Introduction

Objective

For most of us, sales go up because we are marketing geniuses but sales go down because the economy is bad. Rarely does an organization worry about the condition of its umbrella when the sun is shining or question its methods when revenue is rising. The Professional Convention Management Association (PCMA) appears to be a refreshing exception to that rule. Its Eighth Annual Meetings Market Survey reported that 1998 witnessed a record number of respondents reporting convention attendance and revenue to be as good or better than 1997's already sterling performance. It further found that most respondents expected 1999 to be even better. Preliminary results from the yet-to-be-published ninth annual report indicate that 2000 will be yet another growth year. For most associations, the message from these surveys would be to "keep on keeping on."

PCMA, however, realizing that its market is extremely cyclical and that the meetings industry is now enjoying one of the strongest economic upswings in the nation's history, chose to look beyond today's good times and contemplate what factors could undermine its continued success. A number of trends are reshaping:

• the kinds of industries and professions that hold conferences
• the types of companies that pay to send staff to conferences
• the qualifications and responsibilities of the employees who attend
• the concerns that need to be addressed
• the means by which firms obtain information and workers choose to network

Has corporate restructuring, which has slimmed down corporate budgets and enhanced operating efficiency, been a benefit for convention planners by freeing up funds for the survivors of downsizing to attend conferences, to obtain industry intelligence, and to conduct the kind of networking that has become imperative to a leaner organization? Or is restructuring a Trojan Horse that has helped to sustain economic growth in the short term but has eliminated the middle-management level that is the staple of many industry conventions in the long run? Since large firms account for a disproportionate share of conference attendees, will the shift from larger to smaller firms cut into conference attendance in the future?

The Internet has promised to "change everything." Yet it has failed to slow conference attendance. Although well over half of the convention industry now uses online registration, according to PCMA's 1998 market survey, the proportions of respondents reporting using more sophisticated electronic technologies, such as virtual trade shows and video conferencing, have remained distinct minorities ? so far. Have structural limitations or a simple lack of computer know-how or equipment in the market stifled Internet adoption in the short run? Or will these technologies remain "niche applications" that are not suited to the mainstream convention industry that sells the face-to-face experience? New theories that better explain how new technologies are adopted are now emerging and challenging the pessimism of the niche-application interpretation. For PCMA and its members, however, the challenge is in understanding how these technologies will evolve in the convention market. With a better understanding of the dynamics of technological change, PCMA can better guide its members through market changes that lie before them.

These questions and others need to be addressed for PCMA to anticipate the needs of its future members and help its members to prepare for the convention attendee of the future. To that end, The Forbes Group examined trends in four broad areas:

• Economics
• Demographics
• Society
• Technology

These trends were examined in light of how they could influence the conference attendee of the future.

Executive Summary

From Brigadoon to Endless Summer

With the shift to an information-intensive service economy, the shelf life of information and skills has become shorter. The pace of new technology adoption has accelerated exponentially. The transition to new business practices has also increased apace as more highly educated workers challenge existing systems and adopt new ones more readily. Finally, the increased globalization of the world's markets has allowed new technologies, new products, and new business practices to leap from one region of the world to another at an unprecedented pace. With this acceleration in information sharing, the competitive disadvantages and risks of not being current are becoming even greater.

In this environment, once-a-year updates on industry and professional changes are not enough. Although the benefits of personal networks that can only be achieved through face-to-face contact gain in importance, they must be supplemented by ongoing information sharing. Conference and convention managers need to leverage emerging technologies to keep the discussions going from one conference to the next. Such a capability will not only help to keep the organizers engaged with their potential attendees on a continuum, but also provide an early warning system for changes in the profile of potential attendees.

From Smokestacks to Catwalks

Conference and convention planners have to start thinking horizontally as well as vertically. As business structures become more flexible, so do those who work for them. Downsizing, outsourcing, and contingency work arrangements have created a workforce that is increasingly likely to identify more with their professions or occupations than with their employers. As mergers and acquisitions are creating more competitors from more dispersed fields, businesses are starting to identify more with the customer bases they serve than the products or services that they provide.

