BENGALURU (Reuters) - Organizers of conferences and trade shows are benefiting from a shift in the way marketing budgets are allocated, with companies spending less on advertising and more on events that allow them to connect directly with customers.
Research and advisory firm Outsell predicts corporate budgets for business-to-business events in the giant U.S. market will grow 4 percent to $28 billion this year, outpacing overall growth in advertising budgets of 3.5 percent.
London-listed Informa, UBM and ITE are among firms organising events around hot trends such as China's baby boom or cybersecurity.
"I don't believe in trade magazines anymore. I don't think anyone ever gets past the polythene. The magazine gets delivered but nobody ever opens it," said Toby Roberts, whose firm Safety Media runs health and safety courses.
Speaking to Reuters at UBM's IFSEC, Europe's largest security event, he said: "There are few ways to get in front of our prospects (and) exhibitions are a great way to get as many people as possible."
Safety Media, which has a 4 million pound turnover, spends half its marketing budget on this exhibition, which last year helped it get 380 leads.
While the battle between traditional and online media outlets has grabbed headlines, companies are often skeptical that advertising with either translates into sales -- hence the shift towards events that allow face-to-face contact with potential customers, competitors and talent.
"The reality is (other forms of marketing are) getting a lot more mysterious. If you have a marketing budget of a million pounds, half of it is wasted but you don't know what half," said Errol Taylor, an exhibitor at one of IFSEC's sister events and CEO for the Royal Society for the Prevention of Accidents.
The global events market was worth $25.6 billion in 2015, according to research firm AMR International, which predicts the industry will expand by about 4.6 percent annually to 2020.
"The competition is for businesses' marketing budgets," said Charlie McCurdy, global head of exhibitions at Informa, whose exhibitions unit currently targets annual revenue growth of more than 5 percent versus 3 percent for the group overall.
According to AMR, between 65 and 75 percent of exhibitors at shows like IFSEC take stands every year and such events are highly cash-generative, allowing the likes of Informa and UBM to grow through consolidation.
Randy Giusto, Outsell's lead analyst for media, advertising and marketing, said companies were increasingly focusing on online and exhibitions as a way of reaching clients.
"We're seeing marketing spending and advertising spending growth start to slow this year ... but it is not as impacting on events, (which) scores relatively high on both regeneration and brand-building," he said.
With the events market split roughly 40 percent Americas, 40 percent Asia Pacific and 20 percent Europe, Africa and Middle East, London-listed events firms are pursuing a global strategy.
Informa and UBM have each bought up smaller events and exhibitions to fold into their biggest sector shows as well as taking their largest brands into newer geographies.
IFSEC, for example, is now an amalgamation of six trade shows that together draw in over 41,000 visitors, said Simon Mill, UBM's group director, protection & management series.
UBM launched its large European pharmaceutical event CPhI in North America this year, while Informa has taken its Dubai-originated event Arab Health to other markets such as Africa, Singapore and the United States.
"We're looking at other locations around the world," McCurdy said. "Building on the brand and presence we have in Dubai, and the experiences (of) our suppliers ... we helped them increase their access to markets around the world."
The industry's prospects are closely linked to overall economic performance, while specific events can be affected by changes in individual countries. India's demonetization drive has impacted jewelry shows there, for example, while restrictions imposed on travel to the United States from some countries are a headache for technology industry events.
That reinforces the importance of having a wide geographic spread and top events that most exhibitors will not forego.
"Provided that you have strong events in a (sector) in a geography, what tends to happen is that because trade shows are so important, exhibitors still exhibit in 'down' times," UBM Chief Financial Officer Marina Wyatt said.
"But they may take a smaller booth so you need to work harder at selling, you need to get more exhibitors."
UBM strengthened its events portfolio by purchasing AllWorld, which organizes exhibitions in Asia, and U.S. fashion events organizer Advanstar, while Informa bought U.S. trade show operator Hanley Wood Exhibitions in 2014.
ITE has focused less on diversity and its shares have underperformed those of UBM and Informa. Valued at 870 million pounds three years ago, it has lost over half its value due to its concentration on a few geographies and even smaller events in sometimes troubled markets such as Ukraine and Turkey.
Earlier this year, ITE announced a new strategy that will broaden its footprint beyond the emerging markets.
"It's very clear that customers want more and more market-leading shows and we're now not focused by geography, but rather by product. That's a big evolution of our strategy," ITE co-founder and newly-appointed chief executive Mark Shashoua said.
Shashoua was previously head of i2i Events, now known as Ascential Events.
Describing the company as "sector-agnostic", he said "we're creating a blueprint that will be the ITE way and that blueprint will then be executed to any event".
Its rivals have also shown they are prepared to junk or reinvent events as consumer trends change.
Ascential said in June that it would set up an advisory committee to shape the future of the world's biggest annual advertising industry conference in Cannes after criticism from industry giants WPP and Publicis.
The two advertising firms said the event had become costly and too scattered as deep-pocketed tech giants such as Facebook and Alphabet's Google take a greater part, and should refocus on promoting agencies' creativity.
A similar situation saw UBM reinvent its IT event Interop to focus on a niche area after consolidation in the industry reduced the number of exhibitors. UBM said it also continuously sells events it deems 'non-core'.
"Events is, as an industry, relatively resilient," UBM's Wyatt said. "The important thing is to have a broad portfolio across different verticals in different geographies. That makes it more resilient to macroeconomic cyclicity."
For a graphic on 'Marketing spending' click here
For a graphic on 'Share performance of UK event companies' click here
Additional reporting by Alasdair Pal in London; Editing by Catherine Evans