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Show. Me. The Money.

pile-of-cash2By Roger Skoff All told, counting both Las Vegas and Chicago, I’ve probably attended about twenty-five Consumer Electronics Shows (CES). Once was as a “sneak-in” (You know, an audiophile with friends in the industry who get him a badge, even though the show is supposed to be “industry only”); a few times were as a reviewer for one of the audiophile magazines; and all the rest were either as an active or former manufacturer. In short, I’ve seen CES plenty of times, and from just about every possible perspective.

When I was “just” an audiophile, I read about CES in the magazines, and thought it must truly be heaven on earth; what with all the new toys and goodies on display and all the other Hi-Fi Crazies (no offense meant – that was just how I and all my Hi-Fi buddies referred to ourselves) there to learn about them, enjoy them, and talk about them. And, of course, with all the great SOUND that the new latest-and-greatest equipment must make, I was sure it had to be a fabulous listening experience, too!

After each CES (remember that there used to be TWO of them every year) I would excitedly ask my pals in the industry, “Well, what was new? What did you hear? How was it? Was it WONDERFUL? Do I need to buy one? Are YOU going to buy one?”’ and the each time, I got pretty much the same answer: “I didn’t see or hear anything. I never got out of my own room. Ask somebody else.”

Frankly, I didn’t believe what they told me. There must be, I thought, some kind of secret agreement among the manufacturers and other industry people not to talk about anything until the magazines had written about it and the dealers already had it in stock, to take advantage of the news. That even explained why the Show was supposed to be “trade only” and why nobody outside the industry got to see or hear anything until the dealers actually had it on their shelves or showroom floor.

When I got my phony industry badge, and could actually walk the Show that first time, the very first thing I discovered was that CES is BIG! Even with four days of it, you either need to concentrate only on one specific area of interest, or plan on missing much of what you came to see and hear. That’s what happened to me, my first time around – I figured that, with four whole days, I had plenty of time for side trips, so I didn’t just stick to High End audio, but put it off until the last couple of days, taking a shot at everything else, first.

BAD mistake. Most of what I saw in the other areas was of no interest at all, except as a curiosity (Yes, they DID have solar-powered flashlights. How can that be? Do they only work in daylight? Or, when it’s dark out, do you need to shine a light on them to keep them lit?). Even the stuff that was interesting wasn’t interesting enough to keep me away from the audio gear that was the real reason I went to the Show, but that’s exactly what it did, and the result was that there was a whole lot of High End stuff that – even hurrying as I had to do at the end — I simply never got around to.

When I went back to CES as a reviewer, it was entirely different; I was there only for the High End audio gear, and that was all I even tried to see, hear, and learn about. Even then, though, I found many of the same problems with the actual listening that I had had before.

Many of the exhibitors then, as before and every time since, seemed to have absolutely no clue about how to set-up or to demonstrate a system. Add to that the ever-present room problems (too small, too big, too “hard”, overly damped, an actual bed platform still in place because it couldn’t be, or the hotel wouldn’t allow it to be moved, overly loud other exhibitors on either or both sides, and on, and on, and on). Then add the problem of not being able, in a crowded room, to get a seat anywhere near the “sweet spot”, or of bad or boring or awful “music” played either too loud or too quietly (for those of you who remember, think of those viciously expensive French “Tolteque” speakers driven, some years ago, at little more than whisper-level by 500 Watt McIntosh amplifiers running flat-out), or speakers with blown-drivers buzzing along with the music, or out-of-phase speakers, or people sitting next to you providing never-ending commentary, or, or, or, and you’ve got some small part of the picture.

Shows are DEFINITELY not my first choice of venue for auditioning new gear, and even when I have heard good music sounding good at a Show; it was generally in a “private” listening session before or after Show hours.

Another thing that absolutely baffled me when I attended a Show as a reviewer was the number of exhibitors who seemed not to understand that they were there to do business. To many, it seemed, the purpose of attending the Show was just to “show the flag” and hope that people would “rally ‘round it”, so instead of actively courting customers and reviewers – or even clearly identifying which of the products in the system on display was theirs and providing business cards, rep lists, and product literature, so interested parties could request their line – they just sort of sat there hoping that the sound would be their salesman and that people would be sufficiently overwhelmed by it to drag the necessary information out of them.

