Exhibitions represent one of the most effective distribution and promotion channels. High quality exhibitions conducted at modern venues represent a very important element of the economic infrastructure, they are highly important for producers of goods and services.
The main reason that hinders the exhibition industry development in Russia is the lack of modern specialized exhibition infrastructure. A large number of exhibitions and fairs are held today at unequipped venues (sports centres, culture centres, etc.).
Worldwide, exhibition centres are built by the government. The number of exhibition centres built in this country during the past 10 years can be counted on one hand. Insufficient governmental investment in the exhibition industry is due to the lack of reliable information on exhibitions effectiveness for the city and the region, for the industry and the whole country.
One of the tasks for the professionals in the exhibition industry is to inform the state officials on different levels of the profitability and effectiveness of investment in the exhibition industry. The research of the economic impact of exhibitions will provide the exhibition industry with the possibility to be noticed at the governmental level, to receive investments and to move to a new quality level.
Under the instruction of the RUEF General Meeting and the Committee for Exhibition Activities and Support to Producers and Exporters under RF CCI, RussCom IT Systems developed the Methodology to estimate exhibition budget effectiveness.
The Methodology was based on RussCom IT Systems’ long experience in conducting the Exhibition Statistics Audit and the Audit of Visitors Purchasing Power according to the rules and under the control of international and Russian exhibition institutions (UFI, FKM, RUEF).
The objective of the research to estimate exhibition budget effectiveness is to quantitatively measure budgetary benefits (in terms of money) obtained by the Russian government from an exhibition.
Benefits for the government from an exhibition are defined as actual value of tax proceeds in the budgets of all levels: municipal, regional, federal.
According to the Methodology, the following is taken into account when estimating the value of tax proceeds:
The method to obtain data for exhibition budget effectiveness estimation: individual expert interviews with decision-makers among exhibitors and visitors as well as data from the Russian Federal Tax Service.
Respondents sample size is determined by the statistical norms:
|Number of Visitors||Number of Respondents|
|up to 3,000 people||at least 8 % of visitors|
|3,000 – 5,000 people||at least 250 visitors|
|5,000 – 10,000 people||at least 5% of visitors|
|10,000 – 25,000 people||at least 500 visitors|
|25,000 – 50,000 people||at least 2% of visitors|
|over 50,000 people||at least 1,000 visitors|
An example of the calculation of exhibition budget effectiveness indicators
In the example, the initial values and the estimation of exhibition budget effectiveness are given for an exhibition with the following statistical parameters:
|Total number of exhibitors||144 companies|
|Number of national non-resident exhibitors||50 companies|
|Number of foreign non-resident exhibitors||22 companies|
|Total number of visitors||5,630 people|
|Total number of unique companies that sent their visitors to the exhibition||3,466 companies|
|Number of foreign non-resident visitors||450 people|
|Number of national non-resident visitors||1,520 people|
|Total exhibition net space||2,539 sq.m.|
|Average number of people representing 1 exhibitor||5 people|
|Average stay period of non-resident exhibitors||6 days (5 nights)|
|Average stay period of non-resident visitors||3 days (2 nights at a hotel)|
The exhibition format: b2b.
The exhibition subject: goods for children.
The exhibitors were represented by two types of economic activities: manufacturers and whole-sellers, 45 and 55 companies respectively. Among them 42% of manufacturers, registered in the region where the exhibition was held, received earnings in the result of the exhibition and on its subject, and 58% of whole-sellers, registered in the region where the exhibition was held, received earnings in the result of the exhibition and on its subject.
The method of interviewing was used to gather data on the amount of travel expenses (transportation, communications, hotels, food, etc.) and on the value of concluded contracts.
The Russian Federal Tax Service data was used to obtain information on the amount of tax proceeds into the Russian budget from the main types of economic activities. The research came up with the following findings:
The estimated value of the contracts to purchase goods and services concluded in the result of the exhibition during 3 months after its end is within the confidence interval from 631,220,000 to 749,713,000 RUB with the confidence coefficient of 80% (the average rounded value is 690,000,000 RUB).
The exhibition budget effectiveness for the region where it was held is within the confidence interval from 33,748,000 to 42,568,500 RUB with the confidence coefficient of 80%.
The following overall performance comprises all budget receipts from all budget agents in the region (rounded values are given).
In the result of the exhibition the budgets received:
Federal budget – 13,040,000 RUB
Regional budget – 18,200,000 RUB
Local budget – 7,110,000 RUB
The estimated value of the tax proceeds in the Russian budget form the participants from other regions is within the confidence interval from 59,015,500 to 77,067,300 RUB with the confidence coefficient of 80%.
The overall budget receipts from the exhibition for budgets of all levels that were due to be paid during three months after the end of the exhibition is within the confidence interval from 94,864,000 to 122,892,000 RUB with the confidence coefficient of 80%.
Note that each of the indicators of budget effectiveness on all budget levels was estimated on the basis of actual distribution ratio and actual tax proceeds into the accounts of governmental bodies from different economic activities of all the exhibition participants.
RussCom IT Systems is offering a range of services based on the Methodology to estimate exhibition budget effectiveness in the following directions: