I’ve gotten interested lately in a phenomenon that I’ll call “nonresponsive markets.”  I’m no economist, so I’m sure I’m not coming up with anything new here, and it probably already has a (different) name.  But what concerns me is this: I wonder whether we’re seeing an example of a nonresponsive market in the healthcare convention industry.  I hope not.

My wife is a speech pathologist.  It continues to amaze me that, even in the midst of the worst economic downturn in our lifetimes, she still gets one to two completely unsolicited job offers every week.  The demand for speech therapists is sky high, and has been high for decades.  You’d think with that kind of demand, she could command the salary of a baseball pitcher.  Alas – no.

The same seems true in nursing.  America suffers from a chronic shortage of nurses, yet nurse wages remain relatively low.

Why is it that some markets don’t seem to respond to the ordinary supply and demand pressures that are supposed to dictate a free market?  I don’t have the answer to that (though I have some theories about both of the examples above).  But here’s the question it causes me to ask about our industry:  why is it that certain sectors of the trade show and convention industry don’t seem to respond to the ordinary supply and demand pressures of a free market, either?

Specifically: we (HCEA) have been telling the healthcare association community for years that a contraction was bound to happen in exhibit halls.  Ever increasing show costs in the face of a shrinking R&D pipeline, increased scrutiny of the measurable return of convention participation, and now the recession, made that about as sure a prediction as one can make.  Yet neither associations nor, in many cases, their suppliers, seem to have responded in ordinary ways.  Space rates haven’t gone down.  Costs of exhibiting haven’t gone down.  Or even leveled off.  Why is that?

The worst thing for a market is inflexibility.  Sometimes inflexibility is introduced from outside, such as government price controls.  Maybe in other cases it comes from other sources.  But where is it coming from in the trade show and convention industry?

The era of unscrutinized company participation in trade shows and conventions is over.  As it should be.  Don’t get me wrong: I remain convinced that we have a great story to tell, and once it’s out there fully, trade shows and conventions will stand up to scrutiny better most other sales or marketing channels.

But some associations, trade show organizers and their service contractors still don’t seem to grasp the full scope of this.  They try to shore up sagging revenue streams by raising rates or adding on new fees.  This is only going to exacerbate the problem.  An inflexible market, like an inflexible bridge, can withstand pressure to a point, then it catastrophically collapses.  When it happens to a bridge, people have to drive around.  When it happens to a market, companies find other ways to reach their customers.

Let’s all work together to make sure this doesn’t happen in the trade show and convention industry.  Flexibility is the key.  If we remain flexible, there is absolutely no doubt in my mind, the best days of the trade show and convention marketing industry are ahead of it.

Members of the Trade Show Exhibitors Association (TSEA), comprising the world’s exhibit marketing leaders, along with exhibit builders, agencies, show producers and other vested suppliers are openly collaborating at levels never before seen. Results of such collaboration are expected to create new efficiencies that will ultimately serve and benefit the exhibit and event marketing ecosystem as a whole. With that goal in mind, TSEA convened its inaugural Red Diamond Congress event, a three-day leadership summit held in Orlando, FL, April 25-27, 2010. The event brought together many industry leaders to directly address such key issues as third-party audits and housing and labor practices. Results included significant understanding and collaborative insight into the issues, potential solutions and a roadmap forward. The full white paper, produced in conjunction with George P. Johnson, is available at www.tsea.org

The following are examples of the key findings and recommendations:

• 95% of attendees believe that certified, independent, third-party attendance and demographic data would help validate continued investment in a show.
• Housing bureaus should adopt a customer service orientation when dealing with corporate marketers, in recognition of their status as true value generators. The needs of exhibitors and their companies should be considered at all times.
• More efficient and effective labor management can free up allocated budget and resources. These, in turn, can be invested into additional activities and promotions that can (1) improve the performance and increase the overall value of corporate exhibit programs and (2) enhance profit for show producers.

TSEA expressly wishes to thank all Red Diamond Congress attendees as well as the following supporters for helping to make the event possible:  Orlando Convention & Visitors Bureau, Orange County Convention Center, Czarnowski, George P. Johnson, Universal Studios, Walt Disney World Resort; BPA Worldwide, Skyline Exhibits, Centerplate, Fantail Consulting & Technologies, Exhibit Surveys, LMG; SmartCity; Pictura Graphics, Momentum Communications, FedEx Graphics, Contact Keeper, and MMI.

