Word on the Street by Kevin Carty
Exhibitors are from Mars . . . Show Services are from Venus
As we all know, the current economic situation in the US and around the world has been the primary focus in the news over the past year. Is it an economic downturn? I don’t care what economists want to label it . . . It’s a freaking recession folks! Whether you want to blame the new guy or the old guy or just some guy named “Guy,” we are in it together. Or are we?
Over the past couple of years, whether it’s because of the sustainable green exhibit movement, the economy, or whatever, as an industry we have embraced new products and processes that have resulted in cost savings for our clients. We started using more LED technology which cuts down on the electrical bill at the show. We have adopted different packaging methods, such as single shippers, that allow you to send components more “pre”-assembled for faster setup and tear down and thus a lower labor bill. And we have incorporated new lightweight materials and exhibit options which have lowered freight and drayage bills.
These are all changes that Custom Exhibit Builders, Portable, Modular, and Custom-Hybrid Display Builders, and certainly our customers have adopted happily.
This week, while assisting on several new projects leaving for shows, I was reminded that we do not all share the same goals for the trade show industry. It’s pretty clear that improving the trade show experience is not as high a priority for some as it is for others.
The Most Glaring Examples are Things like These . . .
When a show starts on a Tuesday, why is it that the customer is only given Saturday and/or Sunday as setup times? What about Monday you say? Well the show floor is mysteriously “Dark” on Monday unless you have special permission. As a result, the cost for labor goes from around $80 per man hour to $140-$160 per man hour if you use show labor.
The same show ends at 2:00 p.m. on a Thursday; yet teardown does not begin until 4:00 p.m. There is a four hour minimum on teardown, even if it only takes two hours, so you get billed for one hour of straight time and three hours of overtime.
For another show, I am told that freight is only being accepted direct at the show from 4:00 p.m. until 8:00 p.m. on Friday and then again on Saturday. The show does not even open until the following Wednesday evening. The end result is clearly a much, much higher drayage fee.
Really?!? Is this the best we can offer our clients once they get to the show hall? There has to be a better way doesn’t there?
Let me say that this is not meant as an attack on the laborers on the floor or the dock. Rather, it’s a statement and a challenge to the show managers/organizers and services management teams. You’re killing our businesses. You are slowly strangling the life out of trade shows.
In the end, we all have one common goal. Make sure people and their organizations continue to attend and exhibit in trade shows and events. It is, after all, what keeps us all employed. Yet, at least two to three times a week, we hear about people and corporations struggling to decide whether to attend or exhibit at their industry functions. It’s not that we are hearing they can’t afford the exhibit. It’s all the other costs associated with exhibiting at the show. There is a clear feeling in the market that they get “taken advantage of” once they and their freight hits the show floor.
How do we, as an industry, change that perception? Your comments and feedback are appreciated and welcome.
Have a great and restful Labor Day weekend.
Be Well!
–Kevin Carty
http://twitter.com/kevin_carty
http://www.linkedin.com/pub/kevin-carty/3/800/32a
Tags: custom exhibits, exhibit service providers, green exhibits, modular, portable, Trade show industry
Very well said Kevin. I would like to add that I’ve been told that show contractors are often forced to make up revenue where they can due to the negotiations that take place with show managers. And that the “big secret” is that show contractors are forced to give-away at least half of their services for any given show (to show management) in order to win the show decorating contract to begin with.
If this is true, show contractors are forced to make up their revenue in other areas such as I & D labor and drayage fees. It leaves a very bad taste towards show contractors, while it could be that show management is often to blame. We can debate a lot of the fees that are charged by show contractors, but Kevin’s point about odd set-up times that force overtime labor is just one example of how show management just might be paying-back the show contractor for the free services that they have been given to set the show.
The odd set-up times force overtime rates, that in-turn help show contractors make up revenue that was quite possibly lost during negotiations with show management in the first place. Is show management looking out for the exhibitors, who are the ultimate customers in our industry? Not if they’re refusing to pay show contractors fair rates for their services! Who knows, if show contractors were getting paid adequate fees for decorating their shows, exhibitors might see lower rates for show services across the board.
After all, where does all of that money from the booth revenue go? I realize that show management has administrative and marketing expenses, but come on! Isn’t there enough built-in to their booth prices to pay for decorating services? I’m confident that most exhibitors are assuming that a portion of their booth space fees go towards the expense of decorating the show. And I’m sure that most haven’t really given much thought to the side-deals that are possibly made (between show management and show contractors) in the negotiation stages that in the long run force them to pay higher rates on the show floor.
