Everybody loves live events. Newspapers and magazines look for rare rays of sunshine in performances and so-called experiential activity. They’re re-connecting with readers and searching for new profits. Trade shows have never been so hot: a decade of GDP-beating global growth rates has been followed by predictions of at least 5% CAGR throughout 2019-22. Exhibition profits and prices are exploding.
Organisers attribute their success to the power of real networking and human contact in a virtual world. It may also have something to do with the scale of economic growth in emerging markets, notably across Asia: there’s nothing like a trade show for letting buyers see and touch the machinery and equipment on which social and industrial development depends. High profit margins, favourable cashflow, and 70% exhibitor rebooking rates help to explain the M&A boom in exhibitions and why private equity loves them so much.
But will exhibitions ever suffer the digital disruption that has shattered the business models of traditional media? The industry’s smartest bosses assert that digital media is already helping them to target audiences and connect buyers with sellers during exhibitions and beyond. That’s shorthand for: ‘We’re embracing digital, so there’s no risk of us getting blown away like those publishers and broadcasters who thought the world owed them a living’.
Arguably, some exhibitions have already been knocked about by digital. Look no further than the retail shows which were once the largest and most profitable events everywhere. They prospered by attracting hordes of gift shop owners to exhibitions like the International Spring Fair, in the UK, and the New York International Gift Fair. But the ‘Mom and Pop’ gift shops have been squeezed or squashed by Amazon; and many of the survivors are now buying merchandise from – Amazon.
Almost everywhere else, trade shows are booming. But fears of digital disruption persist, not least among executives who know that even high-performing media companies have been wrecked by unforseen changes in the application of technology or in the way that customers spend their time or money.
The suspicion is that the vulnerability of exhibitions may eventually lie in their sheer scale. Huge exhibition halls buzzing with a whole industry under one roof are captivating. No doubt about it. But will the movers and shakers (and others too) tire of the crowds and foot-slogging if they have some kind of choice? And might that lead to the kind of media ‘unbundling’ where people are prepared to pay for the convenience of getting only what they actually want? It may seem sad but many people just do not care about the glorious serendipity of finding something or somebody they weren’t looking for, at events or in print.
The obvious desire to avoid the top-slicing of exhibitors and attendances, presumably, motivates companies to organise “festivals”, a 360-degree blend of exhibitions, conferences, awards, and other learning and relationship-building activities.
They should look at Cannes Lions which was launched as the International Advertising Film Festival all of 65 years ago. Now called the “International Festival of Creativity”, the 2019 event last month attracted a total of almost 40k awards entries from 89 countries for ‘Lions’ across the creative and entertainment industries. For the winners, it’s the opportunity to use the coveted awards to win business and talent. These really are the Oscars.
Delegates from advertising agencies, advertisers, media owners, music and tech companies attend workshops, presentations, and see-and-be-seen parties on yachts and in hotels. Past speakers have included Martin Sorrell, Maurice Levy, Bono, Mark Zuckerberg, Bob Geldof, and Bill Clinton. Like those other music, broadcasting and film events on France’s Mediterranean coast, Cannes Lions is a huge sprawling party of parties which organisers have to somehow manage: Too much time and money spent outside the venue itself can be (relatively) bad for the organisers’ own profit but too much spent in total can threaten future budgets. This year, everyone was budget conscious.
The 2019 event took place just three months after its UK-based parent company Ascential Plc had described 2018 as “a challenging year” with a decline in revenue (to £57.3m) due to a 20% fall in the awards entries which (like delegates’ fees) account for 39% of all revenue. It had been a rare mis-step by a company whose retail information services strategy had been winning plaudits from investors, and came just just two years after its IPO prospectus had hailed Cannes Lions as “the world’s largest and most recognised festival for creativity in the branded communications industry”, which accounted for 13% (£40m) of the company’s revenue. The prospectus was euphoric about the “cash generative business”, whose speakers and judges even paid their own expenses and whose delegates had been stumping up annual increases of 8%. Ascential managed to stop short of congratulating itself for having more than tripled the revenue (and profit) of Cannes Lions in the 10 years since it had been acquired for £52m (7x EBITDA) by its predecessor company EMAP.
The words must have been ringing in the ears of CEO Duncan Painter when his team had to conjure a response to calls from major agency groups for a shorter, streamlined and more cost-effective event. Publicis Group had temporarily forbidden its agencies from submitting work for the Cannes Lions awards, the majority of whose entrants are from Europe and North America.
Ascential’s plan for “a major Cannes overhaul” was a test for the increasingly global company which had sold-off perfectly profitable non-core B2B magazines and exhibitions in a commendable display of strategic “purity” as it sought to focus only on high-value information services and content-rich events.
In grabbing hold of what could have become an existential threat to Cannes Lions, the £1.4bn company (which last year sold The International Spring Fair) is, incidentally, highlighting some of the ways that trade shows could be disrupted. In addition to cutting the event from 8 to 5 days, holding back prices and investing in tech and targeting, the Cannes Lions “re-set” featured:
- CLX: Invitation-only networking sessions reserved on the opening two days for the industry’s movers and shakers. A real approach to curating an event for specific audiences
- Digital Pass: Remote access to the conference sessions for visitors who can’t be in Cannes
- The Work: A subscription digital resource which includes hundreds of presentations and helps to turn Cannes Lions into a 365-day relationship, supported by the acquisition of the WARC advertising data service
- CMO Growth Council: Marketing chiefs from 25 of the world’s largest corporations have created an agenda-setting forum at Cannes
The fact that the CMOs identified one key challenge as taking account of “society and sustainability” seemed perfect for an event which was headlining the need for creative agencies to address the growing need for “social responsibility”, at the same time as meeting the corporate demand to measure the RoI of advertising not just its ability to win awards.
The Work’s online database of talks and the Digital Pass are reminiscent of the all-conquering (but not-for-profit) TED. The Cannes Lions International Festival of Creativity knew where to look for inspiration.
Ascential is being credited with having moved quickly to make Cannes Lions “more relevant, affordable and accessible”. It took decisive action, even though the refusal to issue a 2018 attendance figure may (sort of) confirm the media report of a 20% reduction in the 12,000 paying visitors from 2017. Of course, the 2019 figures are still to come so the story continues. But the Cannes Lions reinvention has a wider significance.
Arguably, all media-marketing-retail businesses should produce original content as a way of maintaining a mutually valuable year-round relationship with their customers: not content marketing or promotional messages but exclusive information for which customers would or could pay. Content is not just for publishers.
For exhibition and event organisers, selling customers remote digital access also seems an obvious innovation even though it is more straightforward for conferences than for exhibitions and complex events. But challenging the proven business model of trade shows is not easy, especially when everything is going so well. And competing with your own traditional offering is always difficult: ask newspapers which persist in selling the whole print-like package rather than segmenting it for digital customers who only want, say, the business or sports sections.
Some kind of interactive remote access is neither a silver bullet nor the extent of the radical change that may eventually emerge in exhibitions but it demands attention. The only way to beat digital disruption is to search out and give all customer groups exactly what they want. Do it first.