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.
Having been in the trade show industry and married to a nurse (both for almost 30 years), your article struck a cord. I believe that a new model is on the horizon for the exhibit industry similar to the one that challenged advertising agencies of old. Value – at an approptriate price point, transparency in practice, and true consultancy – with measureable results, will weed out enterprises both large and small, that have existed and prospered to date by keeping customers in the dark. It seems to have taken longer in the trade show industry possibly due to the industrie’s “garage shop roots.”
Eric, As a long-standing supporting member of HCEA, it’s certainly nice to see HCEA finally taking a stance in regards to current industry challenges. I see this was also posted on the HCEA website in your blog this past March. Shame on all of us for just now noticing.
While I certainly appreciate the opinion expressed on behalf of HCEA, I would like to clarify a few points. As I’m sure you are aware by HCEA’s own practice of consistent increased exhibitor fees at the HCEA Annual Meeting, space rates are defined rather simply. The cost in itself is to offset what the non-profit association pays to the building and all their preferred contractors to produce the meeting. Further to that, as I’m sure you’re also aware, the space rate is a minimal part of an exhibitors overall budget for participating at a show. In some cases as little as 5%.
While I certainly support the education of Show Management and have long been an advocate of all Associations to work with all their contractors, this post seems to unfairly target Association’s and General Service Contractors (GSC). I’m sure you understand and would agree with me that additional contractors such as Audio Visual, Official Building Services, Catering, Floral, Housing (negotiated hotel rates) and overall business decisions of the Association regarding move-in and move-out times play a substantial part in the cost of exhibiting as well.
Recently the American Heart Association (AHA) underwent an extensive RFP process that was managed by an independent third party over a two year period. Through this process we solicited not only the feedback from our exhibitors and Exhibitor Advisory Council but also the feedback from Industry Suppliers.
Based on the feedback we received and incorporated into the RFP process ALL general service contracting companies responded with multiple solutions in controlling exhibitor cost. AHA elected to reward Freeman a two year contract with the option to extend. Some of the agreeable terms for the current year contract and through the new contract period are:
- Simplified flat drayage rates to both warehouse and show-site
- No special handling charges
- Competitive drayage rates relative to host city
- Reduced minimum weight from 2 CWT to 1 CWT.
- Targeted move-in for warehouse and show-site freight (allowing an additional day for move-in)
- Comprehensive packaging for all in-line exhibitors
- Ongoing benchmarks reviews to ensure exhibitor satisfaction and best practices are met and determined
Additionally, AHA has taken the following position on the practice of discounting any services provided by their appointed GSC in their role as GSC of AHA meetings. AHA will not support the discounting of any services whereby discounts/concessions and rebates are offered on products and services to any AHA exhibitor at any AHA/ASA Scientific Conference.
I think it’s rather important to note that AHA is not the first Association to do this. There are quite a few Associations and Trade Show Organizers, all of them members of HCEA and other Trade Groups, which have implemented similar changes or plan to implement such changes in the future. So with all due respect, if these changes don’t impact the cost of exhibiting and show the flexibility of Associations and General Service Contractors, then I think we’re all in trouble.
I love this industry and firmly believe in the value of face-to-face healthcare meetings. Associations should do everything they can to bring value to our meetings for both our Attendees and our Exhibitors. I do agree with you that we have to be flexible but there is a fine line between being flexible and just clear lack of knowledge of available options. This is a much bigger picture than just space rates and General Service Contractor fees and that must be acknowledged or nothing will change regardless of how flexible Associations are.