July/August 2001

By Elizabeth A. Brown

No doubt about it, the last few years were a boom time for the entire economy. We enjoyed record financial indicators coupled with unparalleled business growth. The high-tech industry exploded with new products and services, and markets no one even dreamed of 10 years ago sprouted almost overnight. And, of course, new shows followed the new market sectors. But things have changed. The market is spiraling downward, and launches are feeling the effects.

“I see the lack of show launches as a real economic problem for the industry,” says Charles Greco, President and CEO of Framingham, MA-based IDG World Expo. “Years ago, trade show companies and managers felt more comfortable investing in launching events, but that’s changed dramatically.”
One potential reason: Many larger diversified media companies would rather acquire a show than launch one. “Major media companies look to acquire shows because it’s a lot less risky from a cost standpoint,” says Grant Draper, Director of the Jordan, Edmiston Group Inc., an investment banking firm in New York City that serves the publishing, information, Internet and exposition industries. “Most of these companies just aren’t built to run start-ups.”

It’s true that, in general, large companies prefer acquisitions over launches, says Bob Krakoff, Chairman and CEO of Advanstar Inc., because these companies are usually publicly held or trying to become so. And this means increasing their earnings quickly. “When it comes to a choice between developing something over three to four years or buying an established show, it just makes more sense to buy something if it’s available,” Krakoff says. He says Advanstar typically only launches a show if there’s not one available to acquire, or if they see a sector where they have a big opportunity. Of the 64 shows Advanstar has added between 1996 and 2000, Krakoff says about one-third were launches.

Fewer launches by the big players may mean less competition for those already in the market or those planning a launch, but this focus on acquisitions also has the potential to create an economic disability for the exhibition industry because it doesn’t grow the way it should. “Show launchesare the best way to capitalize on the industry’s recent focus on acquisitions,” Greco says. With faster timelines and tighter profit margins, show launches today are radically different than they were 10 years ago.

Three big changes
There’s a triad of major changes in today’s show launch landscape: more organizers are cloning shows, turning to a conference launch or co-locating new shows.

Cloning existing events into new markets is a proven path to success for Natick, MA-based Imark Communications, says David Korse, President and CEO of the company, which produces trade shows such as Broadband Year and Information Technology Exposition & Conference (ITEC). “In the four years we’ve been in business, all our launches have been replications or clones in a new geographical market,” he says. “For example, if we have a show in Portland that people really like, we may investigate whether there’s a similar opportunity in Seattle.”

Launching a show as both a conference and exhibition is gaining popularity because it’s a good way to test the waters and work up to something bigger. When San Francisco-based CMP Media launched the Embedded Systems Conference in a small hotel in San Francisco in 1989, total attendance was about 500. Over the years, as the show outgrew its facilities, it moved to Burlingame, then Santa Clara, and then the San Jose Convention Center. And in 2001, the show was held at the Moscone Center and boasted total attendance of more than 14,000.

Associations also often choose the conference focus. When the Storage Networking Industry Association (SNIA) in Mountain View, CA, launched Storage Networking World (SNW) in 1999, the event was planned as a conference and drew 150 attendees. But with tabletop exhibits and interoperability demonstrations at each show, SNIA saw the growth potential. So they set out to find a professional partner, says Robin Glasgow, SNIA’s Executive Director. In 1999, they teamed with Computerworld Inc., owned by IDG World Expo, to help them manage SNW, a move many associations make. “It’s a nice partnership,” Glasgow says. The SNW board includes two SNIA members and two IDG members.

Co-locating with an established show is a third launch method that’s gaining popularity. Based on the success of the U.S. and European Embedded Systems Conferences, CMP Media launched co-located events in China and Taipei with Global Sources’ International Integrated Circuit — Conferences and Exhibitions. “There’s no way we’re going to know the Asian marketplace like our partners,” says Mike Flynn, Group Director for CMP’s Embedded Systems products. “At the same time, we have valuable expertise, an established brand, and relationships with our customers that we bring to the joint venture.” 

Changing timelines
Not only are the ways people launch shows changing, they’re hitting record speeds. Greco reports that IDG’s LinuxWorld Conference and Expo, launched in 1998, went from chalkboard to open doors in less than five months. And in April, IDG announced five launches for 2001 and 2002, including the Federal OpenSource Conference, which was announced in April and is scheduled for October. In addition, 
Greco has three more projects in the pipeline for 2001-2002.

Other show managers agree. “The pace seems to be much quicker on launches today,” says Sean Guerre, President of The Trade Fair Group Inc. in Houston. In 2001, his company launched two stand-alone shows, e-ProCom for Oil, Gas and Energy, which he’ll continue next year, and an e-business show for the architecture, engineering and construction industry that didn’t make it. Guerre did two months of research for e-ProCom, then launched the show four months later.

Guerre says the popularity of trade shows and the faster market for products and services cause the shorter launch timeline. “You used to be able to wait a little while before the market would turn,” he says. But now, he says that when associations start up, they almost immediately launch a corresponding show. And the same goes for media players who launch a publication. “The publishing world has solidly cast its eyes on trade shows and conferences,” he says. This pushes entrepreneurs to launch a show first.

On the other hand, timelines haven’t really changed for consumer shows. “We researched our For Women Only show for two years, which I believe is the minimum for planning a consumer show,” says Samuel Concilla, President of Erie Promotions and Expositions Inc., a North East, PA-based consumer show producer. He credits the more personal relationships show managers have with exhibitors for the time it takes to launch. “Today when you sell an exhibitor a booth, it isn’t a matter of a phone call. You might also send two or three mailings and plan a personal visit. It’s better to wait a year and put in the little extras that make a successful show.” 

