Discover key considerations for exhibiting including lease/purchase, ROI, and more.
Trade Show Considerations for Exhibiting Companies
Today’s Considerations to the Age-Old Question – Lease vs Purchase
For many companies, both large and small, the decision on whether to lease or purchase a trade show exhibit hinged more-so on financial factors including total cost of ownership, cash flow and even the stage of a company’s product life cycle. This was particularly evident during the recent financial crisis as many organizations, even those that have historically owned their exhibit, made the conscious decision to leap into this type of renting scheme. As the economy continues its slow crawl from the financial doldrums that began in 2007, the anticipated switch from lease to buy has happened but to a much lesser extent. In retrospect, what is taking place is a paradigm shift in the way companies are purchasing these services. In our opinion, a large part of this shift is due to the increasing innovations in modular exhibit systems which allows for custom-looking designs using leased modular components that can integrated for any size exhibit desired. In addition but to a lesser extent, ambiguity and lack of direction from the IRS regarding Sec. 179, which allows for 100% write-offs for these type of purchases, has forced companies to delay these large purchases and subsequently led them to rent their exhibits in the interim. Post Script, the ‘Fiscal Cliff’ Bill of 2013 has since offered clear direction on the dollar limitation for 2013.
Typically, our guidance to our clients is to lease an exhibit if attending two or less shows per year. Alternatively, as depicted in Table 1 below, we recommend an outright exhibit purchase as total cost of ownership in a purchase scenario (depicted as ‘Running Cost’ below), exceeds the running cost under a leasing scheme at Tradeshow 3. In this example, Tradeshow 3 becomes the so-called break-even point where the cost to lease exceeds the cost to purchase.
Enhancing Your Exhibit, Digitally Speaking:
The tradeshow industry has come a long way over the past 10 years in developing new and innovative durable yet lightweight materials. From extruded metal components to matrix panel systems that bring unheralded design flexibility and modularity, these light-weight yet sturdy substrates have allowed exhibiting companies to sacrifice nothing from a design perspective yet has significantly lowered overall tradeshow costs by minimizing shipping, material handling or drayage, and installment & dismantle labor. With all these innovations, we feel the next opportunity for innovation is to incorporate more digital elements to create longer engagement (see figure 1) and drive analytics. Specifically, we see two huge areas of opportunity that fall into separate yet complimentary areas that we feel needs to be part of any company’s overall tradeshow strategy (see figure 2):
1. Digitize your company or brand message / content by using more digital elements. This type of elements goes far beyond looping a company or brand video onto a monitor. Specifically, we refer to utilization of iPads, touchscreen monitors, 360° TVs, interactive floors and tables, etc. Utilizing these assets allows your visitors a better interactive customer relationship experience through their activity with the touch screens of the booth and with every touch comes analytical data that can be interpreted to allow for the sales representative to do specific follow up after the event.
2. Capturing the plethora of data that will be generated by attendees engaging in your digital content. By digitally tagging, tracking, and connecting your digital content to back-end systems (such as sales force CRM), your data now comes alive allowing your organization to measure key performance indicators such as responses to questions and surveys, time spent on each brand and valid email addresses captured.
How do you measure Return-On-Investment?
This is a difficult yet important question that most exhibitors either simply avoid or fail to understand how to answer. For many smaller companies, a large portion of their customer interaction and sales take place at conventions. The reason is that for many companies, especially foreign-based, conventions represent one of the limited opportunities to showcase their products and meet their customers face-to-face. For these scenarios, convention revenues are a straight-forward indicator of ROI.
For a majority of companies that don’t have this convenience, they have to define and prioritize the qualitative measures required to have a meaningful ROI analysis. This process involves dialogue with key decision makers within the organization, typically those in the marketing, sales, and operations functional areas. The questions should include:
- What is the impact to our organization should we decide not to exhibit? How would our competitors take advantage of our absence? How would our customers react?
- Which of our key competitors are expected to attend?
- What is the audience we should expect to reach? Is this audience similar to the customers we are targeting through other marketing channels?
- Can we alternatively reach our customers through other, more cost-effective channels? While this process is meant to provide your organization with a sensible cost vs benefit decision model, it is important to add that visceral, or gut feelings need to be considered where hard numbers, or empirical data, are unknown.
