Anchors Away

Apple's recent announcement that it will no longer exhibit at Macworld is perhaps the most dramatic example, but major industry players and anchor exhibitors recently have been canceling or reducing their participation in trade shows. It's happening across multiple industries with notable frequency. The past year alone has seen a North American International Auto Show without Nissan, Suzuki or Porsche as exhibitors; an E3 Media and Business Summit without Activision; an International Consumer Electronics Show without Philips, and reduced participation from Cisco Systems, Logitech and Yahoo; and a National Association of Broadcasters Show without Apple or Avid Technology. Sometimes major exhibitors return in subsequent years, but the trend has the industry unsettled.

The reasons for dropping out generally sound the same: "Trade shows have become a very minor part of how Apple reaches its customers," read Apple's statement about leaving Macworld, which is produced by Framingham, Mass.-based IDG World Expo.

"It is really precarious out there," says Dan Hoffend, vice president of corporate sales for Freeman, the Dallas-based events and exhibit solutions company. Marketers still view trade shows as potentially important, he notes, but only if the shows attract the exact buyers or consumer demographic the companies want to reach, and only if the companies get sufficient value for the money they spend. Otherwise, especially in today's economy, they're quick to pull the plug.

Show organizers say they're getting more cancellations or downgrading inquiries now than in recent memory. How should they proceed when major exhibitors vanish? Or, more to the point, how can they prevent exhibitors from leaving in the first place? Organizers say it's a tall but not impossible task, requiring flexibility, better customer service and a willingness to abandon stale policies of the past.
 
History lesson
Surfaces, the largest residential-flooring trade show in the country, produced by Irving, Texas-based Hanley Wood Exhibitions, was coming off a record show in 2003 by every measure: attendance (40,000), number of exhibitors (925), net square feet of exhibit space (535,000) and revenue ($11 million).

Then, in a 10-day period leading up to the space draw for Surfaces 2004, five of the show's biggest exhibitors ­-- including two companies that controlled roughly 80 percent of the market share for roll carpet -- decided to pull out. When word spread, more exhibitors backed off. Within a month, seven of the show's top 10 exhibitors had left, and more than 50 other small exhibitors bailed, too -- companies that previously had accounted for a combined 105,000 square feet of exhibit space, or 20 percent of the show. Not only did the exhibitors drop out; some issued press releases to announce to the industry that they were leaving and launching their own rival, regional trade shows.

Galen Poss, president of Hanley Wood Exhibitions, calls the subsequent months leading up to Surfaces 2004 "the most frightening, challenging, longest and most rewarding" of his career. (He recounted the experience last summer at the Exhibition & Convention Executives Forum in Washington, D.C. A video of his hour-long talk can be viewed at pinnaclepodcasts.com/ecef.) "We came to the realization that we could lose the show if we didn't act smartly, quickly and correctly," he recalls.

The big exhibitors who abandoned the show viewed Surfaces as a threat, Poss explains. They were so dominant within the industry that they weren't attracting much new business on the show floor, and there was a great chance their customers would discover products from rival exhibitors. If the companies set up their own regional shows, they could control the environment better.

Step one for Poss was to get over the initial sting and suppress the desire to sue the exhibitors for collusion. Poss and his staff, led by show director Michelle Troop, didn't want to burn any bridges, either, in hopes the exhibitors would return someday.

Poss reasoned that buyers didn't come to trade shows primarily to meet with a handful of industry heavyweights. "They see them all the time," Poss notes. So he set out to bombard the marketplace with positive messages about the show's surviving attributes and reminders that trade shows are fundamentally about the opportunity to connect with people face-to-face and discover a variety of products and solutions from hundreds of companies. And, ideally, Poss wanted others to spread the word for him, knowing the messages would have more credibility coming from industry consultants, associations and trade publications than from Hanley Wood.

The Surfaces team launched an aggressive -- and expensive -- ad campaign that alternately glamorized the show and made a no-nonsense business case that Surfaces was a "must-attend" event. In addition:

•  They created mar­keting materials that were easy for registrants to forward to friends and for exhibitors to forward to clients.

•  The attendee promotional campaign was launched earlier, with accelerated deadlines, so that they could claim that by Aug. 1, registration was 20 percent ahead of where it had been the previous year. (Forget the fact that the campaign hadn't started that early the year before.)

•  They created new features on the show floor: pavilions, contests, demos and forums on controversial topics.

•  They booked a home improvement TV celebrity to donate services to a lucky attendee, and splurged to bring in a big-name rock group to perform at a nighttime event.

•  The number of telemarketers was doubled to pull in more attendees.

•  A loyalty club program was introduced for longtime exhibitors.

