Fear of Negative PR Not the Only Reason for Budget Cuts

An exhibit manager chimed in on a message board recently, to remind us that the perception that shows and events are frivolous or the potential for negative PR exposure are not the only reasons events are cancelled or cut back. "... certainly not because we see the shows as unnecessary, a luxury or some trumped up PR stunt to try and present an image of a socially-conscious corporate citizen - it is simply self-preservation. Significant cuts are necessary to keep many companies in business. The marketing budget is an easy target for quick money - it's a lot harder to carve money out of production if you are already a lean, efficient organization with good strategic sourcing and operations practices in place. It is sad that this has to become politicized. Nothing should be read into the practice of cutting back trade show marketing other than it is simply one of many tools corporations are using to try and get through this recession."

Her response raises the question again, why cut marketing when things are down?

Profit often comes from serving the existing customer base. New revenue is often expensive to obtain and expensive to support, partially answering the question "why do companies cut sales and marketing budgets during an economic downturn?" Leaning out the organization as Karen has indicated and keeping the revenue streams you already have is a common approach.

Many companies are shifting weight to Customer Relationship Management at events in which they continue to participate, aka "putting their arms around their existing customers." Keeping the business you have safe from price attacks by starving competitors, offering solutions to existing customers that help you both mutually deal with the economy, and making sure that you get any additional business that is to be had from your current accounts are productive goals for events in the near term. Scheduled meetings with top accounts, where you offer real support and solutions for weathering the storm are a wise investment of time and resources.

So, if you are still counting leads as a major part of your event measurement, count meetings with high value accounts at least equally in your measure of success.

What Do Other Companies Spend at Tradeshows?

Comparing Total Spending at Trade Shows

Using a Cross Industry Benchmark of Cost per Square Foot

Clients ask us, “How does our trade show spending compare with that of other companies?” Specifically, what are the benchmarks for total cost of a typical trade show appearance, including all activities except staff time and travel expense (items typically not reflected in the trade show budget)?

It is easy to find references on “spending per square foot” as a comparative index. However, the numbers we see significantly under estimate total spending. Many of the references we found indicate a cross industry average cost of approximately $60 per square foot, including space rental. The most often cited number for a "new build" is ~$150/ sq. ft. Many exhibit managers are shaking their heads wondering how this can be true!? The most likely answer is that these indices do not reflect total show budget but a subset of spending directly related to the exhibit.

To address this need, Constellation ran the average “cost per square foot” data on the actual results from several hundred events in our database. These trade show programs were managed by companies in several different market segments.

So What Do Other Companies Spend?

Total Trade Show Spend per Square Foot

(Cross Industry View)

Type of Customer	Cost/ Sq. Ft.	Exhibit Program Size and Scope
Manufacturing (Fortune 100)	$127	Large Domestic
Transportation (Fortune 100)	$137	Medium Domestic
Consumer Package Goods (Fortune 100)	$144	Large Domestic
Medical and Household Goods (Fortune 1000)	$172	Medium Domestic
Exhibit House Clients (Mix of Sizes)	$186	Mixed Domestic
Engineering/Manufacturing (Fortune 100)	$187	Large Domestic and International
Banking (Fortune 100)	$239	Large Domestic
Computer Technology (Fortune 500)	$388	Large Domestic and International

We estimate the average Cost/Sq. Ft. benchmark, on a cross- industry basis, to be $150 - $190/ sq. ft.

This index includes all things that are generally found in an actual event budget, including off-floor activities and expenses such as a customer dinner or event, sponsorships, media, etc. The index excludes staff expenses (time, travel, food and lodging) that are not part of the show budget. Those costs are usually covered by non- trade show budgets based elsewhere in the organization. (Some clients prefer to look at the complete picture and include staff travel cost. This can be estimated by multiplying the domestic traveling staff by $1,000 and the international traveling staff by $10,000. This article deals only with budgets that do not account for staff cost.)

A Second Opinion

As a cross reference, I asked our friend Skip Cox, at Exhibit Surveys, to perform a similar query against their database of hundreds of events. Skip indicated the average spending per square foot, on a cross industry basis was similar to our finding at approximately $170 per square foot.

These numbers are presented as a guideline. They reflect actual results against hundreds of shows. "The index of “cost per square foot” is a useful way to forecast how much money you might need to allocate to do a good job at an upcoming event or to evaluate how well you are managing cost compared to the spending of others."

The average exhibit size reflected in this data is approximately 400 – 500 square feet, i.e. a medium exhibit size. In the table above you will note that some programs were defined as large, where exhibit sizes can average 1,000 square feet or more. Some of the large programs have a lower cost per square foot compared to smaller ones. Other factors you should consider when reviewing this data are 1) the averages reflect excellent, good, fair and poor cost management by different companies, 2) the cost for floor space rental varies by show and industry, 3) the degree of off-floor and off-site activities included varies by industry and company type, and 4) these averages reflect some programs that include international events where cost is almost always 20 – 50% higher. This data represents results from 2007 and 2008 shows.

Using indexes such as Cost per Square Foot is another example of how a good event measurement program can help you manage your company's resources for maximum efficiency and effectiveness.

If you have questions about your specific spending, please contact me and I will be happy to answer them.

+1.770-391-0015, http://constellationcc.com/