The following communique was distributed by David R. Causton, General Manager, McCormick Place to all industry stakeholders regarding the new legislation which impacts trade shows at McCormick Place which was enacted in Illinois on May 27, 2010.

Dear Stakeholders:

On behalf the Metropolitan Pier and Exposition Authority, I am proud to announce that a new day has dawned in the Chicago convention industry.  On May 27, 2010, the Illinois General Assembly enacted historic legislation in response to your demands for a sweeping transformation in the way business is conducted on MPEA premises.  As a result of this legislation, show management, contractors and exhibitors will realize immediate and long-term benefits, and Chicago will become an even more competitive and attractive destination for conventions, trade shows, expositions and meetings.

While this legislation is effective upon enactment, the implementation process has only just begun.  Preliminary preparations have long been underway, and the Authority will soon finalize a full-scale implementation plan in cooperation with its key partners.  Certain changes will be implemented promptly.  Other changes are wholesale modifications to the way business is conducted on our premises and thus will require a lengthier implementation period.  The following examples illustrate the myriad complex tasks now required:

√               While the legislation expands the type of work that exhibitors may perform in their booths, it directs the Authority to develop rules and regulations to ensure that these new exhibitor rights are exercised consistent with the training and safety requirements for such work.

√               Exhibitors may now unload and load privately owned vehicles using non-motorized hand trucks and dollies in areas designated by MPEA for such purposes.  The Authority must evaluate the logistics of this new policy and identify the areas where such unloading and loading may occur safely.

√              The legislation establishes new rules governing when show managers and contractors may charge exhibitors for labor services on a straight-time, time-and-one-half or double-time basis and how such services must be billed.  The implementation of this provision will require an audit of current wage structures and a new communications piece regarding labor costs and billing practices.

√             While the legislation eliminates “stand-by labor” and requires all union stewards to be “working stewards,” it authorizes the Authority to exercise its discretion to determine whether more than one working steward may be necessary depending on the building or show at issue.  The Authority will develop protocols for evaluating when more than one working steward may be required.

√              The legislation establishes a new Advisory Council to represent the interests of all stakeholders and regularly advise the Authority on critical operations issues.  To illustrate, the Authority now has the legal right to determine the work jurisdictions of “show labor” and crew sizes when appropriate on MPEA premises.  The Authority may only, however, exercise these rights after consultation with the Advisory Council.  For this reason, the Advisory Council will be established as promptly as possible to facilitate a resolution of these important policy considerations.

√               At present, MPEA’s FOCUS One is the exclusive provider of electrical services to show managers and exhibitors.  By virtue of the legislation, MPEA may no longer serve as the exclusive provider, and customers may now choose either an in-house electrical contractor or an outside electrical contractor approved by the Authority.  The Authority will begin to develop a list of approved electrical contractors and modify the FOCUS One model to accommodate this change.

√             The legislation requires itemized billing statements for utility services provided by MPEA and establishes pricing guidelines for food and beverage contracts.  An audit of current practices and new communications pieces are necessary to implement this change.

√             The Authority is solely responsible for administering and enforcing these new legislative requirements and must now establish the necessary governing regulations and enforcement mechanisms, including procedures for audits and contract reviews.

As the above issues and others are resolved, the Authority and its partners will then be required to amend current agreements and substantially revise existing MPEA policies and procedures, including, but not limited to, the following:

√              License Agreements

√              Registration Agreements

√               Right of Entry Agreements

√              MPEA Meeting Planners Guides

√              Exhibitor Manuals

√              MPEA Facility Protection Guidelines

√              McCormick Place Exhibitor and Utility Ordering Guides

√              Informational Publications on the MPEA Website

Undoubtedly, a great deal of work remains to be accomplished.  MPEA and its partners embrace this challenge and reaffirm their commitment to implement this historic legislation in the most expeditious, efficient and communicative manner possible.  Until further notice, you should continue to rely on existing agreements, arrangements, practices and policies. In the meantime, the Authority will continue to finalize the full-scale implementation plan and will communicate with you promptly upon its completion.

