WITH virtual and hybrid events serving as the meetings, incentives, conventions and exhibitions (MICE) industry's only lifeline in the Covid-19 crisis, companies are grappling with the challenge of turning a profit from these event formats for longer-term survival.
Although the shift online has eliminated many traditional costs such as transport, food and venue rental, virtual and hybrid events still demand the same amount of preparation, if not more, as a conventional physical event. Yet many clients have reduced their budgets for such events, and participants are less willing to pay the prices that they used to for physical conferences.
"The perception that a virtual event is as easy as organising a Zoom Webinar is one of the challenges the industry faces, as this in turn affects how much organisers are willing to pay for professional management," said Janice Swee, co-founder and director of TRICOM Events.
She noted that a successful virtual event involves using (or even building) a bespoke and reliable platform that allows high levels of customisation and user engagement, as well as the right combination of digital and audio-visual solutions. Planning a hybrid event is even more complex, since the onsite and online experiences have to run in precise synchrony.
"Coordinating and prepping virtual speakers alone requires days, depending on the number of virtual speakers, excluding the need for added dry runs for a seamless production," Ms Swee said. "It will take time for the market to understand these complexities and appreciate the value that professional event agencies bring to the table."
Adam Piperdy, CEO of events company Unearthed Productions, has noticed a fall in project values and budgets, as well as tickets being priced lower across the board. There are some exceptions of companies that are willing to sustain losses while running events this year, because their objective is to remain relevant to their community during this crisis.
"Also, some clients are utilising the already set budget based on 2019's marketing or events budget to run their events; hence, there is still some room for creative productions," he added.
Mr Piperdy cites publicity and event platform as the most important cost factors in running virtual events. If professional production or rendering of virtual exhibitions is needed, the costs could work out to the same as a physical event, he said.
Talent is another hefty cost factor, since running these event formats requires skill sets and equipment that are new to the events industry. For example, many companies are developing their own virtual event platforms and using more technology to keep up with market needs and trends, said Ms Swee of TRICOM.
"Aside from that, there are also significant costs associated not just with best-in-class audio-visual and live-streaming services, but cybersecurity as well."
Added Mr Piperdy: "Many clients assume it's as simple as turning on the Webcam, but to produce a show, we would need the same amount of time if not more to put together a complete production with the visual director, motion graphics animator and content producer - all of these roles are new to the events industry."
Aloysius Arlando, president of the Singapore Association of Convention & Exhibition Organisers & Suppliers (SACEOS), sees engagement, or the lack thereof, as the biggest challenge for event organisers.
This is because just running an event effectively or with expensive frontier technologies is not enough to bring back customers; the event must be personalised and memorable. "Going the extra mile and investing in the customer journey can become considerable challenges in terms of costs," he said.
With all these challenges, companies in the MICE industry are unlikely to see 2020 revenue reach even half of last year's, despite running virtual events for several months now. TRICOM's revenue is barely 10 per cent of 2019 numbers, while Mr Piperdy expects a 70 per cent drop in revenue for Unearthed Productions this year.
He noted that a single physical event could easily yield a six-digit revenue, but clients are spending more conservatively on virtual events, which are still "on trial".
The companies are now rethinking their value propositions in order to capture and maximise the limited revenue from such events.
Said Mr Piperdy: "The skills needed for event companies are no longer logistics or resource management, but rather that of content and concept building, helping our clients reach their audience in unique ways to capture their attention in a very crowded online world."
Ms Swee said that event agencies that used to focus purely on physical events will need to quickly invest in virtual event platforms and gain expertise in running hybrid events in a short period of time. "The quicker and more agile agencies are, the better able (they will be) to stay relevant and value add to clients."
Mr Arlando said that while the MICE industry is continuing to evolve and learn from the pilot events, it has not yet reached a commercially viable point yet. However, SACEOS has seen a range of business models that have potential to turn sustainable, and a growing number of forward-looking organisations are managing to make money from "digital storytelling for a digital audience in a digital age".
"It may not be as lucrative as before for many organisers, but in a way that is sustainable and gives confidence in the future," he added.
The companies hope clients will recognise and start to leverage more on the advantages of the virtual and hybrid event, such as the ability to scale without adding significant expense, and other revenue streams like virtual sponsorship packages and on-demand videos.
Coupled with the trend of lower ticket prices, this could present an opportunity for companies to build an online database of their community, which they previously would not have had when doing everything offline, Mr Piperdy said.
Ultimately, the industry is holding out hope for physical events to resume at some point soon. While hybrid events can bring back some of the "richness of human interactions" for the onsite audience with an online community providing robust discussions, virtual events cannot replicate or replace them completely, TRICOM co-founder and director Dylan Sharma said.
"The early months of the pandemic saw the largest mass migration of humanity online, as virtual meetings became commonplace," he said. "Albeit at a slower rate, digital fatigue has also kicked in, and attrition rates for digital viewership have increased, as people get increasingly swarmed by a plethora of virtual events."
Edward Liu, group managing director of Conference & Exhibition Managment Services, noted that even companies like his, which was "relatively quick to offer virtual solutions", have not yet managed to monetise them sufficiently to keep the industry and individual businesses afloat.
"We are dealing with a prolonged period of curbs, limited travel and regulated visitorship. The availability of a vaccine and the mass vaccination to protect lives cannot come soon enough."