The state of b-to-b media
Fighting to stay in touch
By Sean Callahan
Some recent figures from American Business Media depict a growing b-to-b media sector. Not surprising, digital revenue for b-to-b media was up 22%, to $1.6 billion, in the third quarter last year over the same period in 2010, according to ABM's Business Information Network figures.
In the same time frame, print revenue increased 4.6%, to $5.7 billion, and trade show revenue increased 1.1%, to $7.7 billion.
Against this background of broad growth in what Outsell Inc. has called a “half-speed recovery,” b-to-b media executives are expressing mild optimism for this year. Jim Vick, staff director-publisher at IEEE Media, spoke for many when he said, “I'm bullish provided we don't have something unexpected happen and the economy heads south again.”
The optimism executives are feeling stems from strength in content, deep audience databases and the ability, honed in difficult times, to generate profitable revenue streams from new sources such as in-person and virtual events, data and paid content.
Outsell estimated the b-to-b trade publishing and company information market grew 3.4% in 2011, to $23.0 billion. The research company anticipates the market will grow at a 3.5% compound annual growth rate through 2014, when it will reach $25.6 billion.
“There are places where business publishers should have the upper hand,” said Andrew Goodenough, former CEO of Summit Business Media. “They have the most comprehensive content, and they have the most comprehensive audience development.”
Yet, at the same time, the b-to-b media sector faces significant threats. Among the largest is the potential value destruction posed by social media and content marketing, as more companies take their marketing spending into their own hands.
“I think you're going to see a certain amount of value destruction [in b-to-b media from social media],” said Bill Pollak, ALM's outgoing CEO.
Surviving social media
There's no avoiding the fact that social media revenue is growing. Facebook plans an initial public offering that will likely be valued at more than $75 billion. LinkedIn Corp. went public last year, and its overall revenue in the third quarter increased to $139 million, up 126% from the year-earlier period.
That revenue is coming from somewhere, and media executives fear too much of it is coming from the budgets of b-to-b marketers. In fact, some liken the threat of social media to the value destruction wreaked by Google Inc. in the b-to-b media sector.
“Google took a big chunk out of display advertising,” Pollak said. “Facebook is taking a big chunk out of display advertising as well.”
Now the sense is that a site such as LinkedIn, which can segment its users by industry and job title among other elements, can siphon away dollars from b-to-b marketing budgets. Ted Bahr, president of BZ Media, publisher of Software Development Times, has no doubt about LinkedIn's danger.
“I believe that social media will begin to suck up a significant amount of b-to-b media dollars over time,” Bahr said. “The primary outlets [Facebook, LinkedIn and Twitter] are beginning to offer increasingly targeted marketing opportunities, and the pricing is based on click-throughs. Measuring performance remains most marketers' holy grail.”
One reason Bahr suspects spending on social media will rise is that his own company is spending more on social media than traditional outlets to market its events.
B-to-b marketers that are spending ad dollars on social media must also staff up to oversee these efforts. “There is also a hidden cost traditional b-to-b media companies are battling: Dollars that used to be spent on media are spent on staffing to monitor and fine-tune a company's online marketing efforts,” Bahr said. “For example, many of our clients are hiring people whose sole job is to tweet, and friend and create a social media presence for their company.”
Social media isn't the only relatively new alternative that marketers have. The rise of search has not only drawn away advertising dollars, it has also prompted marketers to spend more on content to make their websites more attractive to search engines.
“It's not just social media,” Pollak said. “[Advertisers are] basically creating their own content, becoming their own publishing operations. That is certainly as big a threat as Google or Facebook.”
Outsell estimates marketers spent about $67 billion on their websites in 2011—about the same amount as they spent on television advertising.
Mastering marketing services
The outlook isn't completely bleak, however, as media companies also have significant revenue opportunities, industry observers and b-to-b media executives say.
One recent push by publishers has been to offer marketing services as a response to marketers' creating content for their own websites. Outsell identified technology media companies, such as International Data Group, United Business Media and Ziff Davis Enterprise, and agricultural media companies, such as Farm Journal Media and Farm Progress Cos., as leaders in this arena.
However, one b-to-b media executive, who declined to be identified, said much of the b-to-b media industry is lagging behind in marketing services. “It's a nice buzzword,” he said, “but I think the industry needs to accelerate its move into marketing services.”
Some observers say the preoccupation with marketing services and digital projects may be causing b-to-b media companies to ignore one of their great, underappreciated strengths: the power of integrated marketing.
In Outsell's “B2B Trade Publishing & Company Information: 2011 Market Forecast and Trends Report,” Chuck Richard, the research firm's VP-lead analyst, wrote, “The heavy focus on all things digital is blinding many publishers and advertisers to additional revenue from traditional media: combining print, events and digital beats pure-play digital, or just print or just events hands down. Outsell studies provide compelling data showing a 2x cross-media advertising effectiveness multiplier effect: two times more b-to-b and consumer advertisers rate cross-media methods as highly effective than single-media methods, which include using only digital media.”
Most b-to-b media companies are strongly integrated entities, combining print, digital and events. As many of these companies have moved to create unified audience databases around these three media offerings, they have discovered that their audiences are much larger than the typical magazine audit would indicate. Targets who read magazines aren't necessarily the same people who visit a media brand's websites or attend its conferences.
“You know a lot more than anybody else about your market,” Pollak said.
An often overlooked aspect of the integrated media offering is print. B-to-b media companies still have the print market cornered, and this is an area in which ABM statistics show a revenue increase in the third quarter of last year. “It's steady,” Michael Friedenberg, CEO of IDG Enterprise, which publishes Computerworld and other titles, said of print. “It's quite profitable, too.”
Friedenberg, of course, is not standing pat with IDG Enterprise's controlled-circulation magazines. The business has also moved into paid content. Friedenberg said IDG Enterprise's CIO Executive Council, a paid peer membership group, boosted its revenue by 22% in the fourth quarter. “That business was up double digits, year over year,” he said.
Numerous other b-to-b media companies are moving into paid content in various formats. CFO Publishing, which publishes CFO, has built a small paid content business around Excel software training. The company did about 20 paid webcasts last year on Excel and recently launched a $49 subscription e-newsletter on the same topic. “You'd be amazed at how poorly it [Excel] is used,” said Alan Glass, CEO of CFO Publishing.
Other b-to-b media companies have delved into mobile offerings. Farm Progress Cos., for instance, offers a free Growing Degree Days app for Android and iPhone. The app, sponsored by Monsanto Co., helps farmers determine the optimum planting times for their specific area and crops.
Other companies are looking to expand their audiences overseas. IEEE Spectrum, for example, is licensing its engineering content for the development of a Chinese-language website. “We're very hopeful about that project,” Vick said.
And even though many media executives are concerned about social media snatching users and ad dollars from traditional b-to-b media venues, many of these companies are building their own social media sites.
Paul Miller, CEO of UBM Canon, recognizes the power of social media. “There's a threat in any kind of media where the eyeballs are going and, when you look at social media, that's where the eyeballs are going,” he said.
With its DeusM program, which develops social media sites for UBM brands and marketers such as Dell Inc. and Hewlett-Packard Co., UBM has developed a community site around the Design News brand. Miller said the site went from about 200,000 page views a month to about 1 million in about four months time.
“Great content is still what it's about,” Miller said. “It's that the great content is not always produced by you.”