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WHY ARE TRADE SHOWS THE PERFECT BUSINESSES?

Essentially, what trade shows achieve is the magic bullet of business. If you are lucky enough to run a company that organises trade shows, the deal you are pulling off is this: getting people to pay you for the privilege of showing off their goods, then getting other people to pay you for the privilege of looking at them. Not many industries can get the kind of enviable economics when you’re taking money from both sides of the house – to be honest, it’s pretty much only Peter Stringfellow and trade shows. The economics of the latter are actually a lot more interesting; diving into the business models of strip clubs basically only turns up a lot of faintly depressing cases about what constitutes the dividing line between an ‘employee’ and an ‘independent contractor’ for the purposes of tax, employers’ NI, unfair dismissal tribunals, etc. But trade shows – get a good one and you’ve got an earner for life.

Seriously, if any readers are aware of a medium-sized industry, profession or market that doesn’t have a single big, dominant trade show, get in touch with us. We know people who can make it happen, and we can cut a deal on the back-end royalties. The right to organise a specific successful trade show is a valuable thing, and they are occasionally bought and sold, like newspaper mastheads.

HEADS WE WIN, TAILS WE WIN

But what are the pitfalls? Well, as our facetious analogy shows, the operator of the trade show gets his or her position by providing the focal point where a lot of people who basically already want to meet each other can do so, in a convenient location. It’s useful to the customers to be able to see a lot of producers all at once, rather than having to traipse round either physically or virtually. And the producers want to show up because there will be customers there – a trade-show booth is a cost-efficient form of advertising, particularly for larger-ticket items, because it generates a manageable number of specific, pre-qualified sales leads.

And also, for the right kind of person, trade shows can be fun – they’re a chance to have a day out of the office and catch up with mates in the same industry for a gossip and an expense-account boozy lunch. Part of the skill of trade show events management is knowing what balance to strike between serious speaker sessions and more celebrity-oriented or entertaining ones; you need to know how much of a good time your interest group likes to have, and how much of a jolly the bosses are prepared to pay for. And this factor has considerable cyclical variation – the commodities and financial services industry trade shows can range from being three-day spectaculars in Rome in a boom year, to an afternoon in the ExCeL Centre following a bust.

THE IN-CROWD

The thing is, it’s a chicken and egg situation. The customers only want to show up if there are enough producers there to make it worth their while, but the producers only want to show up if there are enough customers there to make it worth their while. There are few things sadder than the fourth- or fifth-most prestigious trade show in an industry in a bad year as you watch half a dozen junior executives without cheque-writing authority amble past a row of unsold booth space. Since the providers of conference halls (and the ancillary services of sound, lighting and even catering) are aware of the amount of money that a trade show has knocking around, they tend to charge wedding-party rates, and a badly thought-out trade show that has to be cancelled for lack of interest can be a financial disaster.

THE ‘MATTHEW EFFECT’

For to the one who has, more shall be given … but from he who has not, even what he has shall be taken away (Matthew 13:12)

So you need to get your trade show right, particularly if you are starting up a new show to compete with established incumbents. But even the biggest shows can fail if they don’t generate enough of the right sort of footfall as Australia’s official fashion week trade show, Premiere, found out in April 2013. Exhibitors left in disgust, having not taken any orders, blaming the relocation of the trade show element away from the real fun of the event, the model runway shows. And the provision of fun, sun, booze and after-dinner speeches from semi-established standup comedy stars can only get you so far. The big attractions that get a trade show going are the keynote speakers. Again, the strange economics of the industry come into play. For top-quality speakers, you might have to pay decent money. But some of the very best attractions are people who usually don’t cost anything at all – they’re industry players who are important because they might make (or even better, might promise to make, in time for you to get the marketing material printed) a big announcement or product launch on the stage at your trade show. That is the apotheosis of the industry – top-quality monetisable content, for free – but, obviously, people are only going to do that for the very best trade shows. Which gives the incumbent top shows a massive competitive advantage over any upstarts.

This is another example of the Matthew Effect (named after the gospel of Matthew) – whereby initial advantage creates further advantage, and can be summarised as ‘The rich get richer and the poor get poorer’. Can you see why a really dominant trade show is such a valuable property?

FIRST MOVER ADVANTAGE

And there is obviously very big first mover advantage in this industry. The easiest way to be the biggest trade show is to be the only trade show. And, in turn, the easiest way to be the only trade show is to be the first trade show in a new industry. New industries grow up all the time, and surprisingly often their key players are too busy disrupting the norm, or creating the new world, to realise that what they need is a really good old slap-up trade show. Spotting the moment when a new industry is big enough to sustain a trade show is a real driver of success in the industry, and it’s a talent that some people have, not unlike Simon Cowell’s instinct for a boy band.

STELLAR POWER

One of the most productive sources of new industries, of course, is old industries and so one of the best places to look for the material of new trade shows is the most exciting booth areas of existing trade shows. Knowing when to bud off a new trade show from an old one is a key skill in this industry – the firm that realised that ‘solar power’ was now a big enough component of ‘renewable energy’ did as well as the guys that realised that ‘renewable energy’ was a big enough component of the electricity generation industry to warrant its own trade show. Once more, this is a skill that anyone familiar with the music industry will recognise – a trade show has got to be big enough to support a critical mass of paying punters, but not so big that it’s got two or three trade competitors already.

So, to anyone with an idea for a trade show, our offer stands. Seriously. Fifty-fifty split if it comes off.