Will the conference of the future continue to serve a single audience (e.g., executives of a specific industry), or will it serve a number of differentiated attendees who need to be segmented and provided differentiated products? In the world of Lego corporate models, will similar industries or similar departments have that need to meet? Conferences on electronic commerce, exporting and global marketing, and human resource planning are growing in number in the business world. In health care, one of the fastest growing sectors of the U.S. economy, professional specialty conferences now are being challenged by issue-oriented conferences, such as telemedicine and aging-in-place, that draw across specialties for attendees' limited conference and continuing education budgets.

The successful industry convention of the future is more likely to be a venue in which providers of very different products to the same targeted market can build alliances rather than one in which similar kinds of businesses compare notes.

From Employer to Employee

With outsourcing, downsizing, and contingency work arrangements, businesses became more flexible and employees, less loyal. With relationships less stable, employers and employees are not as willing to invest in each other. Who will pay for the conference attendee - the employer or the employee? The two are no longer synonymous. As employees are more likely to pay, the conference is no longer a company benefit. The attendee will be more cost conscious and more demanding. Time, if no longer compensated by the employer, becomes more valuable. Attendees will want more intensive and concentrated programs targeted to them. They will want "portable" skills that they can take from one employer to another and even from one industry to another.

From National to Global - Not International

A tighter labor market and a declining number of new job entrants will force firms to look beyond their borders for new workers. The labor force has already begun to decline in some Western European countries and will begin to shrink in Japan in the next decade. Whether they import the workers or export the work, firms will less likely be of a single nationality or work under a single set of market rules. In a polyglot, multicultural environment, conferences and conventions will need to be truly global in orientation, not a collection of distinct national groups that characterize international meetings. Thus conference organizers have to ask themselves, "When am I a competitor and when am I a partner of the show on the other side of the pond?"

From Yesterday to Tommorrow

Economic, demographic, social, and technological factors are all combining to change the reasons why we meet and with whom we need to meet. These changes are taking place in a watershed period that some have likened to the Industrial Revolution. The formulas and conventional wisdom that have guided the convention management industry are being challenged. But the same basic need, in the words of the Wizard of Oz, "to meet, confer, and otherwise hobnob with my fellow wizards" will never change. PCMA needs to provide the tools and strategies that will allow its members to respond to these emerging needs before its members' clients begin to demand them.

INSERT GRAPHIC

Introduction

Do the Physical and Virtual Worlds Meet?

It's a Process, Not a Product

In "Nonconventional Behaviors," the economic analysis/environmental scan companion to this report, The Forbes Group identified several new kinds of conventions and convention attendees. The next logical question is whether these new reasons to convene require new means and venues to accomplish their ends. Rather than take a product-centric approach, the Professional Convention Management Association (PCMA) opted for a process orientation. The question asked of The Forbes Group was not, "How can traditional conventions, our members' current dominant product, take advantage of these trends?" Instead, PCMA asked two questions: "What are the ways in which these new needs can be met?" and "Can our members transition into those opportunities when they are not currently recognized expert suppliers?" As articulated by PCMA, do the physical and virtual worlds meet and, if so, where?

"Nonconventional Behaviors" identified a number of trends that are creating alternatives to the traditional convention attendee, a full-time paid middle manager working his or her way up at corporate headquarters in a company that rewards corporate loyalty with opportunities for advancement, such as those offered by convention networking. The new convention market is represented by an older, more self-sufficient, and self-possessed outsourced worker who identifies more with his or her career path than with the corporate strategy. This worker places greater priority on personal outcomes. In this age of location independence and economic globalization, the new convention attendees are more likely to view fellow professionals as peers instead of fellow employees and are more likely to live in a different country and have a different native language than those at the corporate headquarters.

