Events should be strategic and thoughtfully measured during a recession
Marketers often justify their event expense with rationales like "We’ve always done it," or "Our competitors are doing it." Most companies have no idea why they organize some of the events in their budget or what value they are getting for their investment. Worse, many marketers tend to think of event marketing in merely tactical terms.
Events need to be considered strategically and integrated into the rest of the marketing plan. Most important, they need to be measured and monitored for success. The “EventView” study found marketers that measure the success of their events are 2½ times more likely to receive increases in their marketing budgets than those that don't – an especially important statistic during a recession.
There are five key metrics that will allow you to assess the value of your event investment. Not all of them are relevant to every event. Managers should select and apply metrics they feel will be most useful to track performance year over year, and to compare events to other marketing elements.
1. Cost per lead
Cost per lead (CPL) is perhaps the most common form of measurement used for trade shows. It is calculated by dividing the total program cost by the number of qualified leads generated. The main benefit of tracking CPL is the ability to analyze costs consistently over time in order to rank various events to aid future selection.
2. Cost per contact (CPC)
Another useful number often used at conferences or tradeshows is the Cost per contact (CPC), which is calculated by dividing the entire program investment by the gross number of contacts generated. Only a percentage of these contacts will[n1] convert to sales revenue, but CPC becomes a useful benchmark for evaluating competing marketing investments.
Expense-to-Revenue (E:R) is the total revenue associated with the business event divided by the total expense incurred and is a common metric in business marketing. The benefit of using E:R is that it focuses on the efficiency of events versus other marketing communications -- particularly important during a recession. Companies can impose limits on event spend based on a E:R threshold of 5%, for example to control expenses. Events that don’t meet these thresholds are eliminated from the schedule.
4. Activity-Based Metrics
Since sales results are difficult to measure and many marketers consider these results largely out of their control, Activity-Based Metrics (ABM) may be used to measure results based purely on marketing activity rather than sales. ABM include:
· Number of attendees, year on year
· Attendees by target (by demographic, industry, etc.)
· Attendees by geography, or by product interest
· Cost per demo given, or live presentation viewed
· Cost per attendees reached (i.e. number of people who passed your tradeshow booth)
· Cost per current customer met
· Cost per journalist met or per article published
5. Return on Investment
Ultimately, all event marketers must demonstrate a return on their marketing investments. This means a financial return, either in sales revenue or cost savings. Return on Investment (ROI) is calculated by subtracting the expense (E) from the gross margin (GM) delivered by the marketing program, which is then divided by the expense itself.
ROI = (GM – E) ÷ E
The result is expressed as a percentage. A zero indicates a break-even program, and a negative number means a loss of investment. In other words, if you spend $200,000 to generate $1 million in new margin, you will realize a 40% ROI. Gross Margin (sales, less cost of goods sold and selling costs) is used versus revenues because it represents a more accurate representation of the event’s contribution to the bottom line. The challenge here of course is to accurately calculate the lifetime gross margin value of the new business to be used in the calculation.
The bottom line for events during a recession
Marketers who appreciate the true value of live and online events as the best way to engage and activate customers; understand how to integrate events strategically into the rest of their marketing mix; target events directly to attendees based on their personal and professional needs; and implement measurement programs that help identify and improve events to deliver bottom line results will help their companies to better weather the current financial storm and greet blue skies with a stronger brand and customer base.