September 2004
B2B Communications Trends & Forecast

VSS predicts that trade show spending will increase 2.4 percent in 2004

By Heather Kirkwood

The exhibition market rebounded in 2003 after two years of negative results, posting a 1.5 percent increase in overall spending on trade shows. In 2003, spending on exhibitions reached $8.7 billion. In 2004, spending on shows is expected to rise another 2.4 percent to $8.9 billion, according to the Veronis Suhler Stevenson’s (VSS) Communications Industry Forecast and Report.

The boost in the exhibition industry is due, in part, to an industry made more stable by its response to the recession. Shows without good business practices, or shows that were third or fourth in their markets, have been brushed aside leaving solid businesses behind that are poised for growth, according to the report.

However, the enthusiasm could be dampened if the cost of participating in a show continues to rise at current rates.

Overall, the entire b-to-b communications segment is recovering from the economic slump and is poised for growth. Growth during the rest of 2004 may be more conservative as confidence in the recovery grows. Also, many companies will not realize the fruits of their recovering businesses until early 2005, and thus are not making alterations in their advertising and events budgets until then.

Total b-to-b media spending, including expenditures on magazines and exhibitions, is expected to grow 1.7 percent to $20 billion in 2004. 

Exhibition forecast
The 1.5 percent growth rate in spending on exhibitions in 2003 was a pleasant reversal from the 1.2 percent decline in 2002 and the 3.2 percent decline in 2001. The amount of rented exhibit space dropped slightly (0.4 percent) in 2003, an improvement over the 1 percent decline reported in 2002 and the 1.4 percent decline in 2001.

According to the report, organizers offering complete exhibiting packages that include things such as shipping and drayage, as well as invitation-only networking events that help exhibitors increase their ROI, are helping to counteract this trend.

Hikes in the cost of booth space have made up the difference in revenue that might have been lost by lagging space rental. Spending on booths increased 1.6 percent in 2003. In all, exhibitors spent $6.7 billion on booths in the United States. Prices for booth space rose an average of 2 percent, resulting in an average price of $18.41 per square foot.

Revenue from fees, sponsorships and advertising also grew 1.2 percent in 2003 to $1.9 billion. That spending was fueled by a hike in attendance after years of stagnation. Professional attendance at shows increased 3.6 percent to 39.8 million in 2003. 

VSS believes there’s a particularly bright future for healthcare-related shows. This market segment is doing particularly well, both in the magazine and exhibition markets. As the number of elderly continue to grow while pharmaceutical companies become increasingly more competitive, this trend isn’t expected to change in the near future.

Between 2003 and 2008, VSS forecasts a compounded annual growth rate of 4.1 percent for the exhibition market, driven by a 4.3 percent gain in booth space spending and a 3.5 percent increase in spending on fees, sponsorships and advertising during the same period.

B-to-b overview
Overall, the b-to-b communications market is doing better, after three years of negative growth. Adjusted total revenues for publicly held b-to-b media companies increased 1.4 percent to $4.2 billion. The gains are due in large part to gains at Reed Elsevier and Advanstar. It’s good news compared with the adjusted revenue decline of 3.1 percent between 1999 and 2003.

The outlook for the b-to-b media market improves as the forecast period progresses. Technology, financial and healthcare-related media products are expected to fare especially well. VSS also predicts b-to-b media companies will continue to take a more consultative approach to selling, creating more custom products and more customized advertising and sponsorship opportunities. The number of value-added freebies for advertisers and exhibitors is expected to decrease as media organizations begin to realize the value of marketing opportunities that were once regarded as “extras.”

The overall market is expected to grow at a compounded annual growth rate of 4 percent between 2003 and 2008, compared with a 2 percent decline between 1998 and 2002. By 2008, VSS expects the b-to-b media segment to do $23 billion worth of business.

To order a copy of the report, contact VSS at 800-935-4990, ext. 8538, or visit http://www.vss.com/.