Event profits rise when events are your primary business, research shows
April 23, 2012 - As ABM prepares to present its Managing Profits research at its annual conference next week, one early finding shows a clear differentiation in ways media and information companies earn money from events. The research finds that events organized into their own brands or strategic business units perform substantially better than events that are ancillary to a print or digital product.
Across all companies surveyed in the research, event-derived profits saw an operating margin of 19 percent. That is, a typical event generating $1 million in revenue returned $190,000 in profits after all expenses.
However, the research takes a deeper look at event statistics on a brand basis. Using revenue as the key identifier, brands are classified as event brands, digital brands and print brands. Among event brands, that is, those deriving 50 percent or more of revenue from events, overall event operating margin, or profitability, is 49 percent, a much larger return than the overall 19 percent. Thus, the typical event that has the focus of a brand behind it returns $490,000 on $1 million in revenue.
However, digital and print brands run conferences and trade shows too – just not as their primary source of revenue. Among those events, profitability is a low 9 percent. That is, an event that is secondary to a magazine or website typically returns only $90,000 in profits for every $1 million earned in revenue.
Profitability across event properties varies widely, but the trend is clear: events organized into their own brands, operating units or strategic groups produce higher margins than events operated as revenue sources ancillary to a primary digital or print property.
The full research report, titled “Brave New B-to-B: Managing Profits in a Changing Media Industry,” is sponsored by Scout Analytics and Atwood Capital Partners, and it will be presented at the ABM Annual Conference April 29 to May 2 in San Francisco. The results will also be presented as a webinar on May 9.
By Michael Moran Alterio