The big hope, of course, was that a reviewer from a major magazine (or many) would like what he heard enough to mention it in his Show report or ask for a sample to actually review. The fact was that – if for no reason other than the sheer number of products to be heard and written about – without some active effort on the part of the manufacturer, that wasn’t likely to happen. And even if it did, the cost of exhibiting at CES was so great that a manufacturer would have been a LOT better off to just BUY ads in several of his favorite magazines than to hope that any possible amount of “free” publicity could justify his Show presence.

I found that out when I became a manufacturer: When my company, XLO (cables), first started exhibiting at CES, we did it in the same area and in the same way as the rest of the High-End companies, and, because we wanted to show off our sound (and save some money, too) we shared rooms with some of the very top High End manufacturers of the time (Jadis, VTL, Kinergetics, and Avalon, to name just a few). Doing that taught us three important things: The first was that when you share a room with a “big name” company, even though you are paying an equal share of the cost, it’s never “your” room, but always the room of your most famous partner. The second was that if the sound in your room is great, people will say that it’s because of your great-sounding partners (great speakers, great electronics, or whatever) but if the sound is NOT great, people will always blame YOU. (“Unfortunately, the sound in the [plug in the big name] room was really disappointing, apparently the [your stuff] just wasn’t up to par…”). Third, even if you DO get a mention in the magazines (or, nowadays, on-line) it may only be a mention: “… Velociraptor was at the Show with their new “Banshee” speakers, which sounded terrific running on the latest Whizbang electronics, off a Charybdis turntable with Kowareta arm and Shimatta cartridge. XLO cables were used.” That little bit seems hardly worth the cost of exhibiting.

After sharing rooms a few times, we (XLO) found that for us (and for many products other than speakers), it was probably better (and certainly no worse) to do a private room with a silent display. That way, at least it was OUR room, and we never had to worry either about people not knowing what we were there to sell or about the speakers getting the glory if our sound was good, and us getting the blame if it wasn’t. It also gave us much more time to actually approach, talk with, and sell to potential customers and – when reviewers visited our room, to tell them what was so good about our stuff and why they ought to try it in their own systems and then write glowing reviews about it in their magazines!

When “Home Theater” was first broken-off from High End audio as a separate exhibit category and given its own CES exhibit area, we, having an in-wall cable line and figuring that Home Theater was the future, moved over, first to the (then new) Mirage hotel (for one year), and then, along with the rest of the Home Theater exhibitors, to the South Hall of the Las Vegas Convention Center.

For our Home theater exhibits at the Mirage and then the Convention Center, we had a 20’ by 30’ custom display built, featuring a 24’ tall tower topped by a giant rotating XLO logo. It was SO big and SO effective that the MIT people (competitors of ours), who had a display at the Mirage near ours, told us that they were telling people who wanted to visit them to navigate to their exhibit by our rotating sign.

The big display, with its huge tower and special signage brought us lots of lookers, especially after we added two beautiful young models to hand out purple and white XLO “trash bags” for showgoers to carry product literature in. Of all those lookers, over the four days of the Show, typically about 600 gave us their contact information each year and became prospects.

Pretty good, huh?

Well, not exactly: Between the rental of the exhibit space; the amortization of the cost of our display, the cost of transporting it to the Show and storing it when it wasn’t needed; the very high union labor cost to set it up and tear it down; the costs of the salaries, transportation, hotels and meals of our regular staff that we had brought along to work the Show; the fees and costs for the models and the Show giveaway items; all of the meals and entertainment money that we spent on current and potential domestic dealers and foreign distributors; and everything else, our typical cost for “doing” the Show each year was somewhere in the range of $70,000 to $80,000.

Now, consider that, of our (typically) 600 leads, typically about one-third (200) would be audiophile “sneak-ins” (just as I had been that one time), which meant that instead of 600 good leads, we only got about 400. Then consider that, of that 400, only about half were really interested in our cables, with the other half only giving their information because we had good sales people or because they (the prospects) had wanted to “come-on” to our models. Finally, consider that, of the (typically) 200 left, only a little more than one-in-ten would ever signed-up as dealers.

Empty-Pocket

FOR THE $70 to 80 THOUSAND WE SPENT ON THE SHOW EACH YEAR, WE NEVER GOT MORE THAN 25 NEW DEALERS. That meant that our average cost per new dealer gotten from the Show was something around $3,000 – more than many of them might order in goods from us in a whole year! When we stopped to think that, out of what they paid us for their purchases, we had to build the goods, ship them, and pay our reps a commission on them, it finally became apparent to us that doing the Show the way we had been doing it was – at least in those instances — a losing proposition.

