Are Trade Shows Worth the Expense?

By Gregg Schoenberg Tuesday, March 13, 2012

Tips on Forecasting a Trade Show’s Value to Your Company:

If your business is involved in an industry in which trade shows are an important means of connecting with customers, then you have probably taken part in these events in the past and/or are considering doing so in the future.  Whether you are a trade show pro or a novice, one thing you may struggle with is the budgeting process for a specific show.  We’re going to apply a top-down economic analysis to the world of trade shows to help you efficiently allocate your dollars when planning for your next show.

Step 1 – Determining your target audience

You should start off by looking at the total number of people that are expected to attend the show and then figure out what percentage of attendees are likely to be in your target audience. By talking with the trade show’s organizer and obtaining a detailed profile of the attendees, you can form a reasonable estimate of the size of your target audience.

For example, say a show has 10,000 attendees but 40% of those are other exhibitors, then the total audience is really 6,000 people. Now you’ll want to whittle down that 6,000 into those that truly comprise prospects for your business.   Again, a detailed look at the demographics should help; for our sake here, let’s say that 20% of those 6,000, or 1,200 people represent your true target audience.

Step 2 – Choosing the size of your booth and your staff

You’ll want enough space to comfortably accommodate all of your visitors—and enough staff on hand to handle them professionally— but not so much that you waste money on unnecessary capacity.  In order to come up with the ideally sized booth and staff we can continue the analysis we started in Step 1.

While you have a target audience of 1,200, not all of them will make it to your booth.  As a rule of thumb, about 45% of your targeted audience will actually pay you a visit, so you are looking at approximately 540 visitors.

Now we just need to know you many productive hours there are over the course of the show and how much time, on average, you’ll spend with each visitor.  If we’re looking at a fairly typical three-day, eight-hour-a-day show, that gives us twenty-four hours.  Notice though that we are looking for the number of productive hours.  As anyone who has attended a trade show can attest, not all of the hours spent there fall into this category.  If you account for one slow hour at both the beginning and end of the day, and one at lunch, you’re really looking at five productive hours a day, or fifteen hours over the course of a three-day show.

So your 540 visitors will likely be spread out over 15 hours which means you’ll be seeing about 36 visitors an hour.  If you are going to spend an average of ten minutes with each one, then you’ll need a staff of six people.  A general rule is that each staff member should have 50 square feet of unoccupied space, so you’ll require 300 square feet of space in addition to whatever square footage is taken up by your display.

Step 3 – Tally the numbers

We know that we need 300 square feet to accommodate our target audience, and let’s say we require an additional 100 square feet for our display, for a total of 400.  While the cost of your booth will vary depending on the event, we’ll use an industry average of $25 per square foot to allocate $10,000 to pay for the booth.

A rule of thumb for trade shows is that exhibit costs make up about one-third of total costs with the rest coming from travel and entertainment, show services, promotion and design.  So our grand total budget for this hypothetical show comes to $30,000.

Step 4 – Post- show follow up

To see whether or not the money you spent on a trade show was a good investment, you need to reconcile the cost with the benefits that a good trade show should provide.  Make sure that you and your trade-show staff keep a detailed record of all sales leads collected, and actual sales closed, that can be directly traced to your presence at the show—in addition to more intangible metrics such as increased web traffic after the show ends—in order to compare the value of different shows and ensure that you are allocating your trade show dollars wisely.

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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