Jason Rothbart, of Groupswim, has put a post up on Read/WriteWeb questioning whether or not the ROI on conference sponsorship is worth it. Someone asked if it upset me, and I think was a bit surprised to hear me say that I agree with much of what Jason says. Check out his post, and then check out my comments:
1. Tradeshows v. Conferences: Jason lumps what I would classify as “tradeshows” and conferences together. Dreamforce, Web2.0 expo, etc are definitely “tradeshows,” and one could argue that Enterprise 2.0 (once it crossed the “1k people on the floor” mark) started tilting toward “tradeshow.” I’ve written about the spectrum between tradeshows and conferences, and I think that’s actually a fairly good mechanism for startups to use when evaluating conferences.
2. Worth it? I’m not gonna sit here and argue that conference “sponsorships” are worth it – a lot aren’t. If I didn’t think there was room to beat my competition, I wouldn’t be in business. That, by it’s very nature, means that I think a lot of conference sponsorships aren’t worth it. Some, however, are. The “trick” is in finding the right ones.
3. How to find the right conference: see, that’s a tough one (and no, I wasn’t gonna say “just come to Glue and Defrag”). Conference sponsorships should be evaluated on several fronts and *measured* on several fronts. The evaluation fronts can include: sales leads, analyst meetings, press meetings, partnership (business development) meetings, community development.
Let me set aside measuring sales leads for one second. The “analyst/press” side of things is important to a lot of companies, but I rarely see startups handle it correctly (large companies usually do). If you’re going to be a conference sponsor, and there’s going to be any kind of critical mass of analysts there (3-6), then you need to “work the calendar” to make sure that you’ve got those meetings/briefings on the books. The expense of a face-to-face roadshow with analysts can be folded into a conference schedule.
The partnership and community development sides of things are actually harder to measure, but maybe the most important. I will say that I think there is a *direct* correlation between startups that *smartly* spend on conference sponsorships and startups that get acquired. People don’t realize how many acquisitions happen because one engineer meets another engineer at a conference, and their conversation about how well they would work together floats up to the right levels. That happens at conferences. Period.
sidenote: Jason mentions “attendance going down” at conferences. I think he’s right — you’ll see that at tradeshows. You won’t see that everywhere. Conferences like Glue and Defrag (ie, smaller, community focused events) won’t see a big drop-off. I know because I’ve seen this cycle before.
Spend time finding the right conferences. You’ll know them when you find them (hint: I run two.) 😉
4. Measuring sales leads: Okay, the biggie — how do you measure the “sales” side of a conference. First off, actually measure it (most marketing sides of startups don’t). Second, make sure you’re measuring EVERYTHING in your marketing spend. That means you should track not only “cost per lead” but also the *time* it takes to run through the pipe, and the “sales cost” of any face to face meetings. I’d bet that you’ll find that a lead that comes in via Google adwords will A) take longer to close (time is money) and B) require more dollars spent on face to face meetings.
Now, to measure a conference, realize that it’s about quality, not quantity. In fact, all conference measurement should be about quality measurement. Getting 2000 leads at a tradeshow doesn’t mean anything if most of those 2k leads were people that don’t actually have any interest in buying your software. So, how do you measure quality? Simple. Dollars in, dollars out. If you spend $5000 at a conference, and you only get 1 good lead, it’s okay — as long as that 1 lead results in ROI for that 5k. Spending 5k for 1 lead that results in six figure licensing deals is a spend most marketers will make all day long. Is the “cost per lead” high? Sure is. But is the ROI on the dollars spent good? Oh yea. Now add in the “time to close” and “additional dollars spent to close” and see where you stand. Bottom line: evaluate a conference’s lead ROI based on how much actual revenue it generates for your company.[sidenote: the commenter on RWW that says online advertising is more measurable than conference sponsorship isn’t thinking about the full range of how this all works.]
5. Everything else: What else are you going to spend marketing dollars on? Webinars, search engines, analyst presentations/reports, custom f2f roadshows, banner ads — the list is long. My advice here is simple — where the spend is best is partially determined by your business model/industry. However, *make sure* you’re thinking in terms of “campaigns” not just spend. Ideally, a “lead” is “touched” by you 4-7 times via multiple channels in the course of a campaign (where you run 2-4 major campaigns in spend-year). Somewhere in that 4-7x “touch,” you’d really like to shake that gal’s hand, look ’em in the eye, and start “working on the close.” That, my friends, is what conferences are for.
I hope this helps folks frame things a bit. By the way, if you’re a start-up in the Glue or Defrag spaces, I’m MORE than happy to spend time with you on this. I used to be a VP of Marketing for a startup, so I understand the “dollar struggle.” I also understand how to help maximize the bang for your buck. Just ask. 😉
Conferences are an integral part of marketing in the startup world, and that’s not going to change. However, that doesn’t mean startups should blow 75k on parties and a 20′ x 20′ foot booth at a tradeshow at Moscone. Be smart, be measured, and most of all – see it as part of a larger scheme.