To Rent, Buy or Go Hybrid: Your Exhibit Decision

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To Rent, Buy or Go Hybrid: Your Exhibit Decision

5/1/2019
According to industry research, business-to-business exhibitions capture over forty percent of marketing budgets for companies that attended face-to-face events.¹ Anyone involved in this fast-paced segment of the marketing world understands there are many decisions that must be made along the path to success.

A handful of industries find that there is only one major "must-attend" show every year. However, most exhibit programs will include a variety of shows. Whether they are large or small, vertical or horizontal, national or regional in scope, all shows must be evaluated with the company's objectives in mind.

Once the program is defined, the team's first order of business is researching and recommending the type of exhibit that will promote the brand best, showcase the company's products and services, and gain the attention of targeted attendees at each event.

Today, companies typically have three approaches for securing an exhibit:

Hire a custom exhibit house to design and build a custom exhibit.
Rent a readily-available booth
Go with a hybrid approach that includes rental structure with owned components to create a unique look and feel for your company's brand.

Underlying Considerations for the Rent versus Buy Decision
Three fundamental issues must be explored to make the best decision:
   1. Allocated budget and what it will cover
   2. Quality requirements
   3. Trade show program scope

Setting the Budget
The budget is always front and center in the minds of all stakeholders. Oftentimes, even after the budget has been set, the event manager wishes it could be bigger while the CFO thinks it needs to be scaled back. This conflict is simply a part of the corporate battle for limited resources.

Although corporations define "trade show spend" in a variety of ways, it is typically part of the annual budgeting process. The amount allocated to event marketing should be set after internal discussions consider a combination of:

Corporate and Marketing objectives
Level of success gained from past events
Fiscal well-being of the company

In order to help stakeholders understand financial implications, an event manager should come equipped with:

Pricing components that influence overall cost of participation
Anticipated return on investment (ROI) considering all objectives
Company policy for depreciation of assets for trade show properties

Gathering, understanding, and communicating this financial information is critical to persuading stakeholders during the budgeting process.

Understanding the Quality Dilemma
At one point in time, rentals were just repurposed elements that exhibit companies had left over in their warehouses. This assumed that rentals sacrificed quality, making them inferior to custom-built exhibits. In some cases, this may still be true, but for most custom exhibit houses, it is far from true.

For companies with robust programs, rental inventory is considered a long-term investment. Their rentals are built with quality and detail to sustain usage over multiple trade shows. And the quality of an exhibit goes beyond the materials and craftsmanship of the booth - it is also reflected in how well the graphic messaging is developed and accommodated in the booth design.

In some situations, build quality is not as important as keeping costs within budget. Less expensive rental options based on modular extrusion systems may not have quite the style and finish of a custom-built exhibit, but they still provide a reasonable platform for promoting the brand.

Outlining the Show Schedule
For many companies, the programs include various vertical and/or horizontal events. Given that target audiences would likely be different for each show, a company's messaging and engagement activities need to be easily modified. It also could be that the company needs more/less exhibit space based on the level of the show's importance to the overall marketing strategy.

With custom built exhibits, graphics can be interchanged, but the architectural design and flow remains. Therefore, when a company's show schedule requires different size booths or booth orientation varies, renting could be a more favorable option.

Back-to-back shows call for detailed planning related to shipping, delivery times and availability of exhibit elements. The booth that was rented last year might be reserved by another customer this year.

On the other hand, if a company attends two shows that are days apart, it would not be possible to ship the same custom booth in time to set up for the second show. A rental booth may be required for one of the shows.

Renting Exhibits
The industry's rule of thumb states that the cost of renting a booth should be around thirty to forty percent of the cost of purchasing a similar exhibit.² With a good understanding of the trade show budget, the quality your company expects, and the flexibility required for your program schedule, here are reasons to consider in renting a booth, along with benefits you might gain.

Keeping Costs Under Control
Renting a booth is less expensive than purchasing one for companies that are concerned with this year's budget and have one or two shows in their program. With a less rigorous schedule, renting allows a company to adjust their exhibit design based on the target audience. A lower price tag enables the trade show budget to extend to other marketing activities that support show goals.

For a start-up or early stage company, resources are precious. The demands for dollars come from many directions. Because it is difficult for them to build a case for investments in marketing activities due to a limited track record, these companies should rent to test which types of budget commitments will gain the most momentum.

For rentals, companies do not have to worry about costs for damages that are not the company's fault. The booth is shipped back to the exhibit house, repaired and cleaned for the next renter.

Another consideration involves funding. Unlike a rented booth as a direct expense, a purchased, custom exhibit is a significant investment, making it a "capital expenditure" in accounting terms. This purchase impacts the company's financial statements differently from the expense of renting a booth.

Sometimes, funds for capital expenditures may not be available. If a company's current booth is no longer appropriate, but a new booth must be postponed until CapEx funds can be allocated, then renting is a good alternative.

A company may choose to avoid CapEx even if lack of funds is not the issue. Designing a custom-built booth is an option, but they would rather rent from their design company for a committed number of shows for a set number of years. With this approach, the exhibiting company does not pay storage or maintenance, and the booth is only used by this specific customer.

Some companies are willing to incur the costs associated with renting to gain flexibility, even if they attend more than three shows a year. For exhibitors with products in multiple industries, it is more beneficial to rent smaller booths than to build custom, despite the overall cost. Not to mention that a custom-built exhibit would be excessive at smaller shows when participation is still a good idea. A smaller, rented booth accomplishes this objective.

Buying Exhibits - Pride of Ownership
Exhibiting at a trade show is a major commitment, but it comes with the potential of a significant return. These events put company management, sales team, and other stakeholders face-to-face with targeted attendees, customers and the competition. Given these audiences, it is important that the brand is being promoted in the best possible light. The pride of ownership that stakeholders feel in their company is critical to the exhibit's overall success. A custom-built exhibit gives the event team the freedom to design it in a way that will make everyone proud.

Greater Usability
Purchasing an exhibit is an investment that will be leveraged and useful for years to come. Especially if a company attends multiple shows a year and needs a larger booth, the initial upfront cost is well worth it.

With forethought, larger exhibits can be designed and constructed to be easily reconfigured into smaller sizes. If a company's needs varies in size and type, having multi-use elements not only saves money, but they also ensure a consistent look and feel across the shows.

Customization Opportunities
Unlike rental properties, a custom exhibit truly represents a brand. Here are some benefits that an event manager (and stakeholders) will see:

Opportunity to stand out from the crowd.
All details will align with brand guidelines.
No restrictions in adding technology.
Design of a custom exhibit easily considers materials, construction methods, and crating that can save shipping, drayage and labor costs.

An experienced event team understands how certain brand elements and messaging contribute to trade show success. This expertise ensures that a custom exhibit can be a positive investment for the company.

Hybrid Exhibits
As a mix of custom and rental elements, hybrid exhibits take flexibility to a new level. There are no rules as to why a company chooses to go with a hybrid exhibit. It could be a matter of cost, or they want to complement their existing purchased pieces. A hybrid exhibit is flexible enough to adapt to purchased assets.

Hybrid booths are a great solution for companies delaying the build of a new booth. Perhaps the company realizes one of two things: their old booth no longer supports the brand, or certain elements cannot be adapted to a new rental exhibit. The cost-savings of not having to rent existing elements would favorably impact the trade show budget.

Rent, Buy, or Both?
Understanding your company's specific requirements and circumstances are critical to making the best choice for your company. Whichever route you go, work with a full-service exhibit company that's capable of supporting you from design to tradeshow floor.

What to Look for in a Custom Exhibit House Company

Rental and custom design/build capabilities
Creative services
Production capabilities
Program management
Strategic global relationships
On-site show services
Storage and maintenance
Collaborative partnership
Marketing support
ROI measurement
Custom ERP online system and client portal

¹ 2018 CEIR Marketing Spend Decision Report; Center for Exhibition Industry Research, February 2018
² CEIR: The Spend Decision: Analyzing How Exhibits Fit Into the Overall Marketing

Brad Falberg, President
Exhibitus

As Founder and President, Brad is the driving force behind the Exhibitus corporate philosophy: "DESIGN MATTERS." An award-winning custom exhibit house, the company specializes in 3-dimensional design for trade shows, corporate events, user conferences, permanent installations, museums and corporate interiors.

Contact:
lynn.reves@exhibitus.com