Event Marketing Takes a Hit

Agencies Say They're Seeing a Drop-off as Marketers Scale Back Spending

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A clarification has been made in this story. See below for details.

NEW YORK (AdAge.com) -- In the past two economic downturns, event marketing had been the go-to category for marketers whose ad budgets had been slashed. This recession is a different story.

"The event discipline has fallen in line with the rest of the marketing channels getting hammered and under pressure to be more accountable," said Dan Hanover, founding editor and publisher of Event Marketer magazine.

Growth still projected
But according to PQ Media, a provider of alternative-media research, event marketing will actually see growth this year, albeit less than what it experienced in 2008. Last year marketers poured $8.9 billion into the event-marketing space, an increase of 15% over 2007's $7.7 billion. PQ Media is projecting growth of 10.6% for the sector, to $9.83 billion. (And PQ Media has since revised its numbers downward. See clarification below*.)

Despite that projection, event-marketing agencies, like creative, direct and public-relations shops, are still trying grow their own businesses while clients struggle over their budgets.

Mr. Hanover described the early part of the first quarter of 2009 as the quietest stretch of time the sector has seen in 10 to 15 years. He said he has seen cutbacks in the number of events and spending on "extravagant expenditures" and the "touchy-feely" awareness-based components of events. Instead, marketers are employing event elements that can reduce the gap between engagement and the point of sale.

Claude Prevost, field-marketing director for L'Oreal Canada, said the company has been scaling back, doing fewer but bigger initiatives focusing on reinforcing the message at the point of purchase. And as the struggle for marketing dollars has become more cutthroat Mr. Prevost has had to alter the way he approaches the business.

Changing conversations
"We see what impact we have on consumers, but at the end of the day, unfortunately, it's the bean counters that are making the ultimate decision on marketing dollars," he said. "So I have had to modify how I talk to consumers. I used to talk to them in the context of festivals, consumer shows, street-marketing initiatives, mass transit and mob marketing. Now I'm talking to them where it matters, and where that ultimate decision is made, in front of the retail space. ... I have been able to modify my offering and make it relevant with the sales and marketing guys."

His advice to others in the industry is to remove the silos and figure out what will best preserve the integrity and success of the company. "If I need to take a $5 million hit in the back half because we need to invest in margin protection with a retailer," he said. "Whether I like it or not it's going to happen so you better be on the right side of that decision."

David Rich, senior VP-programs strategy worldwide at experience-marketing agency George P. Johnson, said some of his clients have scaled back, and others have scaled up. But two of the biggest changes he has seen in the past six months are the shift in focus from national events to local and regional affairs, and an "intense" concentration on online experiences.

Combining live and virtual
"Clients aren't replacing a live event with a virtual one, but are using it to augment the overall face of the campaign," Mr. Rich said. "We're seeing the combination of online and face-to-face experience marketing moving to the center of the marketing discussion. The online component allows you to continue that brand experience and expand the number of people in the discussion."

Mr. Rich said his agency has had some clients postpone or cancel events yet there haven't been any client defections. He said business in the first half of the first quarter was almost nonexistent but feels it is now starting to move and has even seen the potential for new business.

"We saw spend decisions slow down in the first half of the first quarter," he said. "But it's picking up again. And more prospective clients are tapping me on the shoulder asking, 'What do we do now?' It's not all darkness. There is sunshine out there too."

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CLARIFICATION: Spending figures quoted from PQ Media for event marketing in 2008 and 2009 were revised downward in February 2009 from original projections in July 2008. PQ Media currently estimates that total event marketing spending was up only 12% to 14% in 2008, with a notable deceleration in the second half of the year, while the forecast for 2009 was dialed back to 6% to 8% growth.
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