The events industry is very much on the front lines of business, and is intertwined with many other industries—logistics, travel, hospitality, entertainment, and even tourism. We feel the immediate impacts of both economic growth and slowdown before everyone else, and long after the crisis is resolved. The best thing we can do as an industry at this moment is to stop panicking. Instead, we must keep moving forward: breathing, assessing the situation on a daily basis, motivating our teams and colleagues, asking the right questions and learning what really matters to our clients. 

15 min read.

By Omarr Cantu, with original art by Haley Mosher

It seems like the entire world is upside down. The empty streets of downtown Austin are particularly notable during a period that was supposed to be bustling from the now-canceled SXSW festival. Many industries are being impacted by social distancing, but history tells us that whenever there is some sort of crisis, some industries get hit first and are forced to weather the storm longest. This time around, those industries include live corporate events, experiential marketing, conferences, and festivals. The events industry is very much on the front lines of business, and is intertwined with many other industries—logistics, travel, hospitality, entertainment, and even tourism. We feel the immediate impacts of both economic growth and slowdown before everyone else, and long after the crisis is resolved.

While the global magnitude of the COVID-19 pandemic is unique in modern times, our industry has endured multiple economic downturns over the past 30 years. Here is a brief examination of the 4 largest downturns in recent history and what we’ve learned from them. 

The Recession of the Early 90s

The recession of the early ’90s is remembered by businesses as a short recession, lasting 8 months from July 1990 to March 1991. However, for the events industry, this recession lasted years.

Advertising agency veteran Greg Williams of DeepMap Creative graduated college in 1993 and was hired as an Assistant Account Executive by Della Femina in January of 1994. The agency assembled their entire staff for Greg’s cupcake welcome celebration. “I thought it was an odd deal that they were making such a big deal about hiring a young assistant AE,” Greg recalls. When he asked the president of the agency about it, the president replied, “No, Greg. You are a symbol of good news. You are the first hire and non-layoff we have had in 3 years.” As business began to quickly pick up with the flood of new innovations on the market, we entered the age of the internet—and, more specifically, the Dot-com. Historically speaking, we often see times of great creative and innovative growth on the heels of downturns. After all, didn’t the Renaissance succeed the Dark Ages?

The Dot-com Bubble

The Dot-com bubble age from 1995-2000 was a turbulent period due to excessive speculation in internet-related companies. During this period, Nasdaq grew 400 percent, only to reach 78 percent of its peak in October of 2002. Tech companies took a “growth over profits” approach, and convinced themselves this was the “new economy.” Companies built extravagant offices filled with every amenity imaginable, and treated employees to lavish vacations, salaries, and perks. The period leading up to the bubble burst was very much like the roaring ’20s that led up to the Great Depression. Internet, hardware, and software companies held opulent “Dot-com parties” and poured millions of dollars into the events industry: Product launches, marketing summits and global conferences had never been in higher demand. 

When the bubble burst, it sent a tidal wave through the events industry. Big companies slashed marketing budgets, and small companies were lucky if they still existed. Industry-wide layoffs became so common that employees started throwing “pink slip parties.”

This economic downturn exposed bad business practices, money mismanagement, poorly executed programs and corrupt business dealings. During this period, only the stronger, more resilient tech companies survived, and better business models were created. The tech companies, agencies, and service providers that successfully navigated this period did so by reinventing themselves. Across the board, companies slowly improved, but just as the economy showed signs of better days on the horizon, four planes were hijacked in the United States and the world stood still. It was the hard, one-two punch that rocked the American economy.

September 11th

In 2001, the world watched as the United States was attacked on September 11th. Many industries were significantly impacted as the world stood still from the tragedy. Tourism, security, immigration and aviation bore the brunt of the impact as international borders closed to keep America safe. It took months for most US businesses to ramp back up into production, and even longer to get back to a business-as-usual posture.

Kirsten Hunter, Executive Producer at Campos, lived in New York City when 9/11 happened. She remembers this period as a time of city-wide mourning, but only for a few months before the city picked itself up by the bootstraps and trudged on. New York City is tough and refused to stand down, and the rest of the US reacted to their strength by standing with them. Kirsten worked for Restaurants Associates NYC at the time, the largest event caterer in the city, and remembers that the events industry shut down for two to three months, but bounced back fairly quickly when companies reopened and wanted to acknowledge the beauty of life. “There was a celebratory surge of business,” Kirsten explained. 

