This is my favorite time of the year: budget time. At my company we look at all the wonderful ways to spend money on communicating with prospects and customers. Working for a small company, we take every dime we spend very seriously. Last year, we attended five conferences. As we plan this year’s budget, we are asking the hard questions about whether sponsoring conferences is really worth it.

We all know the kinds of conferences I’m talking about. They include SalesForce’s DreamForce, Web 2.0, Enterprise 2.0, user conferences, etc. These conferences can be very costly. In addition to the steep fees they demand for companies to qualify as sponsors, the travel and prep costs are often significant (unless you get lucky and the conference is in your town). Money aside, the amount of time spent on collateral, prep, logistics, and so on is a big investment. Granted, once we get to the conference, we usually find our time is worth it. We end up demoing to a large group of people who appear to be genuinely interested. We usually acquire a handful of customers by the time we work through the sales process, so there is a return on investment there.

However, when you add it all up, the ROI may not be worth it. Could we have spent our time and money on more fruitful endeavors? Maybe. There are ancillary benefits to these conferences. We usually meet writers, analysts, and others, so we get exposure and PR, but it is usually hit or miss. If a particular conference is a priority for your company, attending it certainly could change the equation.

Another big factor to consider these days is the economy. Attendance at conferences looks like it will fall sharply over the next few years. Companies are not going to spend money to send people to them unless absolutely necessary. Attendance at the CES conference dropped 30% this year, for example.

Even if you do find the right conference for your company, and it manages to pull in a decent crowd, the problem with sponsoring it is that the bulk of the attendees usually aren’t there to purchase new solutions for their companies; they are there to learn, network, and have fun (all of which I vigorously support). This is the key to deciding which conferences to attend, at least for us. It is all about push-and-pull marketing. If the people who are going to the conference are there to buy, then it is a good conference to attend. If we are there to pull them in, rather than push ourselves out, then we love it. But if we are there amongst a sea of other booths and companies to display our wares, then no thanks. This is the main criterion we use to pick which conferences to invest in: are the attendees real buyers with real budgets? It sounds simple, but you would be surprised at how few companies really look at conferences this way.