‘The bubble has burst’: Brands are pulling back on SXSW 2017

So attendees will be able to play with the Capital One Skill app for Alexa in the product room downstairs and then head upstairs to hear a talk by the team of developers, designers and product managers who built the product, explained Heidersbach. “Focus is a good word for us this year,” she said.

Capital One is not alone. Spotify, for instance, hosted its fifth Spotify House live concerts at SXSW last year to peacock its streaming music dominance. This year, the platform is hosting some private recording sessions instead. And Hype Hotel — a week-long live music performance presented by Mazda and music blog Hype Machine — is gone this year. (Mazda will host concerts at Empire Control Room through other partnerships.) The Fader Fort, one of the most popular live music parties at SXSW, is also moving from an open field to the indoors — to a smaller venue.

Justin Malone, operating partner for the Waller Ballroom and Waller Creek Pub House, feels the scale-back across Austin. Companies’ budgets are much smaller this year, he said. And previously, Malone’s team typically received venue inquiries around six months prior to SXSW. This year, many are scrambling last minute.

“Microsoft pulled out this year, which is huge. Yahoo had been at SXSW for six or seven years but it pulled out last year and has never come back,” said Malone. “I think the bubble has now burst. In the past, corporations spent lots of money on SXSW but when they looked at the bottom line they didn’t see return on investment. I think it’s hard to quantify how much they get from a conference.”

Another reason for the slowdown, Malone said, is that some venues didn’t charge a fair price during SXSW in the past, which left a bad taste in clients’ mouth. In response to the scale-back, Malone is offering a multi-day discount to attract more companies.

“We are more active in approaching clients this year than before,” he said. “Previously, companies came to us.”

Josh Rowe, partner and vp of experiences for experiential marketing agency META.is, thinks that the slowdown could also be ascribed to the fact that companies’ event strategies are shifting from big blowouts to small-scale takeovers.

“For the last few years, brands have produced larger, more grandiose events during SXSW in an effort to stand out from the crowd,” says Josh Rowe, who produced Hype Hotel and PureVolume House at SXSW. “But that can be a difficult thing to achieve. So now, we’re seeing brands increasingly shifting their focus to concentrate on more defined marketing goals with an event strategy that will achieve those more-specific goals, or no event at all.”

The hype around SXSW has begun to wane as other events like Social Media Week have also stepped up their game, said Donna Tuths, global head of digital content for Accenture Interactive, who decided not to attend SXSW this year. SXSW was not available to comment on the story at press time (but for the complete Digiday list of what’s in and what’s out at SXSW this year, click here).

It’s not just big brands: Agencies are scaling back, too. For instance, while Huge will host panels, client meetings and parties at speakeasy The Midnight Cowboy again this year, it is sending around 30 executives to SXSW this year compared to 40 last year. “We keep a consistent presence but take a more focused approach this year,” said Sam Weston, vp of communications for Huge.

Havas is keeping a super low profile this year: The agency is sending junior talent to bring back takeaways for the office at its annual SXSW Shareback at the end of the month. And Team One is sending 15 executives to SXSW this year, three fewer than last year. The agency also stopped hosting bar takeovers on Rainey street as part of its recruiting efforts three years ago — instead, it started participating in SXSW’s career fair programming.

But it’s GSD&M’s director of experience, Rye Clifton, who has the most optimistic spin on the phenomenon. “There are lots of people pulling back,” he said. “But at the same time, there are new people showing up.”