Defining the Fuse

How will these geographically, culturally, and idiosyncratically diverse audiences be reached? Will alternative media compete with the convention to provide them with educational and networking services? New technologies that provide services that were once the sole domain of the industry trade show or professional conference are gaining in both maturity and public acceptance. In 1997-1998, two-year and four-year post-secondary institutions offered nearly 50,000 courses through a variety of distance-learning tools. The private sector offered an additional 5,000 courses, mostly at the professional and college level. Nearly 800,000 adults enrolled in distance-learning programs, accounting for 6 percent of all post-high school students. It is estimated that there could be 2.3 million distance learners, accounting for more than 14 percent of formal post-secondary class work, by 2005.

According to PCMA's own market survey, 13 percent of its members employed video-conferencing capabilities in 1998, compared to 10 percent two years before. According to U.S. Census Bureau estimates, 92 million Americans had at least one PC in 1997, a 47 percent market penetration rate. However, even this optimistic number understates the level of PC ownership among more highly educated convention attendees, of whom almost 80 percent have a PC at home.

Of perhaps even greater importance is the degree to which computers have become standard equipment in education. Of those aged 18 to 24 and most likely to be matriculating full time, 70 percent have used a computer in school. While that percentage drops steadily with age, one finds that even one in three of those over age 55 have used a computer in some form of formal training or schooling.

The question now being asked is whether the lack of widespread computer literacy and a large installed base of PCs in homes are the only barriers to online distance learning. Or are there still other structural barriers that limit the effectiveness of these technologies? After all, only 8 percent of PCMA members reported using virtual trade shows in 1998. Why have these numbers remained stubbornly low compared to other uses of technology, such as the 58 percent who reported using online enrollment?

What Sparks the Flame?

Clearly, access to a PC is a necessary, but not sufficient, condition to ensure the successful integration of virtual technologies into the convention market. Therefore, the Professional Convention Management Association needed to have a better understanding of all of the dynamics of technology adoption and the drivers that will bring that adoption about. In "Nonconventional Behaviors," we described a new model for explaining the path of technology adoption, one that focuses on the new business practices that a technological innovation allows, rather than one focused on the technology itself. In this view, new technologies evolve slowly at first because the infrastructure that is needed to support the new practices does not yet exist. However, once the infrastructure is in place the adoption rate of the new technology increases exponentially. For example, the household penetration rate for VCRs remained relatively low until there was a critical mass of movie titles available on the market, at which time the sales of VCRs exploded. For that reason, this new paradigm is called the firecracker model.

Even though a new kind of on-going trade show was defined in "Nonconventional Behaviors," still left unanswered was whether and when this trade show of the future would be commercially feasible. To answer that question, one needs to identify and evaluate the infrastructural requirements needed to support this new kind of show. The first report examined the trends in consumer demand that would cause this new kind of learning to evolve; this report will cover the supply side of the equation and examine:

• What kinds of infrastructure changes are needed to allow this new kind of convention to emerge?
• What drivers and barriers will influence whether and how the new infrastructure will develop?

In a phrase, this report defines "the fuse" that will allow virtual technologies to explode onto the convention market and what sparks are needed to ignite it. With this market intelligence, PCMA will be able to identify the changes that will permit the organization to anticipate niche-market and mainstream adoption of new technologies and customer outreach practices. It can then assist its members to anticipate these change and build pre-emptive strategies to take advantage of new technologies and markets rather than becoming victims of them.

Executive Summary

Focus on the Process, Not the Product

Convention planners and managers need to think in terms of the value that their services bring to the convention or conference attendee, not how that value is delivered. The physical meeting of ?space, place, and dates? is a means for industry leaders or professionals to augment their personal human capital and gather industry and competitive intelligence to support their employers' objectives.1 Convention managers need to think of themselves as facilitators of industry intelligence distribution and skill development, not as organizers of large forums. By focusing on function instead of form, convention managers can use the new delivery systems discussed in this report as extensions of what they do rather than competitors.

New Problems Require New Solutions

Many of the new customers identified in "Nonconventional Behaviors" appear to be custom-made for the virtual technologies being developed. PCMA should evaluate these technologies ? not for how existing practices will be cannibalized or how services to existing customers will be augmented ? but as potential solutions to the problems being encountered by new customers for whom the current venues are no longer neat fits. New technologies do not allow users to do what they have always done faster or cheaper. New technologies allow users to change what they do. People will not simply learn what they used to learn at conventions using remote technologies. With access to new kinds of information, expertise, and decision makers, they will be able to learn new skills and gather different insights than they did in the past.

