Do tech hopefuls still need Demo and its ilk?

When Demo 09 kicks off Monday in Palms Springs, Calif., the high-technology showcase conference that prides itself on putting cutting-edge companies in front of A-list venture capitalists and journalists will do so in perhaps the worst economic environment in modern tech history.

Exhibitors at Demo pay well into five figures for the privilege of giving a six-minute presentation to a room full of influencers--many of whom have paid up to $3,000 to be there. So one could wonder whether the show can maintain its relevancy while companies are shedding record numbers of jobs, when credit is as tight as it's been in decades, and in an era where tech firms have more ways to promote themselves than ever before.

Yet Demo is not alone in its class: smaller tech conferences of between several hundred and several thousand attendees, such as TechCrunch 50, AlwaysOn, and those run by the GigaOm network. And with money being as tight as it is and the Internet and social media allowing start-ups and companies with new products to bypass traditional promotional methods, one question is obvious: Do we need these conferences?

The answer, according to conference organizers, attendees, and journalists, is yes. But we don't need all of them. And it seems likely that over the next year or two, unless economic conditions improve dramatically, only those conferences that can provide the kind of value that attendees and exhibitors alike need--a solid focus, great content, a long list of influencers, high production value and exceptional networking--will make it.

"I think every business in general is at risk to some degree right now," said Eric Faurot, a senior vice president at TechWeb, which puts on the Web 2.0 conferences, as well as many others. "In the event business, the stronger events, the really healthy events that have a real purpose to them, will emerge stronger, and weaker events will just die. They just won't survive."

Demo, of course, is in a transition period. It announced earlier this month that its longtime director, Chris Shipley, would be stepping aside after its fall 2009 iteration and that VentureBeat CEO and editor-in-chief Matt Marshall would be taking over. Marshall will appear on stage with Shipley at next week's event.

The Demo formula
Some might say that Demo's model of charging a fairly hefty fee to exhibitors, as well as several thousand dollars to attendees--not to mention the fact that it's held at pricey resorts in out-of-the-way places like San Diego, Palm Springs, and Phoenix--would make it a candidate for extinction. But Demo may in fact have just the right formula.

Asked if his software company, Bomgar Corp., would exhibit at Demo in the future after having done so two years ago, CEO Joel Bomgar was unequivocal: "Absolutely....We considered it a huge benefit when we did it."

Bomgar said he had paid $18,000 to present at Demo, and wouldn't blink at paying such a fee again, even if it had gone up a bit.

"If it was a matter of spending $20,000 to get in, we would alter our budget" to do so, said Bomgar, who is speaking on a panel at Demo next week, but who otherwise has no connections to the show. "All of the (benefits it offers), you can leverage to a value that far exceeds $20,000."

To Bomgar, one of Demo's most valuable functions is its traditional filtering process, in which organizers whittle down hundreds of companies--all of which are willing to pay the five-figure fee--to the between 65 and 70 that are finally chosen to present.

"The media and the venture capitalists show up to a show like Demo," Bomgar said, and "they know they're getting the cream of the crop. If they were just getting a random selection, that's instantly less compelling, rather than getting a focused group."

For Michael Arrington, who wears the hats of both a prominent tech journalist--editor of TechCrunch, which he founded--and one of the organizers of TechCrunch 50, a conference's value comes from the people he meets.

"I need to be around CEOs," Arrington said, "because they're the ones that will talk (about what their companies are doing). And there needs to be a lot of news breaking."

That's the lesson conferences can learn in order to stay vital, Bomgar suggested: Give the press and the money people the confidence that they won't be wasting their time by attending, and they'll go out of their way to come, regardless of where the event is. And if the media and the top VCs are on hand, then serious companies that are committed to building their businesses will line up to exhibit, even if they have to pay a hefty fee to do so.

The TechCrunch 50 model
There are other models, of course. For example, TechCrunch 50, an annual show in San Francisco put on by, among others, Arrington and Weblogs Inc. and Mahalo founder Jason Calacanis, gives a select group of start-up tech companies a chance to showcase their wares in front of many of the most prominent tech journalists in the world--without paying a fee.

"We don't charge anything (to exhibitors) for TechCrunch 50, so the only cost is people's time," said Calacanis. "In a down market, many intelligent and creative people have extra time. There is literally zero cost to the startup....If they make it to the main stage, they get $250,000 to $1 million worth of exposure in my estimation."

And according to Calacanis, the TechCrunch 50 model seems to be working pretty well. "We've seen more demand for this year than the previous two years in terms of companies asking us for the deadlines,speaker requests and sponsorship."

Still, expecting conferences to expand in this environment is unrealistic, said TechWeb's Faurot.

"You can't defy the physics of travel restrictions, and paying for conferences," said Faurot. "So any event that doesn't have a rock-solid position is at serious risk...You're going to sell less conference passes than last year, and you're going to sell less sponsorship than last year."

He explained that while TechWeb considers itself fortunate to have "the market leader" in several conference categories, it is without a doubt seeing the effects of the economic downturn. Faurot said where growth for some of the shows might have been around 30 percent two years ago and 15 percent last year, this year the company is simply hoping not to lose ground.

"We're calling flat the new growth," Faurot said.

Factoring in social media
While the evolution of social media--and the promotional and networking opportunities that services like LinkedIn, Facebook, Twitter and others give companies and individuals alike--may pose a threat to conferences that are not prepared to deal with it, it also presents a big advantage for those that are.

"In our experience, we've actually found that social media has increased (attendance at) events," Faurot said, "because people who are building relationships online, and people then have a reason to meet that person physically. It's very powerful. I think you just have to embrace it."

And that's where Demo may be in a good position, he added.

"People say, 'Of course, I can release my product at a number of events,' and there's a lot of alternatives to doing a launch at something like Demo," Faurot said. "But on the other hand, Demo is creating a time and place where people are focused on a category. The bet is you're going to amplify more (there) than if you just did your own announcement."

One phenomenon that has gotten a lot of notice in the last couple of years is what is called "lobbyconning," where people who haven't paid to get into a conference hang out in the lobbies at the event venues in order to network with the paying attendees.

But Faurot said that the activity of lobbyconning existed long before the term became well-known, and that, in fact, conference organizers who don't see such behavior are going to be unsuccessful.

"The worst thing for an event is when someone doesn't want to sneak into it," Faurot said.

One who isn't planning to sneak into Demo is BusinessWeek reporter Arik Hesseldahl, a longtime attendee of the conference. In a story he wrote earlier this month about Shipley's departure from the Demo directorship, Hesseldahl touted the value of the show.

"Shipley has run a great show, one that I have always considered a must-go," Hesseldahl wrote. "I quit attending most of the other tech conferences, but have always liked Demo because it is manageable, and because it's always interesting. Shipley has always picked a great crop of companies and I always leave Demo feeling optimistic about the future for tech companies and for the general state of innovation."

Of course, as a longtime attendee, Hesseldahl's enthusiasm for Demo isn't a surprise. But one person who gave the conference an endorsement was, perhaps, unexpected.

"I'll certainly go to (DemoFall)," said Arrington, who had stirred up a fair bit of controversy last year when he and Calacanis scheduled TechCrunch 50 at the same time as the 2008 edition of DemoFall and who, at the time, said, "Demo needs to die." "I think we're on different weeks this year. If we're invited, we'll go."