Greg Williams, who was working on the west coast during this period, describes the industry as being “on pause” for four to six months. For companies that required national/international travel, this pause of business lasted a little longer—The newly-formed Department of Homeland Security oversaw stricter travel restrictions and regulations implemented by airlines. But, considering the magnitude of the terrorist attack, the United States navigated out of this crisis relatively quickly.

The Great Recession

In 2007-2009, an even larger cloud hovered over the US, when all felt the impact of the “Great Recession.” Industries like hospitality, tourism, marketing and advertising felt the grip first and longest. Many agencies attempted to ride the wave as best they could, despite being forced to work with smaller marketing budgets. Post-2009, as the dust settled and companies attempted to recoup their losses, massive restructuring plagued the workplace. CEO shuffles ensued as companies flagrantly tried to stop the bleeding. New CMOs consolidated advertising efforts; in the case of Chevrolet in 2012, consolidation meant moving business from 12 agencies down to two, with the same amount of workflow. Even for the larger, legacy agencies, work was increasing from a steady flow to one similar to a firehose. Many advertising agencies were forced to do triple the amount of work, at the same or even lowered rate, often with the same number of employees. Agencies were once again forced to do more with less, and what was once considered “non-traditional marketing”—experiential, guerilla and digital—was now included in the “traditional” marketing category. Specialized cultural advertising became less relevant as budgets were consolidated, and a new, general, culturally-agnostic market emerged.

There weren’t significant advancements from the Great Recession within the events industry. Though tech advancements helped streamline event registrations, team communication, and project management, these advancements arguably would have been birthed regardless. Virtual events increased in notoriety as supporting tech slowly became available. Ultimately, if our industry learned anything at all from the Great Recession, it was how to work smarter, leaner and how to do more for our clients with less.

Kirsten commented, “Looking back, the 2007-2009 recession seems so trivial compared to now. Our economy is going to be [broken] for years with the number of small businesses that are going to close. [Coronavirus] has impacted all industries across the board. People physically can’t work.” Events is not the only industry impacted, and many will take years to recover.

The Great Pandemic Pause

Our 2020 economy is slowly grinding to a halt thanks to the global pandemic, and this time it seems as though it is the corporate events, conferences and experiential marketing industries that will feel a similar 9/11–2007 stranglehold. Businesses everywhere have been forced to move to virtual workplaces and events, a shift that may have a ripple effect on how we work in the future. Other businesses will likely cease to exist entirely. What makes the COVID-19 situation so different from anything our country or even our planet has ever seen before is that this sudden pause of business is entirely man-made. Industry didn’t stop because 144 countries had a sudden influx of infected workers, or an astronomical spike in mortality rates. We chose to slam on the brakes to flatten the curve of infection and prevent such a catastrophic spike. This global quarantine, this period of global economic pause, is for the sake of saving human lives and protecting the healthcare system from collapse. It is unlike anything we have ever seen—and perhaps will ever see—in our time.

When SXSW announced on March 6, 2020 that they had been forced to shut down the conference, it sent a global shockwave through multiple industries and staked a flag that marked COVID-19’s official landing on the American business landscape. Other markets will, of course, say the pandemic hurt economies in other parts of the country weeks prior to the SXSW announcement—and it did. However, the canceling of the 34-year-old festival clearly signaled hardships to come for the experiential, events, and marketing industries.

Fox Business reported that SXSW had an economic impact of $355.9 million in 2019, and, as one SXSW organizer described, was “the single most profitable event for the city of Austin’s hospitality industry.” SXSW drew more than 400,000 attendees, nearly 5,000 guest speakers, more than 4,300 media members, and 12,800 direct hotel bookings (equivalent to $1.9 million in hotel occupancy tax revenue alone). Despite the fact that SXSW had to lay off a third of its staff—some 75 people—canceling the event with only one week prior to kick-off massively impacted marketers, promoters, hospitality, restaurants, venues, and production companies. Product had been ordered, event space had been secured, talent had been paid, etc.

Austin-based advertising agency, Bakery Agency, uses SXSW as its primary business development period of the year. Hector Silva, advertising veteran and Bakery CFO, describes it as “the single best business development driver for our company and its in our very own backyard.” He continues, “The value of being able to meet with multiple CMOs in a day is intangible.” Hector and his team planned an entire week’s worth of events, including a tentpole celebration event for the agency’s friends, family, and new business prospects to attend. The cancellation of SXSW meant an economic loss of $70,000 in brand activation and party related costs, but the loss in business development opportunities is immeasurable.

