A recent Forrester Research report on B2B marketing budgets provided several interesting insights into trade show budgets. As expected, trade shows continue to be the single biggest line item in a B2B marketing budget representing almost 20% of the overall budget. Perhaps more interesting is the fact the 30% of marketers told Forrester they would decrease their live event budget while 21% said they would increase it.
The question I sometimes ask clients who believe their trade show budget is too large is “what would you spend the money on if you didn’t spend it on trade shows?” In theory, marketing managers can certainly reduce their trade show budgets and move the money to other marketing activities. Why don’t they?
My suggestion to these clients is “let’s start from scratch are create a budget that you feel delivers the best ROI.” Far too frequently, the trade show budget is literally pulled out of thin air or is based on last year’s budget plus-or-minus a small percentage. This approach to budgeting is not very realistic and leads to frustration.
Starting from scratch (sometimes called a zero-based budget) can lead to not only a budget that everyone is comfortable with, but also a better understanding a what trade shows deliver compared to other possible marketing activities.
Forget the Rules of Thumb (or is that Rule of Thumbs?)
If you have past trade show expense numbers that include all of the activities that generate ROI discussed in my recent Are Trade Shows Worth It post, then by all means use them to develop a new budget. However, if you have to start from scratch, beware the 30% rule. A frequently mentioned rule of thumb is that a trade show costs 3 times the cost of the exhibit space.
The 30% rule covers that costs associated with the exhibit itself such as building the booth, show services, transportation and storage. It does not include costs such as pre- and post-show marketing, sponsorships and other advertising. (See table below). One of the reasons trade shows frequently do not meet ROI expectations is that budget is not allocated to all of the tasks that lead to ROI or that actual results are not traced and attributed to the show.
In future posts we’ll spend more time developing guidelines and checklists for good trade show budgeting and discuss the approaches for capturing the ROI metrics that senior management needs to truly evaluate the effectiveness of trade show marketing.