Post authored by Gary Schirmacher, CMP, Senior VP, Industry Presence & Strategic Development
Event profitability has always been important, but today, executives are inspecting event financials more closely. More attention is being paid to how events ultimately impact the bottom line… for your organization, as well as for the event stakeholders you serve.
As our economy continues to pick up steam, there’s a constant yin and yang playing out for event organizers. They’re striving to rein in expenses, but they’re also being asked to design and deliver richer and more rewarding guest experiences. Adding fuel to the fire, attendee experience palates are getting more sophisticated. With business insight and connections readily available via digital channels, the ante for attendance acquisition and loyalty is getting steeper.
Expense Management Mastery
Let’s start with a few statistics from Convene’s 24th Annual Meetings Market Survey:
- 25% of respondents reported break even or net loss on their conventions & meetings.
- Registration accounted for 50% of event revenue, followed by exhibit sales (23%) and sponsorship & grants (19%).
- Average room pick-up rates were down slightly, from 84% in 2013 to 82% in 2014.
- Booking windows continue to shrink – for larger meetings, from 2.6 years in 2013 to 2.3 years in 2014; for smaller meetings, from 11 months to nine.
- Food & Beverage (F&B) is the largest expense category (33% of total costs) and 74% of respondents have been asked to trim back F&B.
- Exhibit footprints are also shrinking – for their largest exhibition, on average, a 26,000 reduction in square feet from 2012 to 2014.
According to a recent Meetings Outlook survey (published by Meeting Professionals International), 53% of respondents anticipate a budget increase in the near future, yet many are concerned that budgets aren’t keeping pace with rising costs.
Keeping expenses under control requires deeper insight and stronger benchmarking data. You’ll need to move beyond your own rate history to understand what other like-minded groups are investing for various categories. We understand this expense management landscape at Experient, as we’re regularly conducting detailed expense audits across hundreds of meetings to help our clients get a better handle on what’s reasonable, with tips on more innovative cost saving measures to pursue. Obviously, in today’s seller’s market, the need for more comprehensive data intelligence has intensified.
The Sharing Economy, initially perceived by some as a disruptor, is now opening up new options for collaborative consumption to stretch meeting dollars further. Event organizers are now scouting out opportunities to share expenses with others. Booking meetings over the same dates and at the same destination are strategies for some groups. Sharing production sets and general service providers and their equipment has delivered significant cost savings for many conferences. While Airbnb & Uber have commanded the lion’s share of attention, new sharing economy players are emerging. This is an area we’re studying closely to help keep clients a step ahead.
It’s Time to Double Down on Revenue Growth
Once your expense house is in order, we would strongly encourage you to invest more time on growing the revenue side. Event sponsorship is your single best revenue growth strategy.
IEG, a leading authority on sponsorship trends, predicts steady growth for sponsorships. According to their latest Sponsorship Spending Report, North American sponsorship spend grew 4.2-4.4% each year from 2011 through 2014, with growth expected at a similar rate for 2015.
Total 2015 North American sponsorship spend is projected to reach a whopping $21.4 billion. The sports sector accounts for 70% of the total spend pie, while associations and membership groups earn a mere 3% share. With raving fans and event loyalists, we should be commanding a bigger piece of the pie. Next time you’re at a sporting or enthusiast event, keep your eyes peeled for sponsorship ideas you can borrow for your own event.
With event mobile apps hitting mainstream and record use, there are many ways to give sponsors meaningful exposure via the app, but be sure to inspect this from the event guests’ perspective. Pushing logos and alerts out that aren’t helpful will fail to deliver the exposure sponsors crave most. There are many more digital assets that are ripe for sponsorship growth, including event microsites, blogs, and other digital media assets. The hybrid model, where a portion of your meeting is live streamed to remote audiences offers even more sponsorship opportunities, plus it gives those who didn’t attend a glimpse of what they’re missing.
Extending the Event Value Runway
The event runway is stretching well beyond the live onsite experience, with countless new opportunities to deliver value before and after the big conference or tradeshow. This is prompting some organizations to shift from event-focused sponsorship programs to year-round partnerships, with more exacting and lasting sponsor benefits that garner significant investments, often in the six-figure range.
What new steps are you taking to control expenses and/or boost revenue? If revenue optimization is a priority for your organization, please send me an email at email@example.com and I’d be happy to follow up with more insight.