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Co-location for Fun and Profit

by
Michael R. Hough

For many years event producers, both association and independent, have been co-locating their conventions, exhibitions and tradeshows with other compatible events. Back in 1993, an ASAE report suggested, “… look for co-location possibilities with other shows. Consider co sponsorship with other associations …”

This trend to co-locate has been further accelerated due to these recent events:

• A downturn in the economy which has decreased participation in shows by both attendees and exhibitors.
  
• In general, exhibitors are cutting down on the number of shows they are doing. The larger exhibitors are pressuring show management to beef up the size/clout of their shows.
  
• And there are just too many shows out there, each attracting a diminishing response.

Thus, there is much more interest in joining with others.

Note there are several variations of “joining with others”, including:

• Two (or more) shows agree to co-locate in one venue over the same dates but keep identity/brand, ownership and finances completely separate.
  
• One show locates as a Pavilion within another (usually larger) show. This can also include clearly defined educational tracks added to an existing program.
  
• Two (or more) shows merge completely – both ownership, finances and a new identify/brand.
  
• A standalone conference locates within a larger event (such as a tradeshow).

In this environment, co-location is good for both parties because a stronger, more comprehensive event is higher on the radar screen of the key exhibitors (who take the mega booths). The dominant show attracts geometrically more attention, meaning more attendees, more press coverage, more financial analysts, more international visitors, and thus a larger exhibit. This makes for a much more profitable event.

Another advantage of co-locating are the economies of scale. For example, promotion costs are reduced because crossover registrants come at no cost. Other possible economies include:

• Using the same general services contractor
  
• Combining registration services
  
• Combining security services

Basically, appending a 300-booth show to an existing 700-booth show is much more cost effective than running the 300-booth show as a standalone event. The 1000-booth show is considerably more profitable than the two individual shows. The same holds true for adding a 1000-attendee convention to a larger 10,000-attendee event.

Other benefits of co-location include:

• Being able to use this sales pitch to both attendees and exhibitors: “Come to this mega event and you will use your time and dollars much more effectively.”

• Two co-located events get better sites and/or dates. A convention center and convention bureau will always treat one 1000-booth show better than two 500-booth events. If one show already has the prime location and dates, joining your show to them makes sense. Also, a meeting-heavy show can take advantage of another that may have surplus meeting rooms.

• Co-locations are also attractive to sponsors who get to market to two different audiences at one time.

• Attendees get higher quality special events, such as a star Keynote speaker.

• Co-locating your show with another allows rapid entry into a market, particularly internationally.

• Finally, co-locating is a good way to “box out” your competition. You can co-locate directly with your competitor or with your competitor’s competitor (the enemy of my enemy is my friend).

But there are cautions, including the proviso that the co-located event must have a logical reason to exist. Specifically, the attendees must benefit from being able to visit both shows at one time. In fact, the best co-location is one where there is 100% compatibility for the attendees, but 0% for exhibitors (so as not to create competition for the exhibitor base).

How to Make It Happen

The first question is how to find events to co-locate with. Here are some thoughts:

• You should be aware of all events that occur in your market niche – other exhibitions and conventions, shows, conferences, etc. Get on all mailing lists and also continually talk to exhibitors, press, industry gurus, etc.

• Check the Tradeshow Week calendar regularly, particularly 12 months out.

• Ask the venue and Convention and Visitors Bureau which other event is in the facility or city at the same time as you. Many times this may be a compatible event, and you can establish a relationship with them.

• If nothing surfaces, consider creating your own event.

Next, how do you approach the other event? Here are some points to make:

• 2+2 could be 7 if we came together and here is why …

• The co-locating event will not be lost within the larger event and here is why ...

• The larger event will benefit from having the smaller event and here is how …

The Agreement

Once you get consensus on the concept of co-location, here are the areas to discuss and agree on:

• l Divide up the major tasks among the partners. For example, one does the promotion while the other handles operations (each with input from the other). However, do not share responsibility or the task won’t get done effectively.

• l Create a budget for the co-location and agree what expenses can be charged to it. For example, can staff salaries and overhead of the partners be charged? Suggest not – only direct expenses should be charged to the co-located show account; all other costs would come out of each partner’s profit distribution.

