How Do You Know If It’s Time To Spend MORE?

by Pat LaPointe , Tuesday, March 10, 2009

In times like these, budgeting and resource allocation decisions tend to get made fast and furiously, with little time for clear thinking. Unfortunately, it’s exactly these times when some real discipline is required to both make smart decisions and  build credibility with the rest of the senior management team. So if you’re thinking about recommending that your firm should be spending MORE on marketing right now, STOP.

If you’re thinking “Let’s spend more now to gain share” — good luck. Headline-grabbing stories of marketing heroes who have taken this approach tend to emphasize the few who have succeeded, and gloss over the vast majority who have simply squandered more by throwing money into an economic hurricane. The fact is that there’s not much empirical data to prove the merits of this strategy beyond a reasonable doubt. Many “studies” have been done, but none have derived their conclusions from projectable samples that account for the primary risk factors, nor have any led to any high-probability “formula” for succeeding with this strategy. The margin of error between success and failure tends to be very narrow. It’s a roll of the dice against pretty long odds.

If you’re thinking “We’ve got to keep up our spend to maintain our share of voice” — be careful. Matching competitive levels of spend (or making decisions on the basis of “share of voice”) is most often seen by CEOs and CFOs as foolish logic. How do you know the competitor isn’t making an irrational decision? What do you know about the effectiveness of your spending versus theirs? How much ground would you lose if they outspent you by a substantial amount? If you don’t have specific answers to these questions, relying on anecdotal evidence won’t help. It may get you the spend levels you’re requesting in the near term, but if it doesn’t work out, the memory of your recommendations will undermine your credibility for years to come.

When times get tough, buyers reevaluate the value propositions of what they buy. They make tradeoffs on the basis of what is or isn’t “necessary” any more. Shouting louder (or in more places) is unlikely to break through newly erected austerity walls.

To make a sound case for spending more, tune into what the CEO is looking for: leverage. CEOs want to find places to squeeze more profitability out of the business. To help, focus your thinking around:

-    The relative strength of your value proposition, channel power, and response efficiencies versus your competitors.

-    Your assumptions about customer profitability and prospect switchability as buyers cut back.

-    Your price elasticity to find out where the traditional patterns may collapse or where opportunities may emerge.

-    The relevance, clarity, and distinctiveness of your message strategy, and your ability to defend it from copycat claims.

And make sure to check with finance to see if the company’s balance sheet is strong enough to handle higher levels of risk exposure during revenue-stressed periods. If it’s not, the whole question of spending more is moot.

If your comparative strengths seem to offer an opportunity, then increasing spend may just be a smart idea. But even so, you have to anticipate that competitors aren’t just going to let you walk away with their customers or their revenues. And that may just leave you both with higher costs in times of lower sales. In technical parlance, this is known as a “career-limiting outcome.”

At www.gge.com, you’ll find ways to spend smart that make you look smart.

Working with a company like GGE (www.gge.com) can help your exhibiting experience in the U.S. be a success. GGE can give you a primer on everything you need to know to ship your properties and products overseas. Even better, visit www.gge.com to learn how you DON’T have to ship an exhibit overseas, how you can save money and worry, and how you can have brand consistency wherever you exhibit.

10+2 Rule Could Stymie Exhibitors

New security rules for foreign shippers may cause delays, hassles

By Stephanie Corbin — Tradeshow Week, 3/9/2009

New federal regulations for shipping freight via ocean liner could make it more difficult for international exhibitors to ship their freight to U.S. tradeshows.

The regulation, known as the 10+2 Rule, was one of many enhanced security measures implemented by the U.S. Dept. of Homeland Security to secure U.S. borders following the events of Sept. 11.

“We need that type of security,” said Phil Hobson, president of freight forwarder Port Elizabeth, N.J.-based Phoenix Intl. Business Logistics, “but it’s an additional barrier to the process.”

The new rule went into effect Jan. 26, although Hobson said it won’t be fully enforced for another year.

“It’s only going to apply to the international exhibitors with sea freight shipments,” he added. Exhibitors shipping booths or other components by air won’t be affected.

The new regulations require importers to submit detailed information about their cargo at least 24 hours before it is loaded into a ship at the foreign port. Failure to follow the new rule could result in fines of up to $5,000 per violation and shipping delays.

Hobson said he and other freight forwarders are able to assist tradeshows and their international exhibitors.

“The challenge is that they have to know,” he added. “Any red light will stop the shipment from being loaded.”

Phoenix Intl. Business Logistics works with exhibitors from several shows, including Natl. Trade Productions’ Coverings and the AMT – Assn. for Manufacturing Technology’s Intl. Manufacturing Technology Show, to ship freight to the U.S. that is too heavy to be cost-effectively shipped by air.

Jeanette Mucha, director of national sales for Rogers Worldwide, another freight forwarder, said of the changes, “It’s going to be very, very difficult.”

She added a lot of the information already was required for customs entry in the past, but it did not need to be nearly as detailed as it will be in the future.

Rogers Worldwide works with exhibitors from the Offshore Technology Conference, Intl. Home & Housewares Show and Kitchen/Bath Industry Show & Conference. Mucha said most freight from international exhibitors is shipped by air. However, one pavilion at last year’s OTC required 11 ocean liner containers.

“It is more economical for them to ship ocean freight,” she added.

Both Hobson and Mucha said, to sidestep detrimental effects because of the new rule, shows need to work to educate their international exhibitors well in advance.

Peter Eelman, AMT vice president of exhibitions and communications and show manager of the biennial IMTS show, said that’s what he plans to do for the 2010 event.

“It’s definitely something we’re working (on) with our freight forwarder,” he added.

