With refunds in doubt, leaked SXSW pitch deck shows cost of coronavirus cancelations
UPDATE: On late Friday, Austin city officials and SXSW organizers announced that the festival would be canceled in the face of the outbreak.
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SXSW attendees spend big money to be part of the action in Austin, Texas. Now that money may be wasted as mounting numbers of attendees and exhibitors bail amid the coronavirus panic.
On Friday, SXSW organizers remained committed to hosting the show despite the exodus. Executives that are still attending as well as executives from companies that have pulled out say that SXSW is not likely offering refunds. That could amount to tens of thousands of dollars just for lost rented space at the convention center or for expensive signage that no one ends up seeing.
A SXSW pitch deck obtained by Ad Age on Friday, shows exactly what's at stake. A prominent booth at SXSW costs $135,000 for the deluxe set-up. It costs $43,000 to place a logo on shirts worn by festival volunteers, according to the pitch deck.
The costs of these exhibits are factoring into brands’ decisions on whether to attend or not, according to conference-goers and advertising agency insiders. Companies are weighing how much they can recoup if they have already poured money into attending versus the risks of being seen at the epicenter of a potential public relations nightmare.
So far, major companies have pulled out, including Facebook, Twitter, TikTok, Vevo and WarnerMedia. WarnerMedia owns CNN, which canceled its SXSW house on Friday. Twitter also canceled a house. Universal Music Group advised employees against attending SXSW. The companies would not comment beyond their public statements about canceling.
A number of executives from companies attending SXSW and from companies that canceled spoke on condition of anonymity for this story. These people say that there would be no refunds.
“They seem to be taking a stance of ‘hell or high water'," says an executive from a company that canceled its plans. The executive says that SXSW has taken the position that if it doesn’t officially cancel, and a sponsor makes the choice to drop out, then the company is still on the hook. "The cynical person in me thinks it’s just a money grab at this point. They don’t want to offer out credits or refunds or make-goods.”
On top of booth costs and misspent ad buys, companies also have hotel, venue, talent and other costs that are likely sunk, as well.
“Maybe some of the biggest sponsors, if they’re pulling out, are getting credit for next year,” says another attendee, who spoke on condition of anonymity. “But I suspect smaller businesses are being stung.”
SXSW did not respond to requests for comment about its refund policies, and it is still unclear what arrangements it will make with affected sponsors and attendees.
On Thursday evening, Lush Cosmetics told Ad Age that it was canceling its SXSW plans, but wouldn’t comment on potential for refunds. Lush planned a pop-up art installation called “UnBuild That Wall,” which was meant to highlight the mistreatment of immigrants. The wall would have been built out of Lush soap and invited people to deconstruct the edifice.
“This was a really tough decision that we didn’t take lightly but public safety is our top priority,” a Lush spokeswoman said in an e-mail statement. “We thank SXSW for their understanding and hope to see everyone next year.”
The SXSW pitch deck obtained by Ad Age gives a look at how SXSW presents itself to the sponsors and exhibitors. It shows the breakdown of the demographics of attendees, including their countries of origin, which is an important data point at a time when people are worried about international travel. The deck also reveals that the industry most represented at SXSW is marketing and advertising, followed by film, TV, music and tech.
The pitch deck shows SXSW’s advertising offers, and how companies’ logos make their way all over town, on busses, lanyards, hotel doorknobs, napkins and everywhere else. The deck was produced before coronavirus was in the public consciousness, so it shows how SXSW marketed itself pre-crisis.
The pitch deck shows some of the stats about who typically attends and says the festival draws more than 400,000 people and almost 5,000 speakers. There are more than 350 “official” SXSW parties.
However, the convention center floor could be dotted with vacancies this year. Many VR companies are considering pulling out entirely, according Marco Ryan, a visual artist from Australia, who has a booth planned in the virtual cinema area. Sharing VR headsets is hardly ideal during an outbreak scare.
“Myself and a few other exhibitors are more inclined to cancel attendance over the following days,” says Ryan, who runs a motion design shop called Marc-o-matic. “A number of bigger tech companies who are said to have VR exhibits have pulled out.”
Companies like Verizon are on the SXSW schedule with a VR exhibit, but Verizon declined to comment on whether it would proceed with the festival.
Ryan would not comment on whether he would be able to get a refund.