Media Fortune Fame & Folly

How Covid can make or break trade shows

All over the world, people are debating whether they want to resume regular commuting to offices and return to their pre-pandemic working lives. Or not. There are many reasons why employers and employees may prefer to work together in offices. But, although they will not get to choose, many will accept a change, especially if it is sweetened by simple economics. They may sacrifice some of the enjoyable teamwork and companionship of office life in return for an increase in their disposable income. Money talks.

That kind of compromise will apply to the B2B exhibitions industry. There really may be no perfect substitute for attending an event, meeting people, touching the machinery you have seen online, and seredipitously discovering something you had never expected. But the advantages of being there may be compensated by savings in cost and time. That – and the opportunity to build digital relationships through virtual events – is the reason why organising companies are facing up to the need for fundamental change. Whether they like it or not, the world has changed in the year without trade shows and there is no going back – even though everything had been going so well before Covid.

Some stark realities make the point.

For many exhibitors and visitors, it may be two or even three years without budgeting for an event and then having to fight for “new” corporate funding in a recessionary climate. For others, it may be a game-changing hiatus in a costly ‘space race’ with competitors trying to make the biggest splash. Then, there’s the realisation that international travel costs may never be as low again as they were in the pre-covid decade when exhibitions consistently grew faster than all other traditional media-marketing. To make the point, 5% of all trade show exhibitors in 2019-20 came just from China; for 8% of shows, it was 15%.

Those are the challenges even before you consider the impact of virtual events which, in some cases, may prove to be the ultimate post-pandemic compromise: perhaps not as good as live events but, potentially, better value at a time when costs matter most.

The measured words of Jessica Lessin, founder of The Information, struck a chord last month after the virtual version of her annual WTF conference attracted twice as many people, and made more money than it had done as an in-person event the year before: “You’ll pack your bags and attend a boondoggle or two again. It’s nice to see people in person. But I, for one, never again want to run an event without a major virtual component, and I actually think all-virtual events are here to stay.”

The trouble is that, for established events, the scale of change risks being almost as disruptive (not least to profits) as the pandemic itself.

Fewer people are now seriously arguing that the exhibitions industry will simply bounce back to 2019 and continue its former growth trajectory. But there are still agonising signs that some trade show organisers expect things to get back to more or less where they were, within 2-3 years.

AMR International’s new monthly Exhibition Recovery Tracker shows – believe it or not – that the industry currently expects the number of trade shows this year to be about 50% of those in 2019, even though the first quarter implies nothing of the sort. The range of such forecasts is actually 13-69% from trade show organisers in 15 markets. Although the stats record the expected number of exhibitions not their scale, they may be a fair guide to organisers’ views on the rate of recovery.

Given the recent reopening of some major shows in China and the AMR’s expectation that the Asia recovery rate (and also that in the Americas) will, at best, be some 50% in 2021, the European expectation of a 83% bounce-back in the second and third quarters of this year seems, well, rather optimistic.

Consultant Mark Parsons, of Events Intelligence, points out that, after the 2008 recession, it took trade shows at least four years to recover. After three years, some 40% of the surviving shows were still 20% smaller than they had been. With an unprecedented standstill last year, does anybody really believe this crisis will somehow evaporate much more quickly than it did a decade ago?

We might search for some clues at Informa, the world’s largest trade show organiser which (crucially) is also a significant publishing and information company. The £8bn UK-based, listed company overtook longtime leader Reed Exhibitions in 2018 by spending some £5bn on the acquisition of UBM and Penton.

During 2015-19, Informa’s exhibitions profit increased from £138m to £610m, becoming 65% of Informa’s total operating profit. Some 70% of the £1.45bn trade show revenue in 2019 came from Asia and North America. In 2020, the exhibitions will have been lossmaking, perhaps to some £50m on revenue of £576m (60% down on 2019).

Given some £300m of profit from non-exhibitions sources including Taylor & Francis academic publishing, Informa investors seem to expect some £40m of profits from trade shows in 2021. That doesn’t sound too dramatic but brokers actually expect revenue of about £850m, almost 60% of 2019 – a steep challenge in a year when many countries remain in the grip of Covid.

We should assume that Informa will use its 2020 results announcement in April to modify investor expectations of the rate of recovery by exhibitions. Perhaps it will have some good news from its information businesses to offset any disappointment. But it will also be able to promote a robust strategy for a post-Covid world of hybrid events and technology.

Informa has operated no fewer than 500 virtual events in 2020 across the range of multi-day festivals, exhibitions, matchmaking events and webinars. This level of innovation is part of Informa’s assurance for investors. But could the company be planning a fundamental shift in strategy? Maybe it will make some big changes, on the following lines:

  • Versatile: The creation of multi-channel communities to exploit digital, events and information services under a single management team in its principal markets. Currently, Informa’s presence in some of its best markets is managed in several operating divisions. Thus, its powerful pharmaceutical activity is spread across: Markets (exhibitions), Connect (conferences/ training), Intelligence (data) and Taylor & Francis (academic). Bringing these activities together could help the company to: become ‘media agnostic’ in any given market; use content to build relationships and strengthen in-person as well as virtual events; and develop multiple revenue sources.
  • Tech Smart: A determined effort to create best-in-class virtual events. While much of the tech will continue to bought-in, Informa may seek to create a distinctive user experience and especially to meet the challenge of making digital matchmaking a more sophisticated and rewarding process. Tech is more important than ever for event organisers.

Such a reorientation might address the fundamental importance of virtual events as a bridge between supplier-funded trade shows and user-funded information services, conferences – and perhaps virtual events. In some ways, this kind of community focus could be take us back to the future.

It is now decades since major US and UK media companies de-merged their trade shows from the B2B magazines which had spawned them in a pre-digital era. The de-mergers helped to professionalise and internationalise the whole exhibition sector – and propelled revenue and profits. In market after market, trade shows became the biggest earners with the best growth, replacing the publications that had once dominated. Exhibitions continued to grow while the web savaged B2B publishing. But the strategy also separated the shows from the new generation of information services they now need in order to maximise the potential of digital events.

We have said before that a relatively small B2B information ‘network’, Procurement Leaders, can be a role model for trade show organisers and there are other versatile companies which have built integrated businesses, including some focused events companies. Multi-channel communities are the light at the end of the long Covid tunnel for exhibitions. But they must chase it.

Additional reporting by Alex DeGroote

AMR International

Events Intelligence

Informa Plc