When it comes to the face-to-face marketing industry, we're all in the same boat – and it's taking on water.
Just over a year ago, I wrote an editorial warning of the potential impacts that tariffs, some imposed and others merely proposed at the time, might have on the exhibit-marketing industry. Since then, a dizzying array of trade talks have produced an impossible-to-keep-track-of list of new taxes and exemptions that is so overwhelming it's become white noise. I cautioned that these tariffs would raise the cost of everything from aluminum-extrusion-based exhibit systems to electrical products by anywhere from 10 to 25 percent. What's more, I predicted an industrywide impact driven not only by rising exhibit-related costs but also a dip in U.S. exports and a spike in expenses incurred by your customers, their customers, and so on.
Well, it appears those effects are now being felt. When I informally surveyed a handful of portable/modular exhibit providers, I found that roughly 60 percent have already upped their costs, and another 20 percent or so are concerned doing so may be unavoidable. To date, those increases have ranged from a low of 4 percent to upwards of 20 percent, depending on if the products themselves are manufactured in the United States or abroad, as well as whether or not (and to what degree) the raw materials are sourced from China. Most suppliers are raising rates to – at least partially – offset the aforementioned taxes, and some admit the increases won't disappear if and when tariffs go away.
But as I alluded to earlier, the financial impacts of tariffs aren't limited to modular exhibits and LED lights. A new report from the Center for Exhibition Industry Research (CEIR) shows that 75 percent of U.S. show organizers report tariffs have had a negative effect on their events. More precisely, a whopping 82 percent of respondents reported decreased booth sales, and 76 percent said they've experienced registration declines. And you can bet that as profit margins wane and the pool of exhibitors and attendees dries up, the cost of show-floor concrete will surge.
Unfortunately, this state of affairs puts exhibitors in a Catch-22. Pulling out of a show means severing a valuable marketing artery, and it could take years to stop the subsequent bleeding caused by lost potential income. But if you continue to pony up the dough for booth space, you'll likely be subsidizing the shortfall in show-related revenues previously funded by newly absent organizations and international attendees who opted to stay home.
Rather than a linear domino effect, tariffs are likely to send shock waves in all directions, hitting every industry player, from show organizers and exhibit houses to freight carriers and exhibit managers. The agriculture industry has received the lion's share of media headlines, but when it comes to the face-to-face marketing industry, we're all in the same boat – and it's taking on water. No matter what sector your organization serves, the entire value proposition of trade shows will be threatened if tariffs continue unabated. After all, if attendance drops, booth-space fees increase, and the cost of everything from back walls to banner stands goes up by a fifth or more, show-related returns are in danger, regardless of whether your company sells apps or automobiles.
So when budgeting for 2020 and beyond, be mindful that an exhibit-marketing buck isn't likely to go as far as it used to. And if you're planning a new build in the foreseeable future, its price tag is probably going to be a tad tougher to swallow than you anticipated. Additionally, when you're establishing objectives for upcoming shows, know that dwindling attendance could impact your ROI, especially if you're targeting an international audience. Because while trade shows aren't going anywhere, they're likely to cost a little more and accomplish a little less until the tariff tides turn. E