Budgeting out of the doldrums

With innovation and investment, media executives plan for growth that will outpace a sluggish economy in 2013

By Marie Griffin

With the upcoming presidential and congressional elections clouding the forecast, b-to-b media CEOs are not expecting the economy to provide much lift in 2013. Nonetheless, these leaders are counting on targeted investments and the creativity of their teams as they budget for growth rates that will outpace a likely lackluster economy.

Most b-to-b media executives interviewed for this special report anticipated that they will end this year with mid-to-high-single-digit growth over 2011. Although the budgeting process is just getting started for most, they will be focused on similar revenue growth in 2013 despite low expectations for the economy.

David Kieselstein, CEO of Penton Media since Jan. 30, voiced the predominant view when he said, “I believe we will see an uptick based on new initiatives and—this is an important point—our company can still be successful and grow even if there are external headwinds around macroeconomic trends.”

Access Intelligence President-CEO Don Pazour is similarly bullish about his company's ability to “achieve growth despite flat performance of our markets next year.” Access Intelligence is projected to end this year with revenue up 7% from last year and profits up 15%. Margins have increased because incremental revenue has come from existing products and properties.

“We will budget for mid-single-digit growth and drive to achieve at least 10% growth [in 2013],” Pazour said, adding that increases will come from such revenue streams as site licenses, paid content sold on a per-piece basis and e-commerce.

Tom Kemp, chairman-CEO of Northstar Travel Media, offered a similar outlook. “We anticipate we'll have a pretty decent year next year, even though we don't anticipate a broad economic recovery,” he said. “There are a lot of questions that overhang the economy—high unemployment, the debt crisis in Europe, the budget deficit here, the apparent paralysis in Washington and the upcoming elections—and I think the economy is going to continue to be pretty soft.”

UBM Tech CEO Paul Miller said he is “not anticipating a bonanza year for the economy in any shape or form in 2013.” He is optimistic, though, when it comes to UBM Tech, which recently instituted an organizational restructuring (see story, