the most coveted — and most difficult — to attract.

Perhaps that’s why the worlds of e-media and exhibitions are increasingly converging. Show organizers are looking to attract these key demographics by expanding their brands year-round and becoming the go-to source for industry information and networking. They’re striving to create vibrant online communities packed with content that’s responsive to customer needs: news, product information, research, Webcasts, matchmaking capabilities and social networking features. Some shows, such as the Consumer Electronics Show and the Embedded Systems Conference, are using technologies like BDMetrics to enable attendees to create personal portal pages customized to their unique interests and needs. Other shows are reaching outside the exhibition industry
to form partnerships with well-known social networking providers. For example, the POOL fashion tradeshow, held in conjunction with the MAGIC Marketplace in Las Vegas, formed a partnership earlier this year with MySpace, the popular social networking site, to help connect exhibitors — mostly hip fashion designers — with interested attendees.

Show organizers are increasing revenues through unique sponsorship opportunities and custom events that help companies make more tactical and meaningful relationships with attendees. BNP Media partnered with event producer Vertical XChange to create a series of events in the food, packaging and manufacturing markets for top-tier buyers in search of specific products.

The hottest market sectors for exhibitions in the next few years, as forecasted by VSS, include professional services such as finance, retail (particularly apparel), communication and information technology, transportation, sports and entertainment, and building and construction.

B-to-b magazines
B-to-b magazines will experience limited growth as marketers continue to divert dollars away from print advertising. Spending on b-to-b magazine advertising increased just 0.9 percent in 2006 to $9.05 billion, down from 6.4 percent in 2005. Between 2001 and 2006, b-to-b magazines actually lost ground, notes VSS, declining at a CAGR of 1 percent.

Magazines in the IT and telecom sectors are suffering in particular, as advertisers in these sectors shift larger portions of their budgets online. However, some b-to-b magazine categories aren’t feeling the pinch quite as severely. Business, banking, insurance, financial and legal categories are all expected to see advertising growth during the next five years, as will health and life sciences categories. These categories should be of interest to show organizers; more flush advertising budgets mean more funds could potentially shift to shows.

E-media
Although the present dollar value of the e-media sector of the b-to-b market, $2.34 billion, isn’t in the same neighborhood as that of print or events, the medium’s lower costs and improved tracking of ROI make it highly attractive to marketers.

As a result, many diversified media companies are re-evaluating their revenue goals and strategies. IDG, for example, plans to generate more than half of its revenue from online products by 2010. Penton Media (acquired by Prism Business Media in early 2007) aims to grow online revenue by 30 to 35 percent in 2007. Even companies that aren’t “high tech” are embracing the shift. Farm Journal Media, for example, grew online revenues 60
percent in 2006 and plans another 70 percent boost in 2007.

While most online revenue is generated from advertising, other revenue streams include sponsorships, e-newsletters, Webcasts, podcasts, virtual trade shows and online video. All nicely complement face-to-face events and extend the brand year-round. And as such online content serves increasingly sophisticated online communities, it will fuel increased growth in e-media spending, which is projected to grow at a CAGR of 22.2 percent through 2011.