•  They held meetings with VIPs to ask how the show could best meet their needs, and even offered to open the show early and late for private sales meetings.

•  Every possible ally was courted, e.g., associations, customers, media.

Poss knew that not every new effort would appeal to all attendees, but the moves were "something else to talk about" other than that the industry's most powerful companies weren't going to be at the show.

Surfaces 2004 was a surprising success. In the end, revenue was down just 2 percent compared with Surfaces 2003; the number of exhibitors held steady at 925; attendance was down 10 percent, and net square footage declined by 14 percent.

But then the show started to grow again. In 2005, Surfaces set new records for revenue ($13 million) and number of exhibitors (1,054). In 2006, the show sold out the exhibit space in its hall, at more than 514,000 square feet. In fact, from 2004 to 2006, Surfaces was one of the fastest-growing trade shows in the country. And, eventually, some of the anchor exhibitors returned to the show, either as a corporate entity or as the owner of a subsidiary that had booth space on the floor.

Poss acknowledges that factors outside of his control -- namely, a temporarily booming construction industry -- contributed to his rebound success, which has given him a new appreciation for the fragility of trade shows. "We like to think the thing we have here is bulletproof," he says. "It's not."

Preventing cancellations
Most organizers would prefer not to face the challenges Poss overcame, and instead find ways to keep wavering exhibitors involved, even in a reduced capacity, and they have begun to experiment with different packages and deals. Tactics and strategies differ, however, particularly on the crucial issue of how strictly to hold exhibitors to terms of contracts that already have been signed.

Ignacio Cabrera, vice president of exposition sales for the National Association of Home Builders, subscribes to the widely held belief that show organizers should never discount the price of exhibit space. "That is sacred," he says. But recently, he took a harder line than most would with an exhibitor that had contracted for a 16,000-square-foot exhibit space and wanted to pull out in order to hold a private event in conjunction with the show.

Cabrera had heard a rumor that the exhibitor, who spent a combined $1 million each year with the show and the association, was thinking about canceling. Cabrera held firm to the policy that in order for companies to sponsor parts of the show or rent meeting rooms, they had to buy exhibit space. "It's very important to have those names on the exhibitor roster," he says.

The deal Cabrera ultimately negotiated included adding mandatory research questions on the attendee registration form on behalf of the company; co-sponsoring the company's private event and opening it up to the show's VIPs, and convincing Freeman executives to meet with the company in person to reduce display-related costs. In return, the company agreed to maintain its 16,000-square-foot presence on the floor. "God knows what would have happened if they had blinked," Cabrera says.

Susan Schwartz, president of ConVexx, a full-service event company in Las Vegas, took a more forgiving line when dealing with exhibitors for the 2008 SEMA Show for the Specialty Equipment Market Association last November. The space selection had gone well in the spring but, Schwartz says, come the fall, "when final payments were due, everyone woke up and said, ‘I can't do this.' "

Schwartz allowed exhibitors to downsize without penalty,  contrary to the terms in the contract, and gave refunds on unused space. Some exhibitors even received American Express gift cards, which Schwartz says were worth up to $1,000. "Some received more money back than they spent on the exhibit," she notes. "The important thing was to hold on to them."

Other organizers have taken a middle road. "In this economy, most companies would like to make an adjustment, if it were possible," says Kevin McCourt, vice president of advertising and exhibition sales for the Arlington, Va.-based Newspaper Association of America. McCourt tries to discourage cancellations or downgrades by holding exhibitors to the fees and penalties in the contracts, but he counts those payments as money the companies spend with the show or association, for the purposes of figuring out what other advertising or sponsorship deals or discounts they deserve.

Ryan Strowger, senior manager of business development for the Consumer Electronics Association, which produces International CES, takes a similar approach. He'll dissuade renegotiations by standing firm on contracts, denying requests for refunds about half the time, he estimates, but he allows downgrading fees to be put toward meeting room rental costs or other spend the exhibitor makes with the association.

Organizers' advice
Get personal. Strowger says about a third of his sales department is dedicated to CES's biggest exhibitors, and his representatives meet with them in person at least three times a year. If companies ask about canceling, Strowger says it's important to find out exactly who is requesting that action, so he knows how best to spend his energy making the case for continued participation.

Find ways to cut. If a high-level marketing or financial executive wants to eliminate trade show spending, he or she might be unaware of how -- or how much -- an exhibitor can save by making more cost-effective choices, such as staying at a more affordable hotel or cutting back on the materials or products they bring to the show, Schwartz notes. "We say, ‘OK, let's help!' We look at the entire booth package and see where we can cut and how to keep them in the show. Sometimes people don't take the time to do that."

