Show managers can attest to the lack of agency support. Jerry van Dijk, CEM, President of Marshfield, MA-based trade show producer Windmill Enterprises, says he can recall only two occasions over the last 23 years when an ad agency principal called him and said, "'Look, I have a client who's interested in exhibiting in your trade show.' It just doesn't happen."
Beverley Morden, President and CEO of Southex Exhibitions, Don Mills, Ontario, agrees. "We don't have the traditional business relationships with ad agencies that we have with other companies," she says. "We don't approach them and they don't approach us; that might be old baggage but that's the way it is."
Should show managers approach the top ad agencies and explore how they can work together to provide the best marketing mix for agency clients and prospective exhibitors? Response to the proposition ranges from enthusiastic support to a hostile veto. While proponents move forward with caution, they may find unexpected allies in the small to mid-size agencies that are capitalizing on the revenue potential in trade show collateral materials.
Benchmarking agency roles
To fathom how ad agencies actually perceive trade shows, Exhibit Surveys Inc., Red Bank, NJ, and Francis Friedman, COO of New York City-based Time & Place Strategies Inc., conducted a benchmark study for the International Association for Exposition Management (IAEM) Foundation in 1994. Titled a "Survey of Advertising Agency Involvement in Trade Show Exhibiting," the study was released in April 1995 and presented at the second annual Society of Independent Show Organizers (SISO) Executive Conference in Monterey, Mexico. Among its findings:
- 84 percent of the 258 ad agencies responding (1,037 members of the American Association of Advertising Agencies (AAAA) were contacted) said they provide trade show marketing or promotional services to about 29 percent of their clients.
- While nearly eight out of 10 agencies claim to have either significant influence or the final decision in their clients' overall marketing programs, they are not significantly involved in trade show selection decisions.
- 43 percent of agencies report significant influence over trade show participation, but none have the final decision-making power.
- Only 2 percent of agencies mentioned that commissions paid by show organizers would make trade shows more attractive for recommendation to their clients.
- Most advertising agencies perceive trade shows as simply another means of achieving typical advertising and communications objectives.
- Most ad agencies do not fully understand the value of exhibitions as a face-to-face marketing opportunity that helps their clients accelerate prospects along the purchasing path.
In late spring 1995, SISO appointed David Cheifetz, now President of Norwalk, CT-based DSC Group LLC, to present the study to the AAAA. "SISO wanted to learn how to forge links between ad agencies and the trade show community and determine what could be done to get the agencies up-to-speed as to the worth of trade shows," Cheifetz says. IAEM asked Reed Exhibition Companies (REC) Vice President Margaret Pederson to join Cheifetz in presenting the study to the AAAA.
"There's not been much action since David and I visited the AAAA," Pederson says, "just a lot of lip service." Adds SISO's Executive Director, Stephen Schuldenfrei, "We've been pushing the issue at the AAAA for almost three years with not a whole lot of progress."
Why the lack of enthusiasm? Agencies' perceptions of trade show effectiveness are skewed by their failure to see the value of face-to-face marketing versus other media. When agencies compare the cost of participating in trade shows to the cost of commissionable media, commissionable media come out ahead. "The big ad agencies have their collective heads in the sand," says Friedman, who spent several years toiling along Madison Avenue for several large ad agencies. "Media buys are measured on the basis of cost-per-thousand for each target audience (including trade show attendees) reached," he says. "It's a system that's engraved in the minds of agency people and difficult to offset."
Agencies and commissions
If an agency buys $60,000 of magazine space for a client, the publication typically bills the agency for $51,000 ($60,000 less 15 percent), the agency bills the client for $60,000 and keeps $9,000 as commission. (If the client bought space directly from the magazine, it would have paid $60,000 because commissions are paid only to recognized advertising agencies.)
Both advertisers and agencies have become increasingly unhappy with the established commission system. Large advertisers complain that they pay more for the same services received by small ones simply because they place more advertising. As a result, a trend is emerging to pay either a straight fee or a combination commission and fee.
Though IAEM's survey indicates that commissions are a nominal issue, show organizers disagree. To get agencies to recommend trade shows to their clients, both Cheifetz and Phil Ullo, Chairman and CEO of Natick, MA-based Ullo International, say the day is coming when show organizers may have to start paying commissions on booth space and show sponsorships.
"It's been my contention all along that trade show producers have to pay a commission to ad agencies, but this concept has not moved forward," Cheifetz says. "If ad agencies saw something in recommending trade shows to their clients, they'd get more involved."
Ullo says, "There's a simple reason the advertising industry doesn't understand that exhibitions are a form of media. They don't gain any financial benefit from it. If exhibit space becomes commissionable, they might change their focus."
Unexpected allies
While it may take a piece of the action to sway the biggest advertising agencies, many small to mid-size ad agencies are already benefiting from their clients' participation in trade shows. They're compensated on a per project, hourly rate or fee basis for providing services ranging from exhibit theme development, design and graphics, to production of collateral materials. It's these agencies who may be show organizers most ardent allies in promoting trade show participation.
