CEIR UpdateEspecially Prepared for MATSO

Orlando, FL

Presented By: Douglas L. Ducate, CEM, CMP

President & CEO Center for Exhibition Industry Research

Role and Value of

Face-to-Face Marketing Study

Role and Value of Face-to-Face Study

• Conducted by CEIR (to be released in early 2003)

• Objectives:

• Role exhibitions play in the Customer Continuum

• Value attendees and exhibitors place on exhibitions – now and in the future

• Use and value of exhibitions compared to other types of face- to-face activities

• How can exhibitors maximize ROI/ROO?

• Trends in use of exhibitions for 2003

• Respondents from all major industry segments (2,718 attendees and 916 exhibitors)

Importance of Face-to-Face Interaction

• High importance placed on face-to-face (f-to-f) :

• 76% of attendees rate f-to-f with potential new vendors very or extremely important

• 87% of exhibitors rate f-to-f very or extremely important in marketing to prospects

• Economy, Internet, videoconferencing and/or tele- conferencing has not negatively impacted the importance of f-to-f even in a post 9/11 era.

Face-to-Face Activity

Attendees Exhibitors

Exhibitions 100% 100% Sales Calls 72% 93%

Private Events (Net)* 71% 47%

Avg. # Exhibitions Attended 3.5 Avg. # Private Events Attended 3.3 Avg. # Shows Exhibited - 2003 13.7 Anticipated Change Next 2 Yrs.: Increase 27% Decrease 13%

*Vendor produced user groups, conferences, exhibitions, road shows, mobile truck exhibits, briefing centers

Value of Face-to-Face Interactions

Attendees, %* Exhibitors, %**

Exhibitions 70 77 Sales Calls 71 95

Private Events:

User Groups 57 75 Technical Conferences or Exhibitions

60 64

Road Shows/Mobile Truck Exhibits

45 78

Permanent Briefing/Demo Centers

52 86

* Value in performing their jobs

** Value in marketing their products or services

% Rating Very/Extremely Valuable

Change in Value Over Past Two Years

Attendees,% Exhibitors,% More Less More Less Exhibitions 40 11 34 23 Sales Calls 38 11 50 3

Private Events:

User Groups 35 10 38 9 Technical Conferences or Exhibitions

38 9 43 13

Road Shows/Mobile Truck Exhibits

29 15 48 10

Permanent Briefing/Demo Centers

33 13 47 1

Change in Value Over Next Two Years

Attendees,% Exhibitors,% More Less More Less Exhibitions 35 9 33 15 Sales Calls 32 13 58 2

Private Events:

User Groups 19 15 17 9 Technical Conferences or Exhibitions

30 9 30 10

Road Shows/Mobile Truck Exhibits

16 17 20 12

Permanent Briefing/Demo Centers

19 15 17 9

Importance of Exhibition Face-to-Face in Purchasing Process &

Customer Relationships

Customer Continuum Attendees, %* Exhibitors, %**

Awareness 76 86

Evaluate & Compare 67 74

Narrow to Preferred Vendors 50 59

Make Purchase Decision 32 48

Implementation 37 45

Maintain Relationship 51 76

Upgrade/Re-purchase 40 51

% Very/Extremely Important

Conclusions

Face-to-Face (f-to-f) overall continues to be important, and of more value today than two years ago.

Perceived value of f-to-f at exhibitions is strong relative to other f-to-f.

• Exhibitions play a strong role in the purchasing/sales process, not just marcom and branding.

• Private events compete heavily for marketing budgets. More importantly, they compete for attendees.

• Private events not just a large company trend.

• Private events are often successful because they deliver high value and focused information. Lesson: segment and “customize”

shows to deliver high value information.

Conclusions

•Disconnect between attendees and exhibitors as to the relative perceived value of exhibitions and private events. Private events of secondary value to attendees compared to exhibitions as an opportunity for face-to-face with vendors.

•Quality f-to-f interaction is critical to providing high value to attendees. Communicate to exhibitors:

•Exhibitions are an important part of the sales process. Be prepared to advance attendees along the purchasing path with specific info.

• Attendees prefer “one-on-one” as opposed to “one-on-many” approaches for delivering information.

