Are Trade Shows Dying?

By John Honovich, Published Dec 28, 2008, 03:54pm EST

Internet economics and the recession pose a significant risk to the future of trade shows. A broad trend facing all technology industries, we may see dramatic reductions and changes to leading security trade shows in the next 3 years. With Norbain [link no longer available] and Pelc [link no longer available]o both not exhibiting at IFSEC plus weak attendance at ASIS 2008, these fears and concerns are rising.

This report examines the underlying economics of trade shows and the comparative value to Internet marketing. 

How Do Trade Shows Make Money?

Just like newspapers depend on classified ads for the bulk of their revenue, trade shows depend on exhibitors.  And just like the Internet is destroying the classified ad business for newspapers, the Internet will undermine the exhibitor business for trade shows.

Why Do Attendees Go?

Two general motives exist for integrators and end users to attend trade shows:

  • Entertainment: Companies send attendees as a reward or bonus
  • Information: Companies want to learn what is new and find solutions to their needs

How Much Does It Cost Per Attendee?

I estimate an average of $2,000 USD. While most attendees only go to the exhibits and the exhibits are usually free or only a nominal charge, other significant costs must be absorbed by companies:
  • 3 days out of the field ($1,000 USD)
  • Airfare, flight, meals, etc ($1,000 USD)

Why do Exhibitors Exhibit?

The main reason to exhibit is to secure new leads. While a booth can have some branding and signaling effect, the most concrete quantification of return is how many warm leads a manufacturer has coming out of the show.

How Much Does it Cost to Exhibit?

The minimum cost (all-in) for exhibiting at a major show such as ASIS or ISC West is $25,000 USD.  A 10' x 10' booth (those mini-booths in the back) cost $10,000 USD. Then you have the costs of constructing a booth, shipping it, staffing it with 2 knowledgeable people for multiple days, etc. 

The big booths at the front of the show floor usually cost exhibitors (all in) $300,000 or more. 

What Returns can an Exhibitor expect?

In good times, a small both may get a few hundred visitors and a dozen or so warm leads. A big booth may get a few thousand visitors and a few hundred warm leads.

Given that deals in the security industry are routinely in the hundreds of thousands of dollars, closing a few new deals from a show can be an effective investment.

How the Internet Hurts Trade Shows

Company websites are essentially virtual exhibits for manufacturers.

They key here is that the cost per visitor on-line is 100x or 1000x less than the cost at trade shows. Indeed, the effective cost per warm lead on line is significantly less than at trade shows.

The online costs per lead will only drop as manufacturers online strategies mature and the Internet becomes more ubiquitous.

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

This is an issue of economics. Exhibits at trade shows will always provide richer, more personal interactions than the web but the ROI of exhibits will not be able to compete with the ROI of online marketing.

A Simple Example of Online Marketing Benefits

Let's say a small manufacturer wants to generate new leads. Rather than spend $25,000 on an exhibit, they do the simplest thing possible and buy Google search ad results.

They would pay $1 per click for the term "video surveillance." This places them in the top 1 - 3 position and generate an estimated 30 clicks a day. (You could even get much cheaper and many more clicks by using more targeted keywords - try out the Google estimator).

In a year, that would be 10,000 new visitors to a manufacturer's website for $10,000. If only 1% of visitors became leads that would be 100 new leads (1% is a poor conversion rate).

Compare this to an booth at a trade show:

  • 60% lower cost
  • 800% more leads
  • No hassle with travel and risk
  • Without any optimization
The economics are compelling, and in a recession, the attraction will be even stronger.

Internet Traffic is Big and Getting Bigger

You might be surprised how big traffic on the Internet already is. Even small manufacturers can easily do 30,000 visits per year. My site only went live this April and I did over 100,00 visits this year. I would not be surprised if big manufacturers like Axis receive over 1 million visits per year. 

If manufacturers spent even a little money on search engine optimization, the traffic could be 500% or more greater. For instance, for a US google search for "ip cameras", Axis only comes in 4th, behind 3 companies selling cameras. If Axis was first, it would easily get 200,000 more visitors per year, just from that term, just from a 3 position increase.

How will the Recession Impact the Trade Shows?

Pressures on both attendees and exhibitors:
  • Companies will reduce the number of attendees and the number of shows attended. Employees sent as a reward or for entertainment will be significantly cut. 
  • Companies will look for cheaper ways to find information.
  • With lower attendees (and likely less people looking to buy), exhibitors will generate fewer warm leads.
  • Exhibitors will tigten their marketing budgets in general and then further as they see lower attendees and leads.
  • Exhibitors will shift budget more on line
Together, this fosters a vicious cycle for trade shows.

What can Trade Shows do?

I do think trade shows have value (just like newspaper have value). However, the business model faces fundamental and permanent downward shift. They will not be able to depend on historical exhibitor revenues and they will have to radically increase the amount of rich training, education and meetings that online cannot replicate.

Thoughts?

1 report cite this report:

How to Cut Costs Using the Internet on Jan 03, 2009
The recession is forcing broad reductions. Worse, the era of excess consumer...
Loading Related Reports