When one of its clients decides to exhibit in a medical trade show, Lehman-Millett, a Boston, MA-based full-service medical marketing agency not only coordinates booth design and graphics but also develops a comprehensive strategic marketing plan so the client realizes a good return on its trade-show investment. "We view it as fulfilling our role in the agency-client partnership," says Conrad Omanski, Vice President and Director of Account Planning for the 18-year-old firm, which has 40 employees and annual billings of $30 million.
According to Omanski, Lehman-Millett performs a full range of trade show-related services for its clients, ranging from pre-show promotion and public relations to post-show follow-up of all sales leads generated. "There's nothing more efficient than a trade show when a medical company needs to introduce a new product to a target audience," he says.
Acknowledging the trend away from complete reliance on compensation from commissions, Joseph Grimaldi, Chief Operating Officer at Mullen Advertising, Wenham, MA, says, "It's the agency's job to make every client succeed. Period. We do this by establishing relationships for our clients in several markets -- including trade shows." Grimaldi says Mullen, whose annual billings of $136.2 million rank it among Advertising Age's top 100 agencies, has generated six-figure income by handling booth design, graphics and brochures for clients involved in trade shows.
Who'll champion shows?
Despite the handful of enlightened agencies who do advocate show participation, there is untapped potential among the remainder who influence their clients' marketing decisions. A conclusion of the IAEM survey notes that because agencies have a significant influence on the strategic marketing decisions of their clients, it is important to educate them about the value of trade shows in the overall marketing mix.
"Most agencies take the view that they do the collateral for their clients and let it go at that," Pederson says. "They don't see that they have a role because they really don't understand our business and they've never been given an opportunity to participate in it."
In the industry-sponsored book, Whatever Happened to Madison Avenue?, author Martin Mayer notes: "The whole political relationship has changed because clients feel that agencies no longer know things they don't know." In fact, in a recent AAAA survey, leading advertisers overwhelmingly indicated that large ad agencies cannot coordinate diversified marketing programs any better than they can. Advertisers, therefore, prefer to orchestrate their own participation in trade shows rather than entrust it to the agency. These big marketers also said they would not limit themselves to one agency for all their communications needs.
If further education of advertising agencies is needed, the impetus must come from the exhibition industry. According to Friedman, "Senior ad agency executives above the sales and marketing functions have neither been educated nor convinced as to the intrinsic merits of an active and dynamic integrated trade show program. The trade show industry has not told them this story or the benefits to their organizations through an integrated trade show effort."
Do trade show organizers really want an advertising agency as intermediary between booth sales personnel and exhibitors? "If agencies were in charge, I think we would get easier access to the top CEOs," says REC's Pederson. And with flattening hierarchies and the elimination of middle management, it is the CEO and marketing vice presidents in many exhibitors' organizations who make the final decision to participate in trade shows.
But also at issue is the question: Who knows the trade show industry best? Friedman doesn't believe advertising types can tell the trade show story any more effectively than those working in the industry. "Do we really want to insert an agent between ourselves and our buyers and then pay the agent a 15 percent commission? I think not," he insists. "If we don't tell our story, nobody is going to do it for us. We need to promote ourselves more heavily to all our partners, including ad agencies, and we need to promote the unique and compelling benefits to the larger marketing community."
To fund such a trade-show marketing campaign, Friedman has proposed a voluntary five cents per net-square-foot assessment by the industry. "The specifics of how the assessment will be implemented are being worked out and need to be negotiated with each of the 20 different associations that are represented by our industry," he says.
Educating the masses
According to Steve Sind, President and CEO of the Center for Exhibition Industry Research (CEIR), CEIR will continue to disseminate the key findings of the IAEM Foundation study to advertisers, ad agency personnel and marketing consultants later this year through a series of regional seminars in New York, Washington, Chicago, Atlanta and a yet-to-be-determined West Coast city.
Another channel for getting the word out is Advertising Age's associate publication, Business Marketing. For each of the last five years, Business Marketing has published a supplement on the impact of the trade show as an integral part of the successful marketing mix. The supplements are also distributed to Advertising Age subscribers, members and prospective members of CEIR. This year two supplements will be distributed.
"Like print advertising and direct mail, trade shows are but one of many marketing tools available," says Chuck Paustian, Business Marketing's editor. "Each tool has a particular role to play, depending on the audience the marketer wants to reach. And no one tool is better than the other; one size does not fit all. However, when it comes to putting a seller face-to-face with a buyer, only trade shows can do that. That's the message that has to be delivered to ad agency CEOs."
"We support the trade show industry because it's classic business-to-business marketing," says Bill Furlong, Publisher and Midwest Sales Manager for Business Marketing. "Trade shows are the No. 1 tool of business marketers. If marketers are not into trade shows, and if we're not covering trade shows, we're not covering the marketing industry. That's our message."
Furlong thinks it would be interesting to see a major advertising agency approach a major trade show producer and suggest a partnership. "That'd be a real smart thing for someone to do," he says.