Focus on Similarities, Not Differences

Convention managers need to see themselves as training and intelligence problem solvers, not as providers of a single solution. The new kinds of training sought by new kinds of workers need to be met in the most efficient venue. Sometimes that will still be the face-to-face convention. Other times, new remote venues will need to be explored. If convention managers try to apply their present product to all situations, they will undermine their credibility even when they are right. Rather than focusing public attention on the differences between virtual and physical learning environments, they should focus on the similarities so that they will be seen as credible providers of both.

Train at a Distance. Coach in Person

This is not to say that there aren't any differences. Distance-learning specialists agree that both mediums have advantages. In short, information and quantitative training can be delivered remotely. A lecture delivered to a large group from which feedback is limited isn?t much different than distance-learning systems with limited instant messaging functionality. But interactive discussions among peers are best conducted in person. Training and coaching are complementary learning tools, not competing ways to achieve the same end.

Look to Tomorrow, Not Yesterday

Virtual technologies have come about in fits and starts as early experiments have enjoyed mixed results. This is due, in part, to the simple fact that we still are not sure what a virtual trade show really is or what an integrated distance-learning program looks like. Today's eccentrics are tomorrow's visionaries. Be thoughtful before you dismiss them.

Differentiate by Customers, Not by Technologies

The product life cycle analogy used in both this study and "Nonconventional Behaviors" allows strategists to think in terms of a continuum rather than a set point in time in which a given product offering is provided to all customers. Customers will not be virtual or physical learners or conference attendees. Nor will they all migrate from traditional to new learning methods in lock step. They will migrate from one to the other based on their given needs, perceptions, and abilities and the kinds of information or knowledge being conveyed. For those who need on-going dialogs, virtual technologies will sustain conversations and relationships that otherwise would end when customers walk out the physical door.

If the location of the meeting is attractive, attendance is often seen as a "perk" for employees, a sort of subsidized vacation. But that is secondary to the value them employer accrues by having more informed and better trained employees.

Methodology

To achieve success in times of dynamic change, The Forbes Group advises its clients to look beyond their immediate environments and gain greater intelligence about the customers who are driving their members' markets. In its request for proposals for this environmental scan, PCMA stated that it "anticipates that much of the data and analysis [in the environmental scan] will be related to the meetings and conventions industry, professional education trends, nonprofit associations, and broader communications issues." We have found that the most significant changes often take place outside the association's immediate market. Associations do not fail because they are unable to track changes in their core markets. They fail because they do not see the innovations that take place beyond and may ultimately displace their markets.

Tracking Your Customers' Customers

Conferences fall into that class of goods that economists refer to as driven by derived demand, those goods that are needed only because the consumer needs something else. The textbook example of derived demand is transportation. Transportation is needed only because one needs to be someplace else. No one needs to ride on an airplane. If you don't believe that, listen to yourself the next time you call your travel agent. You will not say you need an airplane ticket; you will say that you need to be in Chicago at 11 a.m. on Tuesday.

Similarly, conferences serve many purposes: education, networking, sales opportunities, competitive intelligence, and recruitment. Ultimately, firms pay for conferences to enhance the performance of the attendees and improve the competitiveness of the companies that send them. Therefore, PCMA must look beyond the convention and education market and include in its environmental scan the trends that are shaping the firms who pay association memberships and conference fees. One must understand the changes in demand for the primary product to understand changes in derived demand. For example, according to the U.S. Bureau of Labor Statistics, as much as 20 percent of all the jobs created over the next 10 years will come from new occupations that have yet to be defined. PCMA needs to examine these new occupations and determine what support services are needed and how these services can be best delivered.