Research and promotion
Perhaps one of the biggest factors affecting show launches is the amount of information available quickly via the Internet. “From a research angle, show launches are definitely easier now than they were 10 years ago,” says Guerre. “The Internet lets us quickly find out who’ll be the key players, both in attendance and exhibiting, just by visiting their Web sites. We used to have to call librarians to try and get that type of information.”

Concilla feels that a successful launch today requires more research because of all the competition in the market. “It’s not like you’re doing anything that someone else didn’t already try or is doing,” he says. “It’s important to make sure you’re in the right area with the right show at the right time.”
In 2001, he launched Pet Care Expo after two years of research that included gathering data and visiting successful competing shows. When gathering demographics on a designated market area, Concilla studies population density, potential customers, and their overall and spendable income. “We have more of an advantage now because a lot of that information is at your fingertips,” he says. “Before, we did a lot on gut feeling and just by talking to people.” The show was moderately successful, but when Concilla looked at the dollars generated compared with the effort, he decided to drop the show.

For multimedia companies, like IDG, access to research companies and industry-specific publications makes all the difference in show research. IDG World Expo is part of a group that publishes such magazines as MacWorld, Computerworld, InfoWorld, Industry Standard, and more. In addition, one branch of the company is a high-tech research organization. “We have the advantage of being able to use these resources to quickly identify new and emerging trends in technology,” Greco says.

Sure, the Internet has greatly aided show research, but it also offers the same customers more information choices, Flynn says, which affects marketing efforts. “That means having an established brand means a lot more. When faced with more choices, people tend to go with the brands that have proven themselves over time. New brands need to establish themselves, and that’s tougher than it was in the past,” he says.

Greco says whether an industry is “hot” greatly affects marketing efforts. “The high-tech trade show industry is getting clobbered by the economy,” he says. “But we see this as a temporary problem, and that’s why we’re continuing to launch shows.” In fact, he’s taken an aggressive approach to launches. “We think the key to success is to out-market the competition. That way, when someone decides they want to get into a specific market, they can never spend the marketing dollars necessary to compete,” Greco says. Basically, the first company into the market wins the game.

Money matters
Bottom line: A launch is only successful if it will make money for the company. “At the end of the day, it’s financial,” says Korse. “Did we bring in more money than we spent, and is it sustainable?” Imark won’t necessarily dump a show if it doesn’t live up to all the company’s expectations, but, “If we’re hoping for a margin of X, Y number of visitors and a retention rate of Z, but we miss all three numbers by a significant amount, that’s a good indicator that something’s wrong,” Korse says.

IDG pursues an aggressive launch strategy that’s calculated to produce results. “If we launch five shows and two stick, we just cancel the other three and launch five more,” says Greco. “That’s still much less expensive than trying to raise hundreds of millions of dollars to buy existing shows.”
One major change that more closely reflects the current business climate: Greco reports that today’s launches are budgeted to simply break even, not make a profit. “In the past, all the shows we launched made money out of the gate,” says Greco. “Now we treat them as investments.” One number IDG closely monitors is the rebook rate, with 60 percent to 75 percent indicating a successful launch.

Rising expenses make it even more difficult for shows to make money their first year out. “The expense of a stand-alone launch has increased dramatically,” Guerre says. He points to the competition for dates at convention centers, attrition clauses and other contractual concerns at hotels, as well as increased postal rates. “It’s a lot less risky financially to launch something that’s connected to one of your other events,” he says.

Concilla agrees that expenses are a major factor. “Everything costs much more now,” he says. “It probably costs us at least 25 percent more to produce a show now than it did 10 years ago.” He’s even adding staff members after 24 years of running the business with only his wife’s help. The good side: “If you survive today in this kind of business environment, you’ll be in it for a long time,” Concilla says.

What the future holds
Draper says launch activity has slowed in the past six months, but there are no statistics to confirm or refute this feeling. He also reports that different markets are “hot” at different times. “Up until six months ago, we heard about a lot of successful international show launches,” he says.

This year, it seems that mergers and acquisitions are taking center stage. For the first four months of 2001, media mergers and acquisitions tripled, compared with the same time frame in 2000, according to research by Jordan, Edmiston. And the value of those deals increased 300 percent over 2000.
Emerging markets play a major role in show launches now and will be even more important in the future. Technology seems to be today’s hot market, with energy following close behind. But it’s anyone’s guess which markets will emerge next, or who will be poised to take advantage of them. This means show organizers need to take a lesson from the new-economy companies and become “fast,” or they may get left behind.

Despite the current economic downturn, the exhibition industry looks strong. Professional attendance at trade shows grew 4.5 percent last year, and exhibit space grew 2.9 percent, according to the Veronis Suhler & Associates Communications Industry Forecast, to be released mid-July. No one knows what will happen in the short term, let alone the long term. But as we all know, exhibitions tend to weather economic storms fairly calmly.

In the end, Greco thinks individual success is essential to keep the exhibition industry healthy. “I know it’s cliché to say ‘A rising tide floats all boats,’ but it’s true,” he says. “We root for launches to succeed because that helps grow the entire industry.” And as long as the industry as a whole prospers, there will always be a place for new shows.

Elizabeth A. Brown is Editor-In-Chief of EXPO magazine. You can reach her atebrown@expoweb.com.