March 2001
Who’s winning the marketing match?
Facing increased competition from magazines, direct mail, e-marketing and the Internet,exhibitions battle for marketing dollars
By Lain Chroust Ehmann
When it comes to where to spend its marketing dollars, Motorola follows its customers’ leads — even if it means saying goodbye to shows it’s traditionally exhibited in for years. One show recently got the axe after five years, “Because it was not attracting the level of customer we were interested in engaging,” explains Mary Eriksson, Director, Strategic Marketing Telecom Solutions Group for the Schaumburg, IL-based company.
As Motorola has increased its concentration in the telecommunications arena, it’s had to evaluate and rank each event opportunity — from horizontal megashows, like the Consumer Electronics Show, to regional international telecommunication union shows — as to how well it helps to establish and enhance customer relationships and build brand awareness, says Eriksson. The trend for Motorola’s telecom customers is toward a limited number of larger, regional events. “Most of our customers are being very selective in where they send their employees” due to time and budget constraints, says Eriksson, who heads the internal team charged with evaluating exhibition opportunities and winnowing the list down to around 100 events a year worldwide.
“This team has dealt with reducing investment levels in events, reducing participation in events, adopting totally new ways of exhibiting that weren’t traditional for Motorola,” she says, noting Motorola’s own exhibition budget has remained fairly flat in recent years. “It comes down to, what are the best venues and opportunities that will draw our customers and be of appeal for them?”
Today, the answer includes an increasing number of marketing media options. Glossy magazines, high-profile trade shows and direct mail have been joined by Web sites, e-mail marketing and corporate shows, allowing exhibitors to target their message to an even more refined audience than ever before. All of these options mean that exhibitors are under increased pressure to justify every marketing dollar spent, showing a measurable return on investment. Couple these trends with an increase in the number of shows thanks to the longest post-War economic expansion on record, and the result is that show managers must battle to keep their biggest and best exhibitors coming back.
As exhibitions vie for marketing dollars, a closer look at the competition indicates that spending across all marketing media is expected to increase over the next several years. Gaining insight into how exhibitors view other marketing media may reveal strategies on how show organizers can garner a larger share of the pie.
Get it in print
Magazine advertising traditionally has accounted for a large portion of companies’ marketing budgets and will likely continue to do so. The Publishers Information Bureau reports magazine advertising revenue is on a steady rise, with 14 percent growth in 2000.
When it comes to marketing goals, there’s overlap between what shows and print advertising offer — both contribute to general awareness and image-building, and to a lesser degree, lead generation, says Paul Gangi, President and COO of Harris Internet Services Division at Harris Publishing Inc., in White Plains, NY. The mid-sized company wraps all its marketing efforts, including print advertising, around the more than 40 annual events it attends to showcase its traditional directory printing, as well as its newer Internet application service provider services.
Gangi sees print advertising as particularly effective in extending Harris’ reach beyond — and reinforcing its message with — show attendees. “Everyone at the show will see print ads, but not everyone who sees the ads will be at the show,” explains Gangi. For those who do attend, the print advertising drives booth traffic and reinforces messaging.
Motorola’s Eriksson agrees. Especially in the case of a new product launch concurrent with an event, “building that incremental awareness through print and other media can be very powerful in terms of enhancing your reach,” she says.
Where advertising can falter, though, is getting to the right people at the right time. ipromoteu, a Natick, MA-based online promotional product company, says its print advertising is very limited because ordering promotional products is usually so far down on its customers’ “to do” list that print ads don’t reach the target at the right point in the buying cycle, says Robbie Weinberg, Vice President, Strategic Business Development for the small company that employs 28. Events, however, allow the company to become top-of-mind with potential customers.
Also, the company’s ideal customer — event managers who spend $100,000 or more annually on promotional products — is so well-defined “we know who they are,” says Weinberg. “It’s a very select and targeted group. For my money,
I’d rather send them some direct marketing geared toward them, with a promotional item, than spend the money on print advertising that’s going to be discarded.”