For this reason, organizations should create informal convention committees comprised of a diverse group of individuals that are knowledgeable of the company and their respective industry. In addition, we feel it is important to note that companies should also consider the motivation of the attendees in making these decisions. According to the Center for Exhibition Industry Research (CEIR), the following behavioral statistics of convention attendees include:
1. 65% come back year after year to learn “What’s New”;
2. 76% arrive with an agenda;
3. 55% come to network;
4. 53% attend for continuing education and certifications;
5. 36% are fist-time attendees;
6. 35% will share their learnings with 4-6 other people;
7. 83% buy something; and
8. 94% compare competing products.
Other Important Ways to optimize your tradeshow spend:
An organization should always challenge and incentive its people and vendors to make the most efficient and productive use of its limited resources. The list below includes the usual costs and the optimal ways to manage these costs:
- Material Handling or Drayage Costs – The most brazen and least value added of all tradeshow costs. These are fees imposed by the tradeshow contractor to literally bring your crates, convention marketing materials and merchandise from the shipping dock as it arrives at the convention location to your company’s booth area on the convention floor. This cost is based on the weight of the exhibit. Some ways to minimize these costs are:
- Challenge your tradeshow exhibit company to use lightweight materials without sacrificing functionality, especially parts of your exhibit that the attendees do not see such as the inside of the storage closets for example. Utilize kiosks or other media that can email product or marketing brochures instead of distributing them at the convention. This should not only win an organization kudos for acting in a green and socially responsible manner but most of these brochures wind up in the garbage can before the attendee leaves the convention.
- Shipping to Advanced Warehouse does guarantee that your crates will arrive at your space in-time for installation however this method will certainly increase your drayage costs (sometimes by 50% or more). In some instances, depending on the size of the exhibit space, the show contractor forces the exhibiting company to utilize this method however this is not always the case. Consult with your tradeshow exhibiting company for direction and other considerations as each convention has its own set of rules which will affect your decision.
- If possible, avoid sending multiple small shipments to the convention as the show contractor will impose a minimum fee. Even if the package is only a few pounds, many will charge, for example, a 200 pound minimum
- Understand all of the convention AND tradeshow exhibit company imposed deadlines to avoid rush fees. Read the convention manual as well as encourage open communication with all stakeholders to understand due dates for submitting booth design renderings as well as electrical, furniture and graphic requirements.
- Utilize local employees to staff your booth at the convention to minimize travel expenses, or utilize remote convention destinations to reward high-performing employees. We suggest a company’s trade show coordinator conduct frequent conference calls to set expectations on proper communication with attendees, appropriate dress code, multimedia training, communicate booth staffing schedule and coordination of arrival and departure times.
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- Trade Show, or Convention Contractor – those companies designated by the organization sponsoring the convention to manage all of the logistical and operational activities of the convention include exhibitor and attendee registration and convention services including electric and food. Examples include GES and Freeman.
- Tradeshow Exhibit / Marketing Company – those companies in the business of providing tradeshow services for exhibiting companies including custom and rental exhibits, shipping, graphics, and installation and dismantle labor services. Examples include Skyline and Metro Exhibits, LLC.
This paper was written by the employees of Metro Exhibits, LLC for the exclusive benefit of companies that currently exhibit at tradeshows, have recently begun to exhibit, or are in the process of determining whether they should be exhibiting. The considerations, guidance and tips we offer in this paper are no different than what we share with our very own clients. The purpose in sharing this article is to help all organizations understand what they need to know and consider in order to make informed and intelligent decisions about tradeshow spend. By sharing this information, we feel that the tradeshow industry, exhibiting companies, and all of its stakeholders will ultimately benefit.
About the Author: Metro Exhibits, LLC is a tradeshow marketing organization that provides turnkey tradeshow services including custom and rental exhibits, exhibit graphic design, digital media coordination, project management, graphics, shipping and installation and dismantle services. In addition, Metro Exhibits offers full warehousing and fulfillment services through its wholly-owned subsidiary Communications Resources Group, LLC. With facilities and redundant inventory in Northern New Jersey and Las Vegas, Metro Exhibits is positioned to offer these full capabilities with a high level of efficiency and customer service in all of the major convention areas throughout the United States. Our experienced staff of project managers, account managers, fabrication engineers, and management bring over 80 years of tradeshow experience. We strongly suggest to all exhibiting companies that they challenge their current tradeshow exhibiting vendor on innovative ways to increase the impact and ROI of resources they commit to conventions.