Business media companies plan to accelerate growth
State of B-to-B Media
By Marie Griffin
In 2013, business media companies are following the maxim that what does not kill one makes one stronger, taking full advantage of the restructurings, downsizing and hard-won lessons of the recession as they ramp up for growth.
Growth projections for the b-to-b media/events/information sector are positive, ranging from 3% to 5% annually for the next few years. But those forecasts assume business media companies will continue to operate leanly, broaden their revenue streams beyond print and online display advertising, implement digital- and mobile-first approaches to content, expand marketing services to regain budgets lost to marketers' own websites and social media efforts, and invest in technologies to better manage and analyze data.
Andrew Weber, CEO of Farm Journal Media, said the agriculture vertical did well during the recent recession, especially compared with 2003 and 2004 when consolidation caused ad spending to be cut in half. “First we hunkered down,” he said. “Then we had to change our entire mindset and culture.”
Weber now sees a similar change in outlook among other b-to-b media executives. At recent industry events, he said, “there's a new attitude. A number of new executives are in place and everyone seems eager to explore new things, not just to try to sell another ad page or fill another seat at a trade show.”
Farm Journal Media is trying to use its position of strength to change the makeup of its business, Weber said. “By 2017, our plan is to take our revenue mix from 85% sponsor-driven and 15% end-user-driven to a more balanced 50/50,” he said. “We feel we can organically move in that direction quickly, but we're also looking at acquisitions of subscription- or transaction-based businesses.”
One of Farm Journal's newest user-paid ventures is its Top Producer Executive Network (TPEN), in which executives running some of the nation's highest-producing farms are put together within small peer-to-peer working groups and given support, such as research, to help improve their businesses. Members pay $10,000 each to join the groups.
In March, a month after TPEN was introduced, Farm Journal formed an alliance with the Family Business Institute whereby the institute would provide facilitation and consulting services for TPEN and Farm Journal would acquire the institute's agricultural peer network. By the end of 2012, seven TPEN groups had been introduced. “We were cash-positive in our first year,” Weber said. “TPEN will have seven-figure revenues and be profitable in 2013.”
Unlike agriculture, the construction industry—which is Hanley Wood's sole sector—is just emerging from a deep and prolonged recession. Surviving this period required “a dramatic focus on the cost side,” said Peter Goldstone, who was Hanley Wood's president until November 2010, when his own position was cut to save money. He then moved to Atlantic Media (which he calls “digital media boot camp”) as president of Government Executive. After a financial restructuring of Hanley Wood in early 2012 put new ownership in place, cut long-term debt and infused new capital, Goldstone rejoined the company as CEO last April.
Goldstone said that with its new four-year plan, Hanley Wood is committed to aggressive top-line growth, driven mostly on the digital side, along with continued recovery of its trade shows and events. Critical to that strategy is greater emphasis on “information, tools and knowledge that allow [our customers] to make intelligent decisions that help grow their businesses,” he said. Earlier this month, Hanley Wood expanded its business intelligence offering with the acquisition of Metrostudy, which provides primary and secondary market information to the housing and related industries. The newly acquired unit is being merged with Hanley Wood Market Intelligence, the company's paid-subscription business intelligence platform built on a database of homebuilding activity. The combined business is expected to operate under the Metrostudy brand name.
Culturally, Hanley Wood “is probably going through the most radical transformation I can envision for any traditional b-to-b media company,” Goldstone said. New executives brought in to help lead that transformation include Bob Benz, president of content, who brought a decade of experience on the interactive side of E.W. Scripps' newspapers; Dave Colford, chief revenue officer, who honed his tech media sales talents at Geeknet, Ziff Davis, CMP (now UBM Tech) and IDG's InfoWorld; and Sarah Welcome, senior VP-audience operations, who also worked at Geeknet and IDG. While Benz implements new digital-first practices on the content side, Colford and Welcome are building new lead-generation programs and the infrastructure to power them.
The new deals
The media, information, marketing and technology sectors logged a combined 1,351 transactions last year, 50% more than in 2011, and saw a 43% increase in deal value for a total of $74.7 billion, according to Jordan, Edmiston Group. “We are expecting 2013 to be active as well,” said Adam Gross, Jordan, Edmiston's chief marketing officer.
Gross shared preliminary results of the third annual “Media Growth Survey,” a joint effort of Jordan, Edmiston and Econsultancy. Results of the survey of top executives of media, information, marketing services and technology companies will be released at Jordan, Edmiston's annual Media & Technology Conference Jan. 17 in New York.
Responses for the top two projected growth drivers in the next 12 to 24 months were “fairly close,” Gross said. The most popular answer was launching new products/services, followed by the expansion of market share within existing markets. Third, “and not far behind,” Gross said, was making an acquisition. “Sixty-one percent were very or somewhat likely to make an acquisition,” he said, while 31% of respondents said they expected to make a divestiture.
Among the b-to-b media deals last year was NewBay Media's acquisition of U.K.-based Intent Media. NewBay has a strong track record of growth through acquisition, with Intent being its sixth since 2007.
“We had a small international reach prior to this,” said Steve Palm, NewBay president-CEO. “Intent gives us scale, management talent and infrastructure we didn't have internationally.” To maximize cross-pollination opportunities between the U.S. and international operations, Palm will allow the two units to “run in parallel” rather than integrating them.
“It's a great time to be in b-to-b,” Palm said. “We're testing and evaluating about two dozen [organic] growth opportunities,” he added, including marketing services, e-commerce, expansion in live events, mobile and tablet platforms, improving sell-through of existing digital advertising, virtual events and lead generation.
Many b-to-b media companies are currently rebalancing their brand portfolios through acquisitions and divestitures. For example, Penton Media, one of the industry's largest players, more than doubled its reach in its largest sector, U.S. agriculture, with its $80 million acquisition of Farm Progress from Fairfax Media in November. In October, Penton trimmed its portfolio in the marketing sector by selling its Chief Marketer, Direct, Multichannel Merchant and Promo brands to Access Intelligence.
Family-held Bobit Business Media also made portfolio shifts with three acquisitions and one divestiture in 2012. In May, Bobit fortified its No. 1 position in the fleet vehicle market with the purchase of Newport Business Media's Heavy Duty Aftermarket Journal, Heavy Duty Trucking and TruckingInfo.com. It then closed three deals in December: It acquired the assets of LimoforSale.com, its first all-digital purchase, to complement its limousine charter and tour group, and also bought the magazine and digital assets of Auto Dealer Monthly to strengthen its dealer group. Bobit sold Hotrod & Restoration magazine and its accompanying trade show and website to National Business Media because “it really didn't fit in our portfolio anymore,” said Ty Bobit, Bobit Business Media president-CEO.
“Our strategy has always been conservative growth, but we're getting a little more aggressive,” Bobit said. Like NewBay's Palm, he said he believes b-to-b media is a good sector to be in. “Every year has been getting better since 2010, and we expect a pretty good picture for 2013,” he said.