Business press, trade shows and deja vu
I've received a bunch of angry and a few cordial emails about my supposition that DATE was either dead or not long for the world. Grant Martin of Tensilica even made a comment on my post yesterday pointing out how valuable the content and meetings were for him at DATE. Some people pointed me to Peggy Aycinena's rambling review of DATE (that I had begun to read but stopped after I saw the first comment complaining that she hadn't really talked about the content.) So, for the record, I know that the content in technical conferences like DATE, DAC, Semicon, etc. are all outstanding stuff. I know that the chance to meet with colleagues face to face is important.
That's not the point.
Back in 1995 I started writing a State of the Media report for clients to let them know where editors had moved to, what they were promoted to and what new publications they should be looking at. In 1998 I started noticing that magazines were starting to struggle. In 1999 I noticed ad revenues were starting to slip. In 2000 I predicted that if we didn't start advertising again, we weren't going to have any press to cover industry. That prediction has almost come to fruition. I never said the press that covers industry was unimportant or lacked value. I said if it wasn't financially support it would go away.
So here's my point: It is happening again.
When companies stopped advertising, the money didn't go away. Most of it went into tradeshows and technical conferences. The DATE and DAC conferences exploded and a tradition in the EDA world began where 70 to 90 percent of all marketing budgets went into tradeshow support. Then the bad times really hit, and companies started scaling back, choosing to drop the smaller conference and some eventually pulling out of conferences altogether in favor of their own private confabs. Companies that were not exhibiting but had willingly signed travel approvals for employees to attend, started cutting travel budgets... even if it was just to drive from San Jose to Santa Clara and attendance started dropping.
Now the quality and value of the content didn't necessarily drop, just the attendance. That meant that the companies that organized and ran these events started seeing their own revenues drop. Trade show floors are starting to look like ghost towns. Exhibitors that are still participating are grumbling "Why did we even come here?"
What we still seem to be ignoring is that someone has to foot the bill. Corporations have been doing it for a long time but they are not that convinced that the conference is worth the sponsorship money, especially when up to 90 percent of the shrinking marketing budget is tied up in that support. If those same companies refuse to pay the bill for their employees to attend to get that great content and make business connections, the cost has to come out of the employees' pockets. If they can't/won't pay it, the presenters will be speaking to empty rooms.
And that's the bottom line folks. I know that there are important things presented and discussed at technical conferences, but they are not charities passing out free food to the homeless. The financial model is as broken for trade shows as it is for media. If it isn't fixed it ain't gonna last.
Hi Lou,
ReplyDeleteI know that a big part of the reason that trade shows were kept in the marketing budget was that the ROI was much easier to gauge. You have face-to-face meetings with key people, and that is much better than an anonymous "impression."
But now things are so tight, as the number of IC design starts dwindles (therefore the amount of tools and IP bought has decreased) that everything is being looked at very carefully. Our budgets, which used to be spent mostly in the US, with some in Japan and Europe, now must be stretched to cover Taiwan, Korea and China.
On top of that, engineers can get the info they need most of the time directly from the Internet. So it will be interesting to see how the Internet model changes trade shows and conferences. No, I'm not talking about a "virtual trade show." Who wants to go see a bunch of virtual booths? Instead, I think that virtual technical conferences are a much better idea - and if those can get corporate sponsorships (at a much better rate than we'd ever have to pay for a real booth) that could be a viable business.
I'm not nearly as worried about the demise of trade shows as I am about the near demise of journalism. Journalists wrote stories and investigated - at least in the old days. These days about all they have time for is rewriting press releases. That's very sad....
I would love to see a real case study of a company that (a) actually has its front-end lead-gen system effectively tied into its sales pipeline, and (b) could compare ROI for trade shows, advertising campaigns and pr campaigns. If anyone has seen one (an HBR-type analysis), I'd love to get a copy. I have yet to come across a company in any industry that has a really effective front-to-back flow from campaigns to leads to sales.
ReplyDeleteNow we're adding social media engagement to the mix, which, as Paula has pointed out in various venues, is tricky with the engineering audience. Couple that with the fact that the SM-monitoring and tracking platforms aren't really tied into company CRM tools and you've got a recipe for a massive amount of time wasted on social media.
Effective social media campaigns require money, require at least a full-time equivalent position. So, while I cut off my nose to spite my face, shouldn't small companies, seeing these issues (time invested and ROI) refocus on some traditional channels, such as advertising and trade shows?
That might begin to bring support back to the media industry. And while we're at it, publishers should charge for contributed articles--all contributed articles.
No free lunch. (At the same time, it's not that expensive either).
You're absolutely right, Paula. Engineers are getting more and more of their information directly from the internet. Here's the problem, though. Most of the content on the internet they find so valuable has been produced at technical conferences and in publications. If all that goes away because it isn't supported by the industry, what are you left with? Press releases and marketing collateral.
ReplyDeleteI'm still hopeful for virtual conferences, and I think James Colgan's Xuropa provides exactly what is needed. Yes, they have "virtual booths" but there is much more. Personally, I think DATE and DAC are missing a big opportunity by not engaging with him. The demonstration and lab capability in Xuropa makes it possible for people who could not attend the conference to see what happen in actuality, not from a third party. That makes the events year long and can be used to build ROI for the next live event.
I don't think virtual tradeshows/conferences are a replacement for live event. I think they are the media of the future for live events.