• l Decide what the overall promotion effort will be. Typically, each show does promotion for its own event and then contributes to a promotion effort for the combined event. Also, what will be done on site and who pays the costs (for example, banners, signs, etc.).

• l Strongly encourage crossover attendance – make it free, make it easy, publicize it heavily and offer an incentive (such as a free seminar pass or tee shirt). Do not force the crossovers to re-register; the simplest way is to run their badge through a reader at the crossover point and put a colored dot on their badgeholder. However, this presupposes there is a common registration/lead inquiry system for both shows, since exhibitors will require this.

• l Agree on who owns the names of the attendees who crossover.

• l Decide which common areas and meeting rooms each show may use. Also, divide up the hotels/sleeping rooms.

• l Agree on common days for the exhibit (but not necessarily hours). Generally, attendees will not come back the next day to attend a co-located event.

• l Do not allow “poaching” each other’s exhibitors. The $20 per-square-foot show can’t approach the exhibitors at the $36 per-square-foot show and say, “Come to our show and save $16.” Again, the best co-location has no competition for exhibitors between the shows.

• An alternate to the above is to agree to charge the same rate so that exhibitors have no incentive to jump ship. However, you must agree who “owns” each exhibitor – so the revenue split can be decided.

• Agree not to compete: what is the period during which each show may not hold their event pre and post show? For example, can their show be held one month before in the same geographic area?

• Agree how to handle the dissolving of the partnership. There should be a first right to buy out the other partner if that one wants out. A non-compete clause must be included – the partner who wants out is prohibited from re-entry into the market for a period of time.

Financial Considerations

Here are some financial considerations where two events simply co-locate:

• No funds change hands except for sharing of costs such as registration and security. These are shared equitably – such as based on the size of each show’s exhibit or registered attendance.

• However, there could be a situation where one show benefits more than the other. In that case, a fee would be paid by the benefiting partner.

• These financial considerations apply where one show is a Pavilion inside another:

• If the floor space is rented from the prime show, what is the discount off the posted rate that is charged to the pavilion sponsor? In most cases, the same rate should be quoted to exhibitors inside and outside the pavilion. Note that the sponsor makes its money off the differential between the posted and discounted rate.

• If there is a revenue split, what is the percentage going to the prime and to the pavilion sponsor?

• In this case, the following helps determine what the split is:

  • Which will pay to promote exhibit-only attendance?

  • What on-site operations costs will be borne by each?

  • What help will the prime provide in exhibit sales (for example, will the overall show prospectus include information on the pavilion)?

  • Who is responsible for collecting from the pavilion exhibitors?

Thus, for example, if the prime is responsible for all promotion and operations, the split might be 60 (prime) - 40 (sponsor).

Here are the financial considerations where the two exhibitions are completely integrated:

• What is the common exhibit space rate that will be charged? Usually it is the higher of the two shows.

• What portion of revenue does each organizer keep for those exhibitors unique to each show?

• How do you share revenue for common exhibitors? Also, who sells key accounts?

• l What does each do to promote the common event as well as their own event?

• Who pays for operational costs and other expenses?

• Here are the considerations when a conference is involved:

• Will the conferences be completely independent or will they be “passported” (that is, attendees can pay one fee and go to any session)? If the latter, how is the revenue divided?

• Who gets which meeting rooms? What directional signs will be provided?

• Is there an overall conference promotion brochure? How is the cost shared?

• What are the common costs and how are these shared?

Making It Work

Here are some suggestions on making a co-location work:

• The idea must be driven from the top and supported by all levels in both organizations.

• The duties of each party must be clearly spelled out. The financial terms should also be understood by all.

• Neither party loses control of their part of the event.

• Each considers the other partner an equal (no matter what the differential in size).

• The interaction between the parties is frequent and at all levels.

• Finally, there is a point person on each side who has the big-picture responsibility and can arbitrate the expected disagreements.

If the co-location is successful, there will be enough money to go around. If it is not successful, then all will have been for naught. Thus, all parties should work on making the entire event a success.

***

Michael Hough is an industry consultant and author of The Profitable Trade Show (www.profitabletradeshow.com). He also co produces the Exhibition and Convention Executives Forum (www.eceforum.com).

A version of this paper will appear as an article in the July, 2002 issue of Convene.

Copyright 2002 MRH Associates, Inc. All rights reserved.