Please, Mr. Postman
Whether the target is a select few or the masses, direct mail can help grab more customers, as a growing number of companies, like ipromoteu, are discovering. The Direct Marketing Association (DMA) estimates direct mail advertising expenditures accounted for approximately $44.6 billion in 2000, 13 percent of total advertising spending in the United States. The DMA also projects direct marketing spending will continue to grow steadily through the next few years.
The biggest appeals of direct mail are its relatively low cost and its flexibility, says Christina Duffny, spokesperson for the DMA. Direct mail can lead directly to sales by offering a call to action, supporting other marketing measures, and helping solidify a company’s image with a larger audience.
Weinberg views direct mail — and trade shows, to a certain extent — as a vehicle for getting his company’s promotional items into its target customers’ hands. ipromoteu typically conducts its direct mail campaigns, which account for approximately 20 percent of the company’s marketing budget, very narrowly and in conjunction with an event, says Weinberg.
This dovetailing of different media is critical to any strategic marketing plan. “The magic is coordinating everything you’re doing,” Gangi explains, noting that Harris allocates about 20 percent of its marketing budget to direct mail, which is used for lead generation and show support. Whatever the goal, consistency in branding and imagery across marketing elements is critical in making different channels work together synergistically rather than compete against one another.
Taking it to the Web
Cross-channel consistency is imperative for the digital medium. The ease of using the Internet for marketing is so great, Veronis, Suhler’s Communications Industry Forecast reports spending on Internet advertising and consumer online access increased from just over $1 billion in 1994 to $18.25 billion in 2000.
One of the biggest draws online is the medium’s low cost. “It’s far less expensive in terms of reaching folks,” says Gangi, who estimates approximately 20 percent of his marketing budget is allocated to “soft marketing,” including electronic newsletters. He says because prospects can opt in and out of e-mailings, it qualifies them better than mass mailings.
Because of the lack of constraints on length and format online, a company can use electronic mailings to provide in-depth information to its customer base and to support events. Before a trade show, for example, both Harris and Motorola broadcast e-mails to potential attendees to invite them to the booth or to a reception.
Those who shy away from print advertising, though, may find the Internet also doesn’t meet their needs. While ipromoteu invests heavily in its own Web site, it hasn’t had much success in advertising online, says Weinberg. “Like print advertising, banner advertising is waiting for people to come and find it, and you have to hit them at the time they’re making a buying decision,” he explains.
Industry competition
Shows aren’t immune to competition from within the industry either. Threats come from niche shows, as well as private events. For example, Delphi Automotive Systems Corp. and Visteon Corp. — the world’s two largest auto suppliers — made headlines when they pulled out of the 2001 SAE World Congress and Exposition, citing increased focus on specialized shows and pressure to up their ROI. And a recent Inc. Magazine article highlighted the trend towards private, invitation-only shows held by mass retailers, such as Wal-Mart and Kmart.
Larger companies in particular view corporate events as effective alternatives to shows. Not only can they dictate the content, they can control costs, attendees and the quality of reported data. Motorola’s Vice President and Director of Corporate Communications Shelagh Lester-Smith sees the attraction: “You spend a lot less money and you target customers directly by name, in real detail. I think sometimes that’s a result of having too much to choose from outside, and not always being sure of the quality of the event you’re being asked to consider.”
Overwhelmed by the sheer number of shows — more than 12,000 annually in North America alone, according to the Center for Exhibition Industry Research (CEIR) in Chicago — exhibitors want show managers to be strategic partners, helping them determine which events best fit their marketing plan and budget, and how to exhibit successfully at the shows they do attend, says Michael Bandy, President of Chicago-based Trade Show Exhibitors Association(TSEA).
Companies come to shows with two broad categories of goals, says Skip Cox, President of Red Bank, NJ-based Exhibit Surveys Inc.: Marketing communications (marcom) objectives, such as brand awareness and message conveyance; and sales objectives, such as lead generation. “Generally speaking, we see that larger companies tend to have more marcom-type objectives,” says Cox, “While the small- and medium-sized companies are looking for the next lead.” As basic as it sounds, understanding each individual exhibitor’s objective is the key to the sale.