The bottom line is that everyone is in business to make money, and if you don’t make it in one area of your business you must make up for it in another area. Wouldn’t it be nice if we knew that show management is simply paying their fair share to show contractors so that the ultimate customers (that make the trade show industry possible) could pay more reasonable rates for labor and other services on the show floor? Most of us are reasonable people that expect our vendors to make a fair profit margin, but it might be time for exhibitors to stand up to show management and make sure that they’re not getting hit for unnecessary fees that should have already been paid for when they wrote their checks for their booth space.
You might ask, “why would show contractors be willing to take the hit like this” and upset so many exhibitors? I can’t really answer this question for them, but the obvious answer to me is that it’s the only way they can stay in business! Low fees for show management, and in-turn higher fees for exhibitors.
Next time you hear a negative comment about the high rates that are being charged by show contractors…remember that it could be show management that is pulling the drapes over our industry’s future!
This post should have wider circulation. As a speaker who often also speaks to exhibitors i have seen first-hand how these specific situations have added pressure, cost and stress to the work of exhibitors
Thanks for the note Kare!
Can you suggest some other locations, websites and or blogs that you would like to see this posted on. I am happy to do so.
Thanks,
Kevin
Good Article. Jim’s follow-up post is even more on target. Show Organizers receive free services from the contractor or in the few cases when they pay, it is at a rate that still needs to be subsidized by exclusive services. Exclusive services are typically material handling, cleaning, overhead sign hanging and electrical in open facilities. In some cases the show organizer will receive a revenue share from the contractor, oh and lets not forget the signing bonus that some receive to award the business.
When an exhibitor receives his/her material handling bill, they just paid for a portion of the aisle carpeting in the show or the mutlple aisle banners that were above their booth. The 76 registration counters, information kiosks, entry ways and book store, yes their material handling bill just paid for those services. They also paid for services provided by not seen, fire marshall permits, marking the floor, pre-show planning meetings, etc.
The solution is not to isolate every individual expense area, because we will all be playing a big game of finger poiinting. While I understand the cost shifiting that exists on the show floor, I will openly admit, I don’t understand how some exhibitor appointed contractors can mark up those invoices on published pricing 20-30% and say they are providing a valued added service. I can get a lower loan rate at a payday loan center to pre-pay my trade show services bill. Again, probably not fair to isolate this as I don’t see that they provided the transportation to the show at cost, or made a nominal amount on the exhibit. There is cost-shifiting or lower margin products that are bundled together in every business in America, at the end the consumer has to decide if the total cost for the service represents a fair value for the return.
We can agree that total costs will continue to cause some companies to not participate at shows. Especially when there are other forms of marketing that are easier to implement, don’t require travel & time out of the office. Many of those online forms of marketing have very sophisticated tools to demonstrate the effectiveness of that medium. Our industry, all participants, have to get much better about not just selling the space, selling the exhibit, moving the show in and out, and help the companies more effectively understand their ROI from participating at a specific event.
We need to help exhibiting companies set measurable objectives for their participation in an event. We need to coach the exhibit sales team that working a show is not like working a in person sales call. Leading industry survey firms will state that less than 25% of the individuals that come into an exhibit space ever get interacted with by a companies staff member. Imagine how the ROI could be enhanced if they just spoke to 15% more audience.
Professionals such as your firm and your distributors who are closer to the sales & maketing management in these companies need to help them develop a pre-show marketing plan and a post show follow plan. They need to train their staff and hold them accountable for an acceptable interaction rate and measure their progress. Imagine not only selling an exhibit but selling a service that tells them how effective the exhibit reached their target audience. When I buy a web banner ad, I get both the ad and the service of telling me how that ad reached the audience and the profile of the auidence.
Lets all start helping companies understand the R – Return in ROI as well as the I – Investment.
Kevin,
I’m not in a position to comment on the “How Come,” but I can provide an example on your comment, “It’s not that we are hearing they can’t afford the exhibit. It’s all the other costs associated with exhibiting at the show. ”
I have a friend who owns a small business. He owns his booth property, graphics, and collateral. For the last three years, he has consistently cut down on the number of shows his company attends. This year he chose not to attend any shows, even though he could also make sales calls in each venue city.
It’s an odd turn of events when a company owns the “tools” but perceives it’s too expensive to use them.
I realize this doesn’t respond to the cause, but it does illustrate the result.
Mike – Good Case Study – As an industry we need to help companies understand the ROI based on their total costs to exhibit and help them understand their expected Return. It is no different than other mediums, if I advertised in television, there is the cost of the spot, production time for the commercial, etc . When a company evaluates that marketing opportunity they look at the total cost vs the return.
How many sales calls can your friend make in on city for a day…Depending on where they are, the traffic, I would say 5
max…. and those sales calls are to customers that he knows about,
he is not out prospecting or finding anyone new. If you factored air fare, hotel expense, car rental, meals, lets say his out of pocket expense is $1,000 a day… That is $200.00 per client visit.
CEIR – The Center of Exhibition Industry Research , would say that the average cost per lead at a trade show would be considerably less than the $200.00 per known client.