• Knowledge of product is most important staff attribute

• They prefer to talk to people who know the product more than top management

• Train staff. Only 2% use outside vendors for training

Event Marketing Definition

Events are face to face experiences designed to educate and motivate customers and

prospects to accelerate the sales cycles more efficiently, effectively and consistently than a

sales call alone can.

To retain and grow my existing customer base

To educate and demonstrate thought leadership

To provide a forum for rich conversations

To build a community around my brand

Key Marketing Objectives in a Tight Economy

Key takeaways from global research results

High touch matters more than ever: events (not tradeshows) are an increasingly important part of the marketing mix

Globally, ‘event marketing’ represents from 12.5% to 30% of the respondents’ marketing budgets (25-50% of that is tradeshows).

Event are used primarily for building relationships and increasing product knowledge…Tradeshows for building awareness and capturing

leads.

Measurement is critical, but appropriate tools and cost are obstacles

How do you get more share of the mix?

The role of shows and events in marketing

Leadership

Share of Voice

Trade Shows Channel Events

Proprietary Events

The role of shows and events in marketing

Sponsorships

1. Support and deliver marketing metrics that matter

2. Redesign shows to support key marketing objectives

3. Consider roadshows, regionalization and consumer expansion

4. Deepen relationships with largest customers to provide more strategic and creative events

Four things to consider

There is a Perceived Value Decline in Some

Exhibitions

To Analyze Problem

Understand business model

Identify results concerns

Identify costs concerns

Develop remedies

IAEM - Publish manifesto

The U.S. Exhibition Industry

Business Model

Hotel to Exhibit Hall

Show RoomBellmanCateringBanquetEngineeringHousekeepingAmbiance in Place

ConcreteDrayageFood ServiceFurniture RentalUtility ServiceCleaning ServiceAmbiance Temporary

Access to a Market

Organizers Facilities

Facilities

Control services that invade building systems

• Electrical• Telephone• Water/Waste• Gas• Food Service

Organizers

Official Contractors

Exclusive Contractors

The price for access to a market is free services and/or revenue sharing

Free services and revenue sharing result in cost shifting

Cost shifting is allocating the cost of market access to revenue centers

Allocating costs creates above market pricing for products and services that are then considered out of value

There is a Perceived Value Decline in Some

Exhibitions

Why?

Results Costs

Exhibit Performance Model

EXHIBIT ATTRACTION• Exhibit Size • Promotion

• Awareness/Perception• Products Exhibited• Design/Graphics• Attention-getting Techniques

POTENTIAL AUDIENCE

EXHIBIT EFFICIENCY(Person-to-Person Contact)

• Profile of Staff• Staff Knowledge

• Training

RESULTS• Messaging• Leads

• Brand Enhancement• Awareness Building

• Sales• PR

• No. of Staff• Staff Performance

Source: Exhibit Surveys

EXHIBIT TEAM EFFICIENCY(Personal Contact Achieved With Visitors Attracted)

58%

59%

63%

60%

63%64%

66%65%67%

50%

55%

60%

65%

70%Exhibit Team

Efficiency

Industrial 59%

Medical 76%

Retail 61%

Computer 62%

Telecom 63%

Less Face to Face InteractionLess Face to Face Interaction

Source: Exhibit Surveys

56%

53%57%

63%62%61%

63%

68%63%63%62%

62%

50%

55%

60%

65%

70%

75%

80%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Total Buying Plans (TBP)

TBP

Industrial 49%

Medical 62%

Retail 59%

Computer 56%

Telecom 51%

Changing Attendee ActivityChanging Attendee Activity

Source: Exhibit Surveys

9.2 9.1

9.6

8.88.4

8.6

7.5

7.97.67.6

8.0 7.8

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Average Hours Spent at Exhibits

Average Hours

Industrial 10.4

Medical 7.4

Retail 10.1

Computer 9.3

Telecom 9.6

Changing Attendee ActivityChanging Attendee Activity

Source: Exhibit Surveys

Traffic Density (Td) Lower(Td = Attendees/100 sq.ft.)

2.12.2

2.52.6

2.62.72.6

3.02.8

3.13.0

2.9

3.2

2.0

2.5

3.0

3.5

4.0

4.5

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

TD

Industrial 2.0

Medical 2.2

Retail 1.6

Computer 4.2

Telecom 2.6

Changing Attendee ActivityChanging Attendee Activity

Source: Exhibit Surveys

Traffic Density (No. Attendees/100 sq. ft.) Sq. Ft.

