Almost two years of restrictions on and massive cancellations of events have sent the financial performance of the event services market tumbling. If in 2020, event agencies recorded a 50% drop in working capital, in 2021, the best they could do was maintain the same level, and the number of event companies decreased dramatically as many could not withstand the financial and emotional pressure.
Competition remains fierce in this market, however, and many professionals are feeling depressed, including event organizers, actors, directors, producers and other representatives of the industry.
All this time, event agencies have been struggling to find some solutions to support their business, trying to increase profitability by optimizing processes, introducing cloud technologies, exploring related areas, and discovering new niches.
Many have been converted into communications agencies with an expanded pool of creative services such as branding, video and design production; to some extent, this has helped them offset the sagging demand for events, which is still well below the pre-pandemic level.
Popularization online projects was the obvious solution; the skyrocketing demand for them gave a boost to online technologies, although this has failed to bring proper satisfaction to the market.
Online events barely cover a part of the event business objectives and cannot be used for projects that require live immersion, such as launches, incentives and programs that build a team culture.
As much as we would like it, virtual events’ impact can never be compared with an offline event when it comes to the degree of emotions and audience engagement. Therefore, for most corporations, online projects continue to be a compromise solution.
As workers around the world have transitioned to telecommuting, the lack of person-to-person interactions reached its peak in 2021 and forced many employers to consider strengthening their corporate cultures and supporting their employees’ mental health and comfort — something that cannot be done using online tools only.
A return to offline projects will be the indicator of the event industry’s recovery. Although the demand for offline events has been higher this year than in 2020, the restrictions in place do not allow the market to fulfill all plans. Corporations and event agencies are standing by and postponing their projects until better days.
We can say for certain that the restrictions will still be there during the first six months of 2022. But in the second half of the year, the market will start to warm up and the recovery is expected to begin.
People are waiting for the vaccination programs to become clear and settled — along with work conditions in the post-pandemic period, which should give agencies certain freedom and guidance for working on their projects. The pandemic is not going away but we must learn to operate seamlessly in these new conditions that will become the new norm.
It is also obvious that the former format of event agencies is gone for good. The conventional event business model proved to be inadequate, unprotected and extremely risky.
Agencies around the world had to completely reinvent their approach to business, learn lessons and transform towards uberization, sharing economy and collaboration with partners, which should form a new market of hybrid projects.
Event customers will also be affected by recent changes. The majority of agencies no longer want to deal with post-paid projects that their customers were spoilt with before the crisis. The new reality forces them to review their rates even with current clients.
The quality of projects will improve. In the past years, the agencies have gained significant experience in using online technologies as well as a host of creative ideas that could not be realized during the restrictions and which the agencies continue to implement in their long-term projects.
The crisis proved once again that every cloud has a silver lining. Due to the pandemic, unsustainable agencies dropped out of the race while bigger and heavier companies were forced to transform. It is time to let go of inflated staff numbers and luxury office environments. Today we are forming a new market that will soon reach perfection.
By Ksenia Chursina, founder and CEO of STUDIO 2112 event agency