The Coronavirus COVID-19 is biting hard into revenues right across the media market, nowhere more so than in trade shows which – lest we forget – have been among the best performers for the past decade, growing annual revenue at an average of 6%.
According to Events Intelligence, a total of 1,401 exhibitions in 82 countries have so far been “impacted”. Some 25% of the shows have been deferred to 2021, while 48% are rescheduled for later in 2020 with an average 4-5 months delay from the original date. The majority of major venues throughout Asia, Europe and the Middle East are not currently hosting trade shows; and events taking place in the Americas, Africa and Australasia are described as “scarce”.
The total number of “impacted” shows has more than doubled in the last two weeks. But the apparent expectation of organisers that almost half will take place later this year seems optimistic, to say the least. It is reasonable to believe that many of the events rescheduled for 2020 will simply not take place and/or be anything like the scale they would have been earlier in the year. Those scenarios may just pose the biggest threat of all to the $30bn exhibitions industry.
The very strength of many exhibitions lies in their role as global, national or super-regional marketplaces and calendar fixtures for professional communities. They have grown as the face-to-face, networking alternatives to web-based business relationships with customers, suppliers, friends and colleagues. They have become powerful business generators throughout the world.
The soaring success, during a time when all other traditional media-marketing had been digitally disrupted, has turbocharged the profits, valuations and M&A of exhibition organisers.
We may assume that the sheer pace and price of acquisitions, including by private equity, will have had some impact on exhibitor costs (at least in some cases). Paying 15x EBITDA for an exhibition tends to imply the need for a new owner to trim costs and raise prices. Organic growth is seldom enough.
It follows, therefore, that at least some tradeshow exhibitors may have wanted to reduce their spending – which would have been difficult when all their competitors are splashing out. But now they have their chance. Any latent disquiet at a particular show might just obstruct (or at least restrict) its revival after a prolonged postponement. Such pressures will add to the challenges now facing trade shows, which include:
- Some exhibitor, visitor and event organiser companies will be severely weakened by the fall-out from the virus and the recession likely to follow. Companies may fail
- Re-arranged global events may be denuded by the continuing problems of companies and countries even after the shows resume
- Newly launched web-based conferences, and “events” may disrupt and/or create price pressures for some exhibitions
The real point is that many media businesses may need to “reset” after the huge economic shock. For some, it will be a “soft” reset after postponed events, publications and services which can resume their former strategies. For others, a “hard” reset will be necessary for a long interrupted business that, among all else, must fight its way back into customers’ budgets. It’s all quite a change for exhibitions, the best of which have traditionally measured their success by the proportion of ‘on site’ bookings for the next event. Those ‘locked-in”, cash-upfront bookings have been part of the magic of worldwide exhibitions and the profitability of organisers.
The cancellation of an every-two-years exhibition may produce a gap of more than four years: the organiser may almost be launching from scratch when it resumes. That will not always be problematic. But events which have taken decades to reach their current scale, might take many years to recover during a period when companies have lost their profits.
Put simply, the longer the interruption, the greater the risk that a brand’s goodwill will evaporate. Major changes to the economics of customers and the dislocation of funding and competitiveness risk airbrushing out an event (or publication) that was entrenched – and so profitable – just months before.
The cold reality is that this scale of business interruption will also accelerate systemic trends that were already underway. Exhibitions companies have long sought to become providers of data and high-value information in order to cement the relationships with customers between events. They must accelerate that activity before cancelled events create an unbridgeable gap that requires an expensive “hard” reset. They need to engage customers (which themselves are being hard hit by the cutbacks) with valuable business information not just words of comfort.
In publishing, we should expect more newspapers and magazines to abandon their printed editions and go all-digital. That was always on the cards, of course, but the sometimes slow progress in the switch from print has been due to the conflicted interests of traditional players which (whether they admit it or not) have been preoccupied trying to defend existing print profits. Increasingly, they don’t have the choice.
In the UK, the free daily City AM is going all-digital. The London Evening Standard is cutting circulation but hand delivering to the homes of commuters accustomed to getting their free copies at rail stations. It is easy to predict a new emphasis on digital. The free weekly magazines Stylist and Time Out are going all-digital. In an advertising market which was already torturing them, we might expect the changes to become permanent. But there will be many others, as indicated by reports that The Guardian is concerned about its ability to maintain printing now that weekday sales (even before the virus) had fallen to just 100k. Having seen fellow news brand The Independent make modest but solid profits from going all-digital, they may be getting ready.
Media companies simply do not know how long this crisis will last and how their markets will be affected by everything that is happening. For all the comparisons with world wars and depression, this is the crisis that is accelerating the digital disruption of media.
Just this month, the boom in personal live streaming services Houseparty, Zoom, Kast, Teams, WhatsApp et al has huge implications for the future of media. Companies and consumers everywhere are discovering dynamic new applications of a technology whose growth potential once seemed confined to business videoconferences. Who could have guessed?
By contrast, international travel – which has been the lubrication for so much events activity – may be disrupted for a long time. That is why B2B and B2C media must use what may become a prolonged period of restriction to build and adapt their businesses – not go into hibernation.
Those companies which have spent the last two weeks sending fatuous “we’re on your side” emails to customers are missing the point. The media (and much else) may never be the same again and companies waiting for everything to get back to “normal” will be waiting for ever.
For newspaper and magazine publishers, this must involve taking the shackles off their digital products and services. You might have found it problematic developing the strongest digital services when you were still making good profits from print, but you now have little choice but to be the insurgent not the incumbent. The excuses have gone but the current, frenzied demand for home-based news, information and entertainment really can be a great opportunity.
Will major publishers finally collaborate with gaming, esports and home entertainment companies? What about the combination of news and lifestyle content with those personal live streamers? For all the fact that they are under social and economic “attack” and have many of their people working from home, media companies should be working creatively on what to do – right now – with their brands, audiences and resources. What to change? What to launch?
Buoyant radio stations – which may have been ambivalent about music and video streaming, podcasts, data and e-commerce – must learn to compete more broadly. Television broadcasters, like their news brand cousins, must start to plan a “pick and mix” world for viewers-readers who want to make their own viewing choices with maximum flexibility. New partnerships and alliances beckon.
It’s not, of course, that the traditional platforms, services and brands will simply disappear. It’s just that many risk missing out on the new growth opportunities, and most will not be able to get back to where they were before they had heard of COVID-19. The shrinkage of traditional media is undergoing another step-change even while many businesses are paralysed.
The changes in media consumption are being rammed home by the explosion of live streaming and YouTube. But that’s only the start. This is not some kind of interruption to “normal” business. The future is being decided right now, and media companies which opt for hibernation are choosing the wrong time to sleep.