Exhibition News November 2018 - Page 32

OPINION In defence of the cons Mike Seaman, MD of Raccoon Events, argues that potential investors shouldn’t write off consumer events – they aren’t the unknown quantity they appear to be I 32 was at the EN Race Day session a couple of months ago listening to an insightful debate about private equity investment into events. It was a great discussion from some of the cleverest people in the industry and I learned a lot. Towards the end of the discussion, someone asked the panel a question about whether investors view consumer events as the ‘poor relation’ to B2B trade shows. There was a perceived wisdom that consumer shows are a riskier investment because of an over-reliance on ‘walk-up’ (ticket sales on the day). Now there is some merit in this thinking and clearly an over-reliance on walk-up leaves an event exposed to both cashflow and external forces such as weather, transport problems or other major events. Simply put, if you need to sell tickets on the door to make profit then your event is clearly less attractive to an investor than if you’ve already turned a profit several months prior to opening. However, my personal experience is contrary to the basic assumption being made here (that all consumer events rely on walk-up). In fact, I’ve never worked on a show where walk-up was responsible for more three per cent of the total event revenue. So, I set out to investigate further! To my own experience first – I used to work on a large consumer event that was well established and successfully returning consistent profits. Our revenues were predictable and increased steadily year-on- year. However, despite attendance increasing, ticket revenues remained static and consistently comprised November 2018 | exhibitionnews.co.uk less than five per cent of the total revenue. There is a similar situation regarding ticketing for the National Running Show. In 2018 ticket revenues accounted for approximately five per cent of total revenue with walk-ups being about half of that. For NRS2019 SPEX revenues are set to increase by 240 per cent and our attendance will double, but our gate revenues will remain fairly static. In both instances, gate revenue is a small portion of the total revenue and walk-up revenue is largely viewed as a ‘nice bonus’. In my experience, this model is consistent for both B2B and B2C, in fact, with the events I have worked on the revenue fluctuation is bigger on B2B because the ticket price is generally higher. Perhaps my own experience is a limiting factor here, so I set out to ask some industry experts for their view. The first person I spoke to was Andrew Evans, managing director of Thorough Events. I asked Andrew if his events were reliant on walk-up revenue and he said: “Our events are pseudo-hosted – meaning that our sponsors are responsible for a large percentage of attendance through comps. Ticket sales revenues are the smallest revenue source behind sponsor and exhibitor revenues. Adverse weather will negatively impact walk-up but on-the-day attendance is a minority of paid ticket revenues.” In Andrew’s case, most of his revenue is collected ahead of the event, so walk-up isn’t really a concern. Yes, his events could be affected by weather, but that’s the same for any event whether it’s B2B or B2C. Varying by type Seaman founded Raccoon Events, which organises the National Running Show at the NEC. Another person I consulted was Nick Noble, commercial and events director at Future, and he said: “I think this will vary hugely by type of consumer show. Lifestyle shows can suffer significantly via adverse weather and the revenue model they operate. Shows that I run could never be classed as lifestyle, and so inclement weather has less of an impact than for a show that is a 'good day out.' Weather extremes do impact, but the degree of impact is far less for a specialist show than a lifestyle show. Equally consumer shows have very different revenue models with the 'day out' brigade having a significant percentage of their revenue coming from advance/on day sales.” So as Nick says, perhaps there are different types of consumer show where the experience itself dictates the ticket sales? This was supported by marketing consultant Nolan O’Connor, who said that the reliance on gate revenues in consumer events can vary significantly from show to show: “I ran Urban Games on Clapham Common - this was totally reliant on walk-up. The show sadly died when we had two years of rain. Autosport International is another example where weather on the day had a major effect on revenues. About 40 per cent of visitors can be walk up and running a show in January can dent revenues if the snow is heavy - which it certainly has been. Ticket revenues at Autosport have been between 30-40 per cent of overall income. On the other hand, Clothes Show used to have a huge percentage of pre-booked tickets (75 per cent). Other shows that are