Determine objectives. Companies might be looking to make more significant changes than a scaled-down booth as their business needs evolve. "You have to be willing to go to customers and ask, ‘What do you need? How can we contour and customize your experience to make it worth it for you?' " Poss says. "With anchor tenants, this becomes a prerequisite as we go forward."

Get hotels on board. Schwartz says when a flood of cancellation inquiries came into her office last fall, she turned to hotels in Las Vegas and asked them to reduce their rates. The hotels agreed -- several dropped rates by $40 or $50 per night -- and Schwartz made sure the discounts were retroactive to those who had already booked. Las Vegas hotels made similar reductions for peak nights during International CES. The measure helps exhibitors and attendees, Schwartz adds. "If buyers come back, exhibitors will come back."

Share data. McCourt says the best move he made was to be completely open with potential exhibitors about the current attendee list. He tells prospects about the companies and job titles represented, and he shares the full list, updated weekly, with exhibitors once they've signed contracts; formerly, exhibitors had to pay for such access. "Be as candid and open as you can be about expectations and numbers," McCourt suggests. Exhibitors don't care whether a show attracts 2,500 people instead of 25,000, as long as the 50 prospects they want to see are there, he explains.

Start payment plans. Instead of collecting exhibit space payments in two or three installments, Schwartz implemented a customized payment plan option for exhibitors for the first time. Exhibitors appreciated defining the amount they could pay and the schedule. Schwartz plans to offer the option again this year.

Please Don't Go

When Robin Preston, assistant executive director for conferences, exhibits and sponsorships for the Alexandria, Va.-based National School Boards Association, learned that a major technology company and long-term exhibitor would be pulling out of the association's two big yearly shows, it was "a huge blow to us," she says. But she was not about to take the news lying down.

Preston set up a meeting with the tech firm and point-blank asked what the association could do to keep them. She found that rather than traditional trade-show floor exhibiting, "they wanted more involvement with our education and more opportunities for one-on-one contact with our members."

So Preston's team came up with a plan. They asked the company to help curate an educational session at the annual conference and offered a presence in the show's "members-only" room. The company came back to Preston and said, "We can do this."

The trial run for this new arrangement took place last March, at NSBA's annual conference, which was held in Orlando and drew about 12,000 attendees. The tech firm was not only pleased with how things went, it has expanded its involvement with a similar presence at NSBA's annual tech show, as well as smaller, targeted conferences for urban boards of education.

"Not only do we have a larger relationship with this company, our partnership with them has opened our eyes to opportunities with other companies," Preston notes, "especially those with nontangible products that don't lend themselves to an exhibit booth." -- HUNTER R. SLATON


 

Pitfalls of deal making
The lengths organizers go to keep anchor exhibitors happy could have adverse effects on those who never ask for special treatment. "I tell my staff every month, 'Be absolutely sure when you are making arrangements with any one company that you would be comfortable explaining why you did it that way to a competitor or a colleague,' " McCourt says.

Rick McConnell, senior vice president of Hanley Wood Exhibitions, who spoke on the topic of exhibitor negotiations with Cabrera and Strowger at the annual meeting of the International Association of Exhibitions and Events in Miami last December, insists exhibitors aren't entitled to equal treatment. Organizers can deflect accusations of favoritism by offering the same deal to anyone who makes as large of a commitment to the show as the major exhibitor who received the deal, he says. "That said, you need to be very selective. Otherwise you really are opening Pandora's box."

Furthermore, when concessions and agreements are made, a new baseline is set, and exhibitors might expect even more help in future years, McConnell says. Organizers should try to lock in exhibitors for multiple years once a deal is reached, to avoid going through the same process every show cycle, he adds.

If anchor exhibitors do cancel and return in subsequent years, they might expect preferential treatment, McCourt says. "A number had the expectation we would move exhibitors in the front-of-hall spaces" that the major exhibitors previously held and vacated, he notes. "We were very careful not to do that, because we didn't want to disenfranchise companies that had made a commitment to us all along."

Poss says organizers even need to be willing to take a financial hit to keep exhibitors happy. "Historically, our industry has always looked at trade show space as somewhat of a sacred cow -- don't do anything that interferes or diminishes it," he says. "Theoretically that may be true, but it may not always meet the needs of customers, especially of the biggest, most important customers."

For example, one exhibitor at a Hanley Wood show didn't need a large footprint on the show floor, but wanted a space to meet with customers even when the trade show was closed. Poss worked out a deal to let the company shrink its floor commitment and buy meeting room space, which cost far less than exhibit hall space. "We did not generate nearly as much revenue and profit [from that company] as we would have in previous years," Poss admits, "but we saved that customer and, more importantly, we met that customer's needs."