For this report, The Forbes Group examined numerous public and private data series outside the conference industry. Trends were selected because of their potential impact on conference attendance, worker training, and employee networking. The analysis was supported and challenged through interviews with experts in the conference industry, corporate training, electronic commerce, and other fields of specialization, as determined to be necessary. The research included both telephone and in-person interviews in the United States, Europe, and Japan. The objective of this report is to create profiles of new and emerging kinds of conference attendees and identify new business needs that the convention medium can provide either on its own or in combination with other channels of distribution.

The conclusions in this report are those of The Forbes Group and do not necessarily reflect the opinions or positions of PCMA leadership or staff. The Environmental Scan and Channel Analysis summarized in this document may be ordered in their entirety by calling (205) 824-4082 or by e-mailing education@pcma.org.

Credits

1999 PCMA Education Foundation Officers
Chair of the Board: Charlotte St. Martin, Loews Hotels Corporation
Vice Chair: Anthony Jannetti, Anthony J. Jannetti, Inc.
Secretary: Todd Clist, Marriott International, Inc.
Treasurer: Robert J. Donovan, American Hospital Association
Immediate Past Chair: David R. Evans, Starwood Hotels & Resorts Worldwide
President: Roy Evans Jr., CAE Professional Convention Management Association
Education Foundation COO: Phil Mogle, Professional Convention Management Association

1999 Trustees
J. D. Andrews, Ph.D., Council for Professional Recognition
JoAnn Bedrosian-Ryan, United Airlines
Joe C. Boyd, Freeman Decorating Company/ AVW Audio Visual, Inc.
Wayne C. Chappell, Convention and Visitors Bureau of Greater Kansas City
H. Cris Collie, M.Ed., CAE, Employee Relocation Council
Douglas Layne Ducate, CMP, CEM, Center for Exhibition Industry Research
James P. Evans, Best Western International, Inc.
Richard P. Grimes, CAE, Anthony J. Jannetti, Inc.
Robert E. Hobart III, American Medical Association
Beverly Kinkade, CHME, CMP, Starwood Hotels & Resorts Worldwide
Edward Nielsen, International Association of Convention and Visitor Bureaus
Jean O'Donnell, American College of Physicians- American Society of Internal Medicine
John Orr, Hyatt Regency Phoenix
David S. Radcliffe, Greater Phoenix Convention and Visitors Bureau
David C. Scypinski, Hilton Hotels Corporation
Craig Smith, AVW Audio Visual, Inc.
Brian D. Stevens, ConferenceDirect
Thomas W. Storey, Promus Hotel Corporation

A special thanks to the PCMA Education Committee for their support of this process.

Chair: Joe Boyd, Freeman Decorating Company
Vice Chair: Valerie Sumner, TCI Companies, Inc.
Committee Liaison: Janine Pesci, BOMA International

About The Forbes Group: The Forbes Group is an 18-year-old management counseling and research firm that works with senior executives to help them think, plan, and act strategically. It is the leading strategic management counseling firm specializing in working with professional societies and trade associations.

About the Author: Richard C. O'Sullivan is senior vice president and chief economist of The Forbes Group. He has more than 20 years of experience in economic analysis and market research for associations, corporations, and government agencies. He has worked to uncover new market and product opportunities, to develop strategic responses to emerging economic and market trends, and to implement strategies that address public policy issues and market analysis. He specializes in providing practical and understandable business contexts for complex economic analyses.

O'Sullivan served as manager of economic and industry research for a national manufacturing corporation. He has been senior economist and director of statistics for one of the nation?s leading trade associations representing 85 percent of all production in its industry. Before entering the association field, O?Sullivan was employed as an economic statistician and industry economist for the federal government, serving at the International Trade Administration of the U.S. Department of Commerce and at the U.S. Bureau of the Census. O?Sullivan is a member of the board of directors of the U.S. Business Research Advisory Council. He was recently elected by his peers to serve as chairman of Brac?s Economic Growth Committee. He is also a member of the National Association of Business Economists and the Society of Government Economists. He completed master?s degree studies in economics at George Mason University and holds a bachelor of arts in foreign affairs from Assumption University. He also studied economic and political integration at the University of London.