Brian,
ReplyDeleteI actually drove the effort and did the installation (with the help of a consultant) of Salesforce.com, which promises to give us this front-end lead-gen system tied to the sales pipeline. After using it for just over a year, I can highly recommend it. However, our budget is so small that I can't give a quantitative analysis of the effectiveness of different marketing activities. Plus, you need to measure advertising and PR on an awareness scale, not a lead gen scale.
The biggest advantage of using Salesforce.com to me is that now I can be my own publisher and easily email info out to people who have inquiried about our products through various things we've done. For Sales, they have one place to go to quickly get any sales leads that come in. It's very efficient.
Lou
ReplyDeleteI still think that you are making the assumption that a conference like DATE cannot survive without a large trade show component that cross subsidises the technical part of the conference. I don't have any insight into the 2009 DATE financials (and the EDAA), but with 1400 paid attendees, at say an average 300 euros each (and full conference was more than that), is still over 400,000 Euros revenue for just the technical conference part. Add in the revenue from the small exhibition this year, and it strikes me that is enough revenue to continue a non-profit technical conference, albeit perhaps in smaller venues (like Dresden in 2010) every year - even if the exhibition part withers away completely. Those 1400 paid attendees were the same number as in 2009, and I met plenty of people from industry there - so there continue to be plenty of companies willing to send some employees to such events because they derive value from it.
If DATE and DAC were "owned" by for-profit exhibition companies then the situation of dropping revenues and the need to transform these events radically, or die, might cause their death. However, neither of these events is actually owned by the companies that manage them - it's a lot more complicated than that.
I can't predict the future of either event, but would expect them to both continue to change and possibly end up as something quite different - but continue to exist at least as technical conferences - because nothing can (yet) substitute for meeting and discussing complicated technologies with colleagues in person.
I'm (fortunately or unfortunately) old enough to remember DAC before there was even any exhibition and the addition of such caused great controversy (companies did "forbidden" things like show products in hotel suites). I would guess these events can survive the next great transformations to come.
And if you want to read some brief columns discussing some of the content at DATE 2009, you can always look at:
http://www.chipdesignmag.com/martins/2009/04/21/update-2009-nice-tuesday-21-april/
http://www.chipdesignmag.com/martins/2009/04/22/update-2009-nice-le-mercredi-22-avril/
http://www.chipdesignmag.com/martins/2009/04/23/update-2009-day-3-jeudi-le-23ieme-avril/
http://www.chipdesignmag.com/martins/2009/04/24/final-update-2009-friday-esl-synthesis-workshop-24-avril/
and finally
http://www.chipdesignmag.com/martins/2009/05/11/the-return-of-design-by-contract/
Paula, you, as usual are way ahead of the curve on marketing. But I don't necessarily agree that measuring advertising and PR by awareness rather than lead generation. I'm also not sure that lead generation is that valuable for most companies.
ReplyDeleteI actually heard a sales VP utter this phrase: "There are two kinds of leads: Those I already know and worthless leads." The real measurement of any marketing program, from advertising to social media is the affect on the cost of sales.
There's a company I've talked to several times in the past that estimated the cost of nailing down a sale is $1,000,000 for them. Therefore whatever they end up with, the deal has to be more than $1,000,000 for them to make a profit. They look at the cost of all their marketing and measure to see if that effort has any positive or negative affect on that cost of a sale. Anything that drives it down, gets more attention.
Dan Skilken, when he was VP of marketing at Summit Design back in the early Jurassic, had a system in place in which he knew exactly what effort created a lead, what the potential of the lead was and whether it resulted in a significant sale of product. He invested heavily in public relations because it resulted in a 100X return on investment compared to anything else. Direct mail was second, trade shows third and advertising fourth. Leads-to-sales developed by salesmen weren't even enough to register. But what was important was that he knew that each one had an overall effect on closing the deal and had to be integrate into an overall strategy. I've only worked with one other company in the EDA/IP world that had that level of granularity in the marketing efforts, but in both cases, they were concerned not with how many leads were developed or even the quality of the leads, but in what resulted in profitable sales (emphasis on profitable).
There are probably people reading this who are thinking, "DATE's problem was its funding sources. What about conferences sponsored completely by IEEE, ACM, SPIE, etc.? Surely they're safe." I've got news for all of them. The engineering and computing societies have been living on borrowed time for years. Because they don't have to rely on exhibitors, some participants feel that they're like the National Science Foundation. Not so. As fewer and fewer people retain paid memberships in IEEE, ACM, etc. because they are laid off, the societies will feel the crunch just like everyone else.
ReplyDeleteLoring
ReplyDeleteThe IEEE and ACM don't pay for most of their conferences - they "sponsor" them by underwriting some of the risk in putting them on, and will lay claim to a some of the surplus (if there is one) while agreeing to cover the risk of a deficit. Most of the IEEE and ACM sponsored workshops, symposia and conferences I have been involved in are non-profit and breakeven and work very hard to set the registration fees and any other revenue sources (such as very limited industrial sponsorships for things like the conference bags or coffee breaks) to exactly match the expenditures. Yes, layoffs and inability to pay membership fees for IEEE, ACM and the like will impact what these societies will do - but the impact on conferences will be indirect at best.
Thanks, Grant, I knew the societies worked from a nonprofit basis, but I can't help but believe that they will be hammered by the recession almost as much as commercial trade shows will.
ReplyDelete