Is Demand for Pro AV on the Uptick?
Mmmm, 65.7. Gotta love 65.7.
It’s a never-before-reached number. And if it’s got legs, 65.7 could mean good things for the AV industry in the coming months. (That said, despite the obvious, it may not be as great as the number 63.5, but I digress.)
You see, 65.7 is how buyers of AV systems rate their future demand for said systems, according to InfoComm’s October 2012 Economic Snapshot Survey [PDF]. It’s the highest-ever InfoComm Demand Index (IDI) since the association began measuring demand in 2009.
And what of that 63.5 mumbo-jumbo? That’s the IDI for the six months prior to the most recent survey. In other words, a measure of how AV customers rated their actual demand over the spring/summer. Again, that’s the highest (by a hair) IDI of past performance ever.
Besides the IDI being at its highest level, the October 2012 Snapshot also marks that index’s turning point. Over the past several Economic Snapshot Surveys, the IDI was a measure of vacillating (or even disappointing) demand. Of course, one optimistic survey does not necessarily signal a positive trend, but it’s a good sign and reason to check back to see if the next Snapshot continues the good news.
But quickly, for those of you who are new to InfoComm’s Economic Snapshot Survey: InfoComm started fielding it in 2008, when the recession started threatening the AV industry and companies were looking for insight into what to expect going forward. Over the years, more and more industry professionals have participated in the survey, from 222 in the beginning to a whopping 818, including end users, this time around. That’s another record and a sign that the Snapshot has become a reliable gauge of industry performance and a study that AV professionals want to be part of.
And it’s truly of international scope.
“This is the most geographically diverse Snapshot to date, with participants from 50 countries,” Duffy Wilbert, CTS, InfoComm’s Senior Vice President for Member Services, told me. “In general, respondents from Latin America have the most positive view of the economy while those in Europe are the least optimistic. But across all geographic regions, respondents in general say the economy seems stable and they expect business to pick up in 2013.”
Now, if you’ve read past Snapshots, you know that the InfoComm Performance Index (IPI) is the main measure of how AV companies think their businesses are doing now and will do in the future. In general, the IPI looking ahead six months is usually higher than the IPI looking back six months, an indication that companies remain optimistic about the future but don’t always meet their heightened expectations. This Snapshot is no exception, as you can see from the chart below.
The most recent Economic Snapshot includes a brand-new measure of business performance. Whereas the IPI gauges companies’ feelings about how well they’re doing, the new InfoComm Company Health Index (ICHI) factors in actual company health indicators, including number of employees, office space used/occupied, number of offices, capital investments, bid requests, gross revenue/turnover, and overall company profit. Respondents were asked to evaluate each indicator on a 5-point scale from “significantly increased” to “significantly decreased.” Those indicators were then weighted and aggregated to come up with an ICHI that runs from -100 (significant contraction) to +100 (significant expansion).
The first-ever ICHI checked in at 25, which puts the health of the AV industry somewhere between “steady” and “moderate expansion.” Here’s an insight from the actual Snapshot:
It appears that while the respondents use the IPI to depict a “running in place” scenario with regard to how they feel their company has performed, the ICHI shows that the typical company has added staff, increased capital investments, realized increased revenue/turnover and profits, and is seeing an increase in bid requests.
In short, the ICHI is a significant new barometer for AV industry health. Check back with future Economic Snapshots to monitor its progress.
Wait! I know you’re dying to ask: “Is the presidential election having an effect on the AV business?”
Anecdotally speaking, perhaps. The newest Snapshot doesn’t explicitly ask the question itself, but in the respondent feedback sections (my favorite), where AV providers and users sound off on trends, there’s a feeling of wait-and-see based on the pending outcome.
“Too many of our customers are sitting on cash and not spending,” one person wrote. “ The election will either make them positive and they will start to invest again, or it will be more of the same cash holding measures.”
Researchers theorize that heightened political rhetoric likely means that in the short-term, until the election is behind us, the industry may be characterized by an atmosphere of perception overshadowing performance. In other words, because the economy will be so central to the election, companies may perceive things as worse than they really are. How that affects business remains to be seen.
Homework: Get yourself a copy of the October 2012 Economic Snapshot Survey, read it over, and pen your reactions in the Comments section. Is it spot-on with your company’s experiences? Or is it a bunch of hooey and you’ve got the right answers? Let us know.