Many saw significant losses due to SXSW’s cancellation, and Austin lost its single greatest profit generator. Moreover, its cancellation sent a message that COVID-19 was officially on US soil and not going away anytime soon. Let’s face it, businesses are built on cash flow. If there is no cash flow, there is no business. And, keep in mind, SXSW is one event in one city. The ripple of similar cancellations across the globe is catastrophic. Some events were able to pivot to virtual spaces, but even that comes at an additional budgetary impact.

Daniel Kuehm, President and CEO of Atomic Picnic, an Austin-based production company, closed his doors after 17 years immediately following the SXSW announcement. It wasn’t SXSW that ended the picnic, though—it was the shockwave. One by one, clients called in to cancel due to the uncertainty over when it would again be safe to congregate in groups larger than 10. Daniel lost his entire calendar of work from March through September, all within a few days of the SXSW announcement. Getting new business was impossible with no end in sight to the effects of the pandemic.

While it is too soon to tell where the global pandemic is headed, it is safe to say marketing and advertising will see significant changes in business operations and society in general. There will be clear democratization of humanity; everyone will be on a level playing field, and leadership will be more humanized. Greg Williams remarked, “From newscasters to CEOs, we are being reminded that we are all human and in this together. We see once rarefied people delivering messages from their home offices as the sound of their children and pets echo in the background. This warmth and relatability is more important now than ever. Let’s drop the pretense.” Teams will instinctively seek out connectivity, and employers will be more responsible for improving concise communication and coaching to people’s strengths. Business models will shift to a more empathetic, “What’s best for the employee?” mentality, and companies will be forced to focus on strength/weakness gap management.

The Final Thought

I predict employers will quickly learn that working remotely favors productivity and they can trust their employees. Employers will relax employee requirements, such as working 5 days in a week or even 40 hours per week, and take an “as long as the work gets done” approach. With more people working from home, we will see a significant shift in the amount of traffic congestion on our metro roadways. Without having to fight traffic twice daily, Americans will have more flexible schedules, a better work-life balance, and less stress. We will begin to see a massive shift towards work cultures that emulate our European cousins. Sounds good, right? But the dramatic shift to virtual, non-time constrained employment will kill the event industry, right? Wrong! It will make corporate events and experiential marketing even more relevant. Corporate meetings will serve as the primary form of physical interaction for companies. The need for face-to-face interaction, networking, and community is part of our DNA, and that won’t change. It may even be more prevalent after experiencing and surviving this unique situation we’re all in together.

The Lasting Effect

When we get to the other side of this pandemic and economic downturn, we will see a clear line in the sand dividing winners and losers. The advertising agencies and service providers that are not high enough upstream will cease to exist, and smaller shops will be forced to conglomerate and form larger agencies to minimize costs. Larger shops will need to cut the fat and reduce their workforce, or retool their bag of tricks and reinvent themselves. Weak business models will weed themselves out, and new, strong business models will grow in their place. The industries that will most feel the pinch will include automotive, fossil fuels, brick and mortar businesses, airlines, restaurants, and bars. Auto and fossil fuels may take a significant hit as workers learn how to work from home and opt out of the rat race.

The winners will include service providers that facilitate this new homebody lifestyle, such as DoorDash, GrubHub, Uber Eats. Home entertainment and gaming brands such as Xbox Live, Netflix, Hulu, and YouTube will spike internet consumption. Additional winners will include brands that facilitate at-home work, such as high-definition conference cameras and monitors, standing desks, monitor stands, microphones, acoustic treatments. Brands such as Slack, Lifesize, Asana and others that offer assisted virtual connectivity will be the clear winners. The biggest winners will be the recession-proof industries, such as alcohol/spirits, grocery chains, healthcare, insurance, and information technology companies. They will not only be able to weather the storm, but with forward-thinking leadership will be able to take a pause, deeply analyze their business models, and develop strategies and messaging that will help them grow for decades to come. As some larger alcohol conglomerates already have, many others will likely take a page out of the WWII playbook and produce ethanol for the shortage of hand sanitizer, thus further diversifying their product portfolios.

The best thing we can do as an industry at this moment is to stop panicking. Instead, we must keep moving forward: breathing, assessing the situation on a daily basis, motivating our teams and colleagues, asking the right questions and learning what really matters to our clients. We must identify the broken parts of our business models and client success processes so that we can fine-tune our engines to deliver a better product more efficiently, with less overhead for the people that matter most—our clients.