1.0 2.0 3.0 4.0

50k

1,250

2,500

3,750

5,000

100k

2,500

5,000

7,500

10,000

150k

3,750

7,500

11,250

15,000

200k

5,000

10,000

15,000

20,000

Low Exhibitor Satisfaction High

Low

Attendee &Organizer

Satisfaction

High

Assumptions: Average Hours Viewing Exhibits = 8.0 hrs. Total Show Hours = 20 hrs.

Traffic Density Relative to SatisfactionTraffic Density Relative to Satisfaction

Source Exhibit Surveys

Why?

Results Costs

Nominal Air Fare

1982 2000 Total % Increase

$122.77 $143.58 16.9%

Source: Air Transport Association

Average Annual Room Rates

1982 2000 Total % Increase

$50.56 $85.89 69.8%

Source: American Hotel & Motel Association

Occupancy tax Rate

1995 1998 2001

Anaheim 13% 15% 15%Atlanta 13% 12%14%Chicago 7% 15% 15%Dallas 13% 13%15%Las Vegas 8% 9% 11%Orlando 11% 11% 11%Philadelphia 12% 13%14%Average 11% 12.6%13.6%

Source: IACVB

Consumer Price Index

1982 2001 Difference % Increase

96.5 177.1 80.6 83.5

1992 2001 Difference % Increase

140.3 177.1 36.826.2

Source: Bureau of Labor Statistics U.S. Department of Labor

How the Exhibit Dollar is Spent

1982 1996 2001

Exhibit Space 21% 29%28%Exhibit Design 18%12%T & E 13% 21%Shipping 12% 9%Show Service 18%19%Promotion 9% 5%Other 1% 5%

Source: CEIR/TSEA

Exhibit Space Rates

1982 1987 1992 1997 2002

$9.25 $11.57 $14.15 $18.14 $21.40

1982-2002

131% increase

Source: Trade Show Week

National Average Labor Rate

1982 1992 2002 Total %Increase

AV Technicians $37.76 $57.39 52%

Booth cleaning (per sf/per day) $0.09 $0.13 $0.24 167% Carpenters $26.56$38.04 $64.60 143%

Decorator $25.41$37.48 $64.37 153%

Drayage per CWT (direct to hall) $12.68$24.23 $44.00 247%*

Source: Trade Show Week - *Adjusted

National Average Labor Rate (cont.)

1982 1992 2002 Total %Increase

Draymen $24.47$37.18 $63.45 159%

Electricians $32.24$43.30 $60.48 88%

Forklift with operator (highest weight range) $50.12$83.85 $150.38 200%

Forklift with operator (lowest weight range) $47.84$68.24 $126.61 165%

National Average Labor Rate (cont.)

1982 1992 2002 Total %Increase

Plumber $33.42$41.92 $60.12 80%

Riggers $28.09$43.39 $79.31 182%

Security Guard $8.61 $12.28 $17.88 108%

National Average Furnishings

1992 1997 2001 Total %Increase

Side Chair $21.00 $32.35 $38.82 85%

Standard Carpet $1.41 $2.86 $2.32 65%(Cut & Lay Per SF)

22x28 sign $43.38 $56.70 $63.33 46%

Color Monitor $175.89 $204.45 $215.35 22%(3 Day)

Lighting Outlet $51.12$63.69$68.23 33%(120V 500 Watt)

Source: Trade Show Week

Cost to Close A Sale

1984 2001 Total %Increase

Close sale w/oexhibition lead $1,130 $1,140 1%

Close sale with an exhibition lead $254 $705 178%

Cost of a typical field sales call $205 $308 50%

Average cost per visitor reachedat an exhibition $90 $212 136%

Source: CEIR

The Value Gap Still Exists but it is Incumbent UponUs to Stop the Shrinkage

Exhibit Dollars (In Billions)

1996 2001 Total % Increase

$16.5 $20.5 24%

Source: CEIR/TSEA

There is a Perceived Value Decline

in Some Exhibitions

Without Real Value We Cannot Succeed

With Real Value and Responsible Stewardship

We Cannot Fail

Voluntary Contribution Program

(VCP)

Exhibition Industry Foundation

(EIF)