As has been said before, we are truly grateful for your support and diligence in this important endeavor and appreciate your insight and patience as we continue this collaborative venture.  The future of Chicago’s convention industry is bright, and the best is yet to come thanks to your dedication and commitment.

The following Case Study is presented as an example of an event that is putting Best Practices to work for their exhibitors, and themselves.

Name of Event: Association of Public-Safety Communications Officials International

Brief History: 360 exhibiting companies, 75,000 nsf of exhibit space

Description of Issue or Concern: In 2007, the high cost of exhibiting and low attendee satisfaction rates threatened the future of the show.

Details of Solution provided:

• Implemented TL Operational Cost Analysis where the association was able to create an active spreadsheet that itemized the actual costs of every service on its show floor, including its show management materials and services costs (reg desk, signage, aisle carpet, etc.).
• Planned and budgeted show management services knowing real costs.
• Participated in setting all exhibitor service rates.
• Reduced drayage rates, simplified to just two rates: advance receiving and direct to show floor. Eliminated overtime, etc. 
• Implemented online service kit with true one-stop shopping. Exhibitors utilized a single checklist and paid for services with a single credit card transaction. All disbursement of information and payment was handled on the back end invisible to exhibitors.
• Exhibitors were provided with a single customer service rep who assisted with services and made suggestions to help exhibitors set objectives and take advantage of marketing opportunities.

Results/Future prospects for event:

• Reduced its show decorating costs 50% while increasing actual decorating by 20%
• Achieved 96% positive rating on value of show vs. cost to attend.

Provided by TradeshowLogistics

Late last month exhibitors arrived at the first TSEA Red Diamond Congress in Orlando, FL on a mission.

Collaborative and mutually beneficial change was the call to action as the two-day event brought together over fifty industry leaders, including senior exhibit managers, to engage as change agents, progressing toward mutual definition and common understanding of several key areas critical to the exhibition industry: fundamental labor practices; convention housing practices; and third-party audits. Exhibit managers were brought to the table and encouraged to start with the simplest of tasks – to “have a conversation” about the issues that concerned them most and significantly challenged their abilities to deliver quality and value-added programs.

Day two of the event offered exhibit managers the opportunity to participate in an honest dialogue with show organizers. They used the time to better understand organizers’ perspectives as they “walked a mile” in organizer shoes and listened to thoughtful and informative responses to issues raised. Attendees felt insights offered by the organizers were very helpful and they were encouraged to continue collaboration toward achieving recommendations for best practices. Both sides were able to move quickly and offer potential solutions over the course of the exchange.

The end of the caucus signaled a call for all exhibit management professionals to come together and to act as a single group.  By working together, the voice of exhibitors will be heard by all stakeholders in the exhibition industry. I look toward McCormick Place as an example of that beginning to happen outside of the Red Diamond Congress.  Legislators in Illinois interviewed all stakeholders to define what they needed from McCormick Place.  The exhibitors, show organizers, the Chicago Convention and Visitors Bureau, general contractors, and union officials were asked to testify about what the issues were and asked for solutions.  What we have now is a pending bill awaiting the governor’s signature that will forever change the face of McCormick Place and, quite possibly, save the exhibition industry in Chicago.  I look forward to this happening on a grander scale.

The next step is so simple.

All the stakeholders in the exhibition industry need to sit down together and communicate with each other on a national and international scale.  When we all learn what it is like to “walk a mile” in each others’ shoes, honest dialogue will happen and we can truly find a model that will work for all parties.

In the spirit of fostering this dialogue, what questions do you have?    And who would you direct those questions to?

The following Case Study is presented as an example of an event that is putting Best Practices to work for their exhibitors, and themselves.

Name of Event: American Academy of Pediatrics

Brief History: 300 exhibiting companies, 70,000 nsf of exhibit space

Description of Issue or Concern: In 2003, the high cost of exhibiting and low attendee satisfaction rates threatened the future of the show.

Details of Solution provided:

• Implemented TL Operational Cost Analysis where AAP was able to create an active spreadsheet that itemized the actual costs of every service on its show floor, including its show management materials and services costs (reg desk, signage, aisle carpet, etc.).
• Planned and budgeted show management services knowing real costs.
• Participated in setting all exhibitor service rates.
• Reduced drayage rates, simplified to just two rates: advance receiving and direct to show floor. Eliminated overtime, etc. 
• Implemented online service kit with true one-stop shopping. Exhibitors utilized a single checklist and paid for services with a single credit card transaction. All disbursement of information and payment was handled on the back end invisible to exhibitors.
• Exhibitors were provided with a single customer service rep who assisted with services and made suggestions to help exhibitors set objectives and take advantage of marketing opportunities.