Eelman said he’s fortunate that the show is biennial because it gives him and his staff more time to spread the word among exhibitors about the new rule. The last show, held Sept. 8-13 at Chicago’s McCormick Place, had a 1,233,878 net square foot showfloor with 1,803 exhibitors and 92,450 professional attendees.

Eelman said about 35 percent of the equipment on the showfloor was shipped from outside the U.S. and about 80 to 90 percent of it came by ocean liner.

“IMTS stuff is too big to ship by air,” he added.

Jennifer Hoff, COO of Natl. Trade Productions and show manager for Coverings, which has large shipments of stone shipped via ocean liner by international exhibitors to its show, also said education is the show’s strategy.

While the rule won’t have a big impact on this year’s show, Hoff said, “For 2010, we’re going to make sure we do a whole campaign to make sure the exhibitors understand (the changes).”

NTP’s also going to do marketing during TS², which it owns, and through its partnership with the Intl. Assn. of Exhibitions and Events to create awareness, Hoff said.

Several Shows Defy Odds, Post Increases

Yes, the economy is down; no, not all shows are having problems

By Joalien Johnson — Tradeshow Week, 3/9/2009

There is plenty of news to report of shows negatively affected by the economic downturn. However, in the first months of this year, several shows in a variety of sectors – electronics, travel and apparel, for example – have reported at least 10-percent increases in attendance, along with significant boosts in net square footage and number of exhibitors.

Their struggling peers may wonder what shows like Integrated Systems Europe, the Los Angeles Times Travel & Adventure Show and the Off-price Specialist Show did right.

At ISE, an audiovisual and electronic systems market show held Feb. 3-5 at the Amsterdam RAI in the Netherlands, there was a 12-percent increase in attendance, from 22,199 attendees in 2008 to 24,912 this year; a 16-percent increase in exhibiting companies, from 484 in 2008 to 564 this year; and a 19-percent hike in net square footage, from 18,500 square feet in 2008 to 22,000 sq. ft. this year.

According to ISE Managing Director Mike Blackman, the success of this year’s show largely can be attributed to the resilience of the industry it serves.

“Professional AV and systems integration is a robust business,” Blackman said.

But that’s not all, according to ISE’s press officer, Dan Goldstein.

“We certainly increased our amount of marketing this year,” he said.

Goldstein added those at ISE worked “like dogs” to strengthen their relationships with varying geographical audiences and market the show. He said the show received a lot of additional marketing support from the trade associations that co-own the event, InfoComm Intl. and the Custom Electronic Design & Installation Assn.

Goldstein said exhibitors didn’t cut back on their space at the recent show because they needed enough room to demonstrate the kinds of large products they offer, such as televisions, graphic displays and video billboards.

“The particular industry that we’re in is still growing,” he added. “There’s a lot of innovation. There are a lot of very, very cool new technologies. A lot of companies have vested a lot of research and development into developing, and they need somewhere to showcase those technologies.”

Back in the United States at the Los Angeles Times Travel & Adventure Show, held Feb. 14-15 at the Los Angeles Convention Center, attendance also was up, by approximately 10 percent, from 18,000 attendees in 2008 to around 20,000 this year; the number of exhibiting companies rose by 37 percent, from around 400 in 2008 to more than 550 this year; and total square footage increased by 4 percent, from 224,000 sq. ft. to 232,242 sq. ft.

The show’s bump in numbers can be attributed to a healthy travel industry, word-of-mouth marketing and incentives and content offered at the show, according to Los Angeles Times Communications Representative Hillary Manning. She added the show steadily has gained momentum since 2006.

L.A. Times Vice President of Advertiser Marketing Anna Magzanyan had another explanation. She said the increase in exhibitors largely was attributed to the change in show location, from the Long Beach Convention Center to the LACC, which provided more space for exhibitors.

She also said attendees may have been lured into attending through eye-catching mini-jacket advertisements in the L.A. Times and coupons, such as one that offered $100 off travel booked through the show.

“More folks nowadays, we know, with the current landscape, are looking for great deals and opportunities to be able to do a quick getaway or to be able to plan a trip,” Magzanyan said.

At the Off-price Specialist Show, an event that featured apparel and accessories Feb. 15-18 on four levels of the Venetian Resort Hotel Casino in Las Vegas, there also were significant increases.

The show’s attendance increased by 12 percent, from 9,086 attendees in 2008 to 10,196 this year, and the number of exhibiting companies rose by .5 percent, from 448 in 2008 to 450 this year. Net square footage decreased by 3.1 percent, from just more than 100,000 sq. ft. in 2008 to 97,000 sq. ft. this year.

According to Don Browne, the show’s marketing director, the biggest reason for Off-price’s success this year was the aggressive order-writing that took place, especially for spring and swim apparel. There were more boutique and international customers than in the past, he added, along with many more Internet retailers.

“It was the biggest show ever,” Browne said, “and it could’ve been a complete disaster if none of these people came to write business. We’re very encouraged because people still need clothes for their kids. They need basics.”

David Lapidos, Off-price Specialist vice president, said, “Our vendors are happy and the buyers seem to be very satisfied with their purchases. We are also thrilled to see a lot of new faces from the retail community who need our off-price specialists to add more excitement to their stores.”

Browne said marketing efforts were strong, and attempts were made to re-tool the show’s image to being about values, instead of deals.

“We did much more segmented marketing,” he said. “We were able to attract and target women’s buyers and thrift shops. We’ve done a lot more online marketing, like through Facebook and LinkedIn, and we have a video.”

Browne added, “One exhibitor commented that people were buying as if business was booming; as if there was no recession at all. We would say, ‘Well, they’re buying because there was a recession and that they need these deals.’ We are able to say the vendors were very happy.”