Hanging tough
While virtually every company uses a mix of marketing strategies to meet its goals, events are a key element and are holding their own in terms of growth and spending. The Veronis, Suhler Communications Industry Forecast reports that while more total dollars were spent on consumer magazines and B2B magazines in 2000 ($15.4 million), trade shows will outpace them in percentage growth, increasing at an average compound rate of 8.5 percent per year from $9.3 billion in 2000 to $12.8 billion in 2004.
For large companies, events can be a necessary complement to print, radio, direct mail and television. “We’re not selling nuts and bolts. We’re selling communications systems andsolutions. Because of that complexity, our events help build that relationship — that long-term, strategic relationship that’s critical to our business,”explains Eriksson.
Shows meet unique needs for exhibitors. “The conferences afford us the opportunity to talk to clients we’ve done business with for 40 years and to introduce some of the new services we’re offering,” says Harris’ Gangi.
Not to be underestimated is the value of face time. “I think it gives people a comfort level,” says ipromoteu’s Weinberg.
Think strategic
With the variety of marketing options and events available to exhibitors, a show’s success depends almost entirely on its ability to strategically position itself with its audience. Exhibitors of all sizes are examining how a show contributes to their marketing, sales and branding goals. They may be attending more shows — the average company exhibited at 114 shows in 2000, up from 93.5 in 1999, according to a TSEA member poll — but there are more shows to choose from. And though TSEA reports its members’ 2000 trade show budgets increased an average of $110,783 — approximately 9 percent — over 1999, costs also increased in virtually every category.
Organizers who fail to communicate effectively with exhibitors may not find a place for themselves in next year’s event budget — which, according to this sample of exhibitors, isn’t expected to grow much, if at all. “There’s a huge proliferation of shows, and sometimes you wonder if there really is a need for quite so many of them,” ponders Motorola’s Lester-Smith. “I think what we have to do is be very, very refined in how we make our choices. And we do have to make tough choices.”
Lain Ehmann is a freelance journalist who covers marketing and business issues for a variety of magazines. She lives in Boston.
The ups and downs of the economy are enough to make market watchers seasick. Despite the Federal Reserve’s two recent rate cuts, all indicators point toward an economic slowdown. So will the exhibition industry be forced to hit its brakes? Not necessarily.
“We haven’t gotten any evidence at this point that overall marketing budgets are coming under fire,” reports Douglas Ducate, President of the Chicago-based Center for Exhibition Industry Research (CEIR). Ducate says while companies are “cautious,” and perhaps delaying large-scale and long-term expenditures, those looking to trim back are apt to pursue layoffs and other cuts with more immediate impact on the bottom line.
Robbie Weinberg, Vice President, Strategic Business Development for online promotional products company ipromoteu.com, says the company’s modest events budget will remain constant — and eventually increase as the company doubles the shows it attends in 2002 — even if the economy heads south. “Promotional products spending has gone up every year since spending has been tracked,” he reports, despite fluctuations in the economy.
That spending pattern holds true for exhibitions, too. “Historically, the exhibition industry is impacted much less than other industries,” Ducate explains. During the last major economic slowdown, in the mid-1990s, spending on trade shows and exhibitions did indeed grow; 1996 spending totaled $6.5 billion, 10 percent more than in 1995, according to Veronis, Suhler & Associates Communications Industries Report.
Even the Internet industry — reeling from the closure of more than 200 dot-coms last year, reports Webmergers.com — is hanging tough. While there are fewer companies, the survivors continue to spend marketing dollars on shows. “The trade show is usually, for a lot of these people, the absolute last thing they’ll cut,” reports Anne Holland, Publisher of MarketingSherpa.com, a media company following dot-com marketing.
What the slowdown does mean, however, is a greater need for accountability. “We must be absolutely accountable for marketing expenditures — more than ever before,” says Marilyn Kroner, President of the Computer Event Marketing Association. “We need to be able to report return on investment and track anything else we can.”
Ladies and gentlemen, start your calculators.
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