That wasn’t all we (I and my company) learned: One of the very first things – going all the way back to when we first started exhibiting – was that all those people who, before I got into the industry, had told me that they saw and heard nothing at CES were telling the truth. When you’re busy, you’re too busy to ever leave your display, and when it’s slow, you don’t dare to leave it, because important customers or reviewers might come along and you might miss them.

Another was that the whole basic reason for manufacturers to exhibit was baloney: Even though everybody knows that doing a Show isn’t the best use of their resources, they all think that they HAVE to attend and HAVE to exhibit because all of their competitors will be there, and that if they don’t show, their competitors may get an advantage or ― even worse ― dealers and the magazines might think they’re out of business!

Bullsh*t!

When Home theater and High End Audio were separated, XLO simply couldn’t afford to have two separate CES displays so, like many others, we decided that Home Theater seemed to have the greater potential market, and went with it as our only display. What we later found in going through the lead-sheets from our years of doing that was that, in general, dealers of just High End audio went only to the High End exhibits, and that the people we got at the Mirage or the South Hall were only dealers or distributors who sold either Home Theater, only, or both High End and Home Theater. In short, even though were at the Show and were spending tons of money to be there, TO THE HIGH END, WE WEREN’T THERE AT ALL! When you consider that the majority of our business was and continued to be High End cables, and that it continued to grow even without our effective presence as a High End exhibitor it becomes obvious that, while the idea of “Be there or lose out” may make for good business for the promoters and sponsors of CES, it doesn’t have much basis in reality.

What we finally wound-up doing, after having tried everything else, was to loan cables and signage announcing them to any other manufacturer who wanted to use them at CES for either High End or Home Theater display, and to withdraw ourselves from exhibiting at the Show, entirely. What we did instead was to take a “hospitality suite” at a hotel, preferably within walking distance of the Show; stock it with the very best in food and drinks; take high-visibility video signs on the Las Vegas “strip” and elsewhere to announce our hospitality suite and invite the industry to visit us; leave signs and announcements for that same purpose in the rooms and exhibit areas of those who were using our cables; and require each of our sales rep firms (there were 17 that we dealt with at the time) to bring at least a (depending on the firm and its territory) set minimum number of dealer prospects to our suite to meet us, see and hear (yes, we DID have a display system) our products, and discuss how we could benefit each other.

Doing those things dropped our total cost of doing the Show to a MAXIMUM of less than $20,000; got prospective dealers and distributors away, for a while, from the attractions and pressures of the Show; and gave us more time and a relaxed, comfortable, and friendly atmosphere in which to meet with them, sell them, and actually write orders. Going to a hospitality suite instead of any kind of conventional display allowed us ― each and every time we did it ― to add more dealers and take in more money than we actually spent!

See? Maybe Shows aren’t so bad after all – as long as you don’t actually GO to them!

About the Author

Roger Skoff was founder and designer for XLO Electric, which he sold in 2002. His first published writings were in the field of consumer electronics, where he was a reviewer for Sounds Like… Magazine, a consumer audio publication, and later became Editor of Sounds Like…News, an industry publication in the same field. In whatever spare time he has from his current consulting activities and ongoing research in cable physics, he writes for Part-Time Audiophile, Audiophile ReviewPositive Feedback Online, and Enjoy The Music.

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4 Comments on Show. Me. The Money.

  1. No doubt trade shows are very expensive form of marketing. Internet is the most effective. The single best way to sell anything all over the world, ANYTHING, is the internet. The three largest, most popular search internet engines today are Google, Facebook (a horrible search engine!) and YouTube. That means businesses must have a presence on ALL THREE in order to market effectively over the internet. Including smart phones. You need large and dynamic web SITES with pages devoted to your most competitive search keywords. You need a Facebook to blog about your industry. And you need videos on YouTube to educate and entertain. After you have all that, after you have maximized your internet marketing, then you can chase after more expensive, less effective ways of publishing and advertising your business. Event marketing is one possible format. Trade shows are another.

  2. Part-Time Audiophile // September 23, 2013 at 2:27 PM //

    The question is: “Is that all there is to an audio show?”

    I would submit that there are still good reasons to go, depending on who you are.