Results/Future prospects for event:

• Exhibitor material handling reduced by 25%
• Exhibitor satisfaction rates have increased by 50%
• The show has continued to be profitable for AAP.

Provided by TradeshowLogistics

Earlier this week, I reread an article that our 2009 EDPA President, Dan Cantor wrote last fall titled, “Is Our Industry Model Obsolete?” That’s when it occurred to me that Dan was drafting this article at the same time that the EIC was being formed and created.   CEMA, EACA, HCEA, TSEA and our association, the EDPA were all coming together to work for a common good; “PUTTING THE EXHIBITOR FIRST”. Over six months have passed, and it’s already interesting to see which parts of Dan’s article have come to fruition, where we’re heading, etc. As an industry, we still have lots of work to do.

For this weeks EIC blog entry, I’ve decided to submit Dan’s article word-for-word as it appeared last year. For those of you who haven’t seen it before, we’d love to hear your initial thoughts on it. For those who read it then (my guess is you’re all EDPA member companies) please take a few minutes to re-visit it again here. We’d like to get your latest thoughts too.

IS OUR INDUSTRY MODEL OBSOLETE?

By Dan Cantor, EDPA President Emeritus

I am reasonably certain that our national economy will begin to significantly improve in 2010, and our industry will show signs of life as a result—but we have a choice to make at this moment in time. For our industry, we have the ability to choose between 1) a subdued recovery, dampened by the lackluster physical appearance and extraordinary cost of tradeshows; or 2) a robust recovery that is supercharged by a new business model from which exhibitors and all industry segments will benefit.

The EDPA positions on the business practice of packaging or bundling of “exclusive” with “non-exclusive” services, and the peculiar fees that lead to unpredictable show costs and exhibitor dissatisfaction, are well known. The marketplace does not reward this kind of activity for very long; consequently, we are confident that reasonable people can collaborate on a solution that facilitates fair competition among all designer-producers, including those that perform exclusive services in convention centers.

But our industry has a much bigger challenge: our business model is not globally competitive, and our industry will soon be in crisis as a result.     Exhibiting in convention centers outside the U.S. costs a fraction of what a similar appearance costs in this country. Global show schedules  for U.S.-based companies have increased dramatically because of the relative strength of economies outside the U.S., but also because overseas events are far more cost effective. Without significant changes, this trend will continue, and each year event marketing professionals at U.S.-based companies will allocate more dollars to “outside the U.S.” events, which are gaining in prominence. They will also allocate more dollars to virtual solutions, which are a necessary complement to live events, but are also replacing small tradeshows and private events at a significant rate.

Exhibitors can no longer juggle upwards of 30 different charges or fees, many of which are unpredictable (and very challenging for any budget compliant event manager). We have to address floor-space costs, material-handling issues, venue restrictions, work rules and booth regulations, which make exhibiting in the U.S. unnecessarily restrictive and costly.

Each year, our customers opt for smaller, lighter, less-magnificent exhibit solutions because we use weight as the primary variable in the calculation of material handling charges. If we do not actively collaborate to determine a better measure, we will continue to see tradeshow presentations become more lackluster, and the average size of events decrease. This trend will exacerbate the overall decline in tradeshows, simply because they will be less compelling and differentiated against online sources for information and engagement.

Soon, our municipal boards and legislatures will realize that their recently expanded convention centers are being negatively impacted by these trends, and they will attempt to exert more control—which will cause us to focus on their model instead of ours, and be less customer focused.    Think Wall Street, the auto industry, and health care reform; governments react when industries are not proactive.

The good news is that face-to-face marketing is a proven medium that deserves its place at the top of the marketing spend, second only to Web marketing. All industry segments acknowledge that the current model is problematic, and must be modified to enhance the viability of tradeshows. The EDPA is supportive of recent initiatives to develop industry best practices, and is actively engaged in dialogue with other associations and constituents—and encourages all interested parties to participate.

Let’s continue the dialogue!