Lets help our client pencil out the Return
There are many costs that show managers/organizers negotiate with the General Services Contractors to be shifted into other fees (usually material handling/drayage and labor) charged to exhibitors — like the cost of aisle carpet and the labor and materials to lay it, production and rigging of aisle and sponsorship signs, printing and placement of other directional signage and graphics, decorative entrance units, registration counters/stools/wastebaskets, furnishings for the show management’s offices, masking drape, labor and rental exhibits for the show manager/organizer’s exhibit or retail store, and the freight and material handling of all show management’s properties. Having these costs shifted to the exhibitors creates what is known in the industry as a “zero invoice” for the show manager/organizer.
And if you’ve ever wondered why the cost of the “official” services offered in the exhibitor services manual are so high, look at revenue splitting by these subcontractors back to whoever signed their contracts to make them “official” — some require up to 60% of the after-expense profits to get this opportunity to obtain the exhibitor list and be the preferred contractor!
Another example for the discussion; we recently had a customer in Seattle with a 10×20 truss display that they owned. They asked if we could do the install and dismantle of their 10×20 truss display because the show labor quote was for over $1500. We quoted less than half that, figuring 2 hrs to put it up and a little less to take it down. Once our guys got to the show – on a Saturday – they were immediately stopped by the union steward and told that, even though it was a tool-less kit and didn’t require a ladder either, the “rules” at the Seattle convention center required union assistance for any display over 10ft. And because the assistance wasn’t already scheduled and was needed on a Saturday, their minimum charge for 2 hrs was at $225 per hour!
The client had no choice but to accept this; when the union guys showed up to help – and they did try to be helpful – they indicated their pay, even on Saturday, was less than 20% of the hourly fee…
The whole incident was surreal to me; I could not believe that the show management thought it was a good business practice to either impose such draconian “rules:, much less to charge their own customer such an exorbitant fee. The client told me this was nothing; that he’d been forced to supervise show labor at a mid-west show spend over 8 hours setting up the same display.
This is why Mike’s friend mentioned above gave up – our mutual customers are treated like they have no other choice – ignoring the fact that they can simply vote with their feet and skip the show entirely…
Understand how surprises of any kind can be upsetting. I would bet that the union jurisdiction rules were clearly published in the exhibitor service manual. Those jurisdictions probably played into the fact that the show labor was considerably more than your quote.
All the contractors in Seattle are signatory to the same collective bargaining agreement with the Carpenters. When contractors negotiate those agreements, rate of pay, benefits and jurisdictional scope are all negotiated. That provision may have been negotiated or “given”, and in turn a lower hourly rate was recieved by the contractors.
The labor supply is limited in most cities, especially on larger events.
If every exhibitor ordered walk-up labor on a Saturday that wasn’t scheduled, some of the exhibitors that pre-ordered or the showsite orders could get shorted. The walk-up fee is place to motivate companies to plan so that labor can be ordered to fullfill all of the orders.
With all of that being said, rarely is it a good business practice to impose those pricing penalties on what are referred to as “stop jobs”. Generally most contractors will provide the lowest published rate to ensure the best outcome of a difficult situation.
I totally believe in the future of Exhibiting. People are social animals – they need to meet & shows fit that need very well. But exhibiting needs some changes.
I used to do COMDEX & watched the fees escalate wondering when it would all implode. I don’t say that that COMDEX’s ultimate demise was entirely because of the fees but the hikes were a huge issue to many exhibitors, large & small & I know many that gave it up as “too costly”. Learning from history…
Show Organizers might look to the press for inspiration and to see what writing could be on the wall too. At one time the press was a goldmine and who would ever think it could eventually be a challenge to run a newspaper? But times and society change.
Many show charges are simply artificial. Drayage is one that is overhyped and overcharged. Ask almost any Australian exhibitor what “drayage” is and they will stare at you blankly. Needless rules are enforced for false reasons. The Fire Marshall will prohibit storeage of boxes concealed in the booth. Why? To hike up the drayage of course! In Melbourne, Australia (who are manic with their usual OH&S rules) they encourage storage as there is limited room to store elsewhere (that recently changed with the building of their new exhibition hall but it demonstrates my point). It has nothing to do with safety!
There has to come a time when Unions, Contractors and Organizers sit down and negotiate to move into the new century. They need to do it together and they can. They must!
The power is in the hands of the Organizers – for now. That’s OK as long as it’s used wisely. As new ways to market are devised and new structures created this will change and excessive charges will be the economic drivers to drive that change.
At core, the REAL power is in the hands of the Exhibitors and even more so in the hands of the Attendees. Mice that can – and sometime will – roar. They are roaring (and tweeting) quite nicely in other promotional media.
Colin Green, CTSM
http://www.bestofshow.com