    1. General attendee: This doesn’t really apply to CES as there aren’t supposed to be any “general attendees”, but THE Show, which runs parallel, is not an industry show, it’s a consumer show. So, there’s a bit of a bait-and-switch there, but follow me. For the general consumer, an audio show is a replacement for the loss of the local dealer. There are still quite a few, it’s true, but there are nowhere near as many as there used to be and of those that are left, most of them (not all, but way too many) are simple box pushers: “That thing you read about is trash, (but since I get a 70% margin on this line,) you really ought to hear this instead”. Its a dystopic world in the dealer market these days. Anyway, with no serious viable alternatives, an audio show is a very quick and easy way for a consumer to learn about and see first-hand what’s real, what’s new, and what’s coming. Hopefully, they’ll get to hear it, see it, touch it, and even — for bonus points — get to talk to a manufacturer about it without a sales person attempting to tell them they’re an idiot, (please come see my 70% margin line). Add to that, and I mean that in the biggest, most awesome way possible, it’s a party. A multi-day extravaganza where they get to extrovertedly overindulge in a wickedly introverted hobby. They get to talk to other freaks, swap notes and stories, and generally get jazzed up about their hobby, buy new music, and perhaps start thinking strongly about actually spending serious cash.

    2. Media: It’s an old saw that audio show sound quality is terrible. It’s totally true. Except when it isn’t. I heard the most jaw-droopingly amazing set up, with Rockports and Absolare electronics — the first of which I was familiar with only glancingly, the second was utterly new, and that at an audio show. At THE Show in Vegas, to be precise. And that was only one of a half-dozen other rooms that attempted to blow me out of my footwear. But that’s not why the media goes. We go for content. What’s new. What’s not new. What’s sounding good. What’s sounding great. Chat up the manufacturers. Meet the resellers. Swap stories with the other press. Hang out. Drink too much. Eat too much. You know. Party. Which is important for a group of folks invested in a wickedly introverted market.

    3. Manufacturers: First, you have to assume you’re not going to make money at an audio show. But if you’re a dealer who’s seen their dealer network shrivel and dissolve — or, better still, doesn’t actually have a dealer network because they’re consumer-direct — then the audio show is the only time to actually interact with your buyers. This is the chance they get to see and hear what you’re offering. This is the chance for them to get over the hump of buying your gear without a lengthy, costly (to you), in-home trial period. Your website is great, I’m sure, but if you can’t do better, in person, than your website, you’re the wrong person to be sending to the show. Whatever. It may be that you’ll clear a few sales directly at the show. Especially if you discount your demo products “to save the cost on shipping them home”. But the reason you’re there isn’t to show your competitors that you’re still a competitor, it’s to foster your market. To get them comfortable with and excited about you (yes, you — people buy people — their story — as much as they buy those people’s products) and what you’re selling. You can call this marketing, if you want, but it’s more general than that. Advertising, maybe. Brand awareness, maybe. Whatever. Unless you’re a huge player, this business is about the people. And the people are at the audio show. It’s like the lottery — your chances of winning are low. And if you don’t play, they’re even lower.

    4. Resellers: Like Bill just mentioned, this is the one that I don’t get. At the very least, the “local” audio show should be an absolute no-brainer for resellers. Your job is to sell product. You need customers for that. Go where they are. Got customers? Don’t see the need to show at a show? This is where you show your competitors that you’re a player, not by staying home. Why? Because it’s a party. By not supporting your local show, it’s like saying “I’m not going to your Super Bowl party because I have a better widescreen here at home.” You’ve pretty much missed the point entirely. Your system, it’s components, and it’s sound, are a tiny fraction of why you go. You go to say hello to your customers. To remind them that you’re still around. That you’re ready and willing to stand by your lines and with your customers and — most importantly — to see, meet, and impress your next customer.

    That’s why you go.

    As to what makes a show successful, that’s another ball of wax.

  3. Bill Leebens // September 23, 2013 at 10:28 AM //

    That’s great— but if you hadn’t had the main show to draw those guys in, you wouldn’t have been able to have reached them.

    I may be a little sensitive to that issue, having put on a show in NYC which many dealers chose to use as a marketing handle for their own off-site, parasitic events.

    There ain’t no such thing as a free lunch.

    • Sorry, for your unsatisfactory experience, Bill, but the only business I that I MUST care about is my own. CES or other Shows would be there with or without me. I have no moral responsibility to keep them afloat to the detriment of my own bottom line.

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