While unemployment hit 6 percent nationally last year, association management companies saw a 7.3 percent growth in business, according to the AMC Institute, an association for AMCs based in Westmont, Ill. The group's research shows that the AMC industry grew a whopping 33 percent since 1995. In 2004, the upward trend continues, with three meeting industry associations turning to the AMC solution so far this year: Insurance Conference Planners Association, Center for Exhibition Industry Research, and the Association of Convention Operations Management.
Why the growth? A difficult economy puts pressure on associations to scale back expenses and find efficiencies, says Henry Givray, CEO at SmithBucklin Associates, a Chicago-based AMC. That leads toopportunities for management firms, whether it's to run the business soup to nuts, or for a specific task. “There's a general raising of the bar in the association world today,” says Givray, whose firm has already won two full-service accounts this year — ICPA and CEIR. “The newer generation of members and leaders are simply demanding a higher level of performance and results than years ago.”
Taking the Plunge
ICPA has struggled in recent years to build its membership as the insurance industry has been hit by mergers, acquisitions, and downsizing, says Stephen Clark, vice president of public relations at ICPA. As insurers merged with financial services companies, ICPA officials realized they had to expand membership to include financial services planners. But Clark says the board didn't have the resources to tap into a new market with a small “mom and pop” headquarters office in Vancouver that was more administrative than strategic. The board looked at several options, including adding staff, and decided that hiring an AMC was the way to go. SmithBucklin won out, in part because of positive feedback from an official at the Society of Incentive Travel Executives, which hired SmithBucklin two years ago. (ICPA officially moved from Vancouver to Chicago in May under the leadership of Steve Bova, the new executive director.)
While SmithBucklin was hired for full service, ICPA volunteer leaders will still handle some functions, mainly meeting site selection and. “We're still going to utilize our hospitality partners,” says Clark. The new administration will handle all other meeting functions, including logistics and marketing. With its new structure, ICPA aims to create operational efficiencies and marketing opportunities, as well as to expand its membership.
A La Carte Options
A growing number of associations are turning to AMCs on a project-specific basis for everything from marketing and public relations to meeting management. The average AMC manages 34 meetings a year, according to the AMC Institute, and AMCs spend in total more than $1 billion annually on room nights and convention services.
At Association Management Resources Inc., a Lexington, Ky.-based AMC, meeting planning has become its most popular a la carte service, says CEO John Ruffin. “It's helped us offset the economic downturn,” he says. Ruffin has also found that associations are outsourcing meeting management to “upgrade the quality of their meetings,” and to help with declining attendance. Ruffin says accredited AMC firms have brought a new level of professionalism to the AMC industry. (The International Association for Association Management Companies developed an accreditation program two years ago in concert with the American National Standards Institute. Of the estimated 527 AMCs in business, 24 are accredited by the IAAMC.)
The outsourcing of marketing and public relations projects has been a boon to CMA Association Services Group, Princeton Junction, N.J. “People are not only looking for management today, they're looking for management and marketing,” says CMA's CEO Jeff Barnhardt. Association management is almost the “ante to get in the game,” says Barnhardt. Beyond that, organizations want assistance with marketing programs, Web site development, design capabilities, creative services, and electronic communications, he says. The Association of Convention Operations Management recently hired CMA as its full-service manager, primarily on the strength of its promotional capabilities, says Mary German, president of the association. “We're looking to heighten our visibility in the industry,” says German, “as well as grow and increase the value of membership.”
Cost- and Time-Savings.
When considering whether or not to hire an AMC, executives should look at two factors, says Givray. One is the cost of running the daily operation; the other is the value of the dollar spent. For a small to medium-size staff, the cost of providing a robust infrastructure is probably going to be higher than it would for a firm such as SmithBucklin, which has invested millions of dollars in technology, human resources, financial management, administrative, and other back-office services, he says. Along with marketing and meeting management, AMCs bring other key attributes to the table. They have the excess funds and resources to mitigate cash flow risks and make the necessary technology upgrades, Givray explains. Moreover, the recent trend toward heightened corporate governance has also driven some associations to AMCs; governance not only in terms of instituting policies, programs, roles, and responsibilities, says Givray, but also culture — “the values and guiding principles that are going to govern the association.”
Time management is another challenge for many associations, including the Society of Corporate Meeting Professionals. SCMP has been run by volunteer leaders, but they don't have the time to handle the administrative and marketing chores in addition to the mapping out the strategic vision of association, says Kevin McNally, SCMP co-president. He says that SCMP executives expect to name an AMC this summer to take over management of the group.
Not all Rosy
Not all associations that have gone the AMC route are satisfied with the move. Kevin Jetton, past president of the Association of Information Technology Professionals, says the decision to hire an AMC has not paid off for the organization. AITP tapped an AMC two years ago because it didn't have the time and resources to increase membership and build the association, Jetton says. “So the whole association management philosophy made sense as a way to give us an injection of everything in one fell swoop.”
But since then, AITP has been hampered by turnover of staff and executive directors, Jetton says, and by the new administration's lack of responsiveness. While AITP has saved money, membership has decreased, he adds. “[AMCs] hire lots of people straight out of college, and they're excited and motivated but they have no experience.” While the AITPis reviewed annually, Jetton says it's difficult to extricate the association because the association and the AMC are so intertwined. “It's kind of like switching your bank account these days. Easier said than done.” There's also an issue of control that comes into play with regard to staff, he says. “They're not your staff. You didn't hire them. You can't fire them, technically. And you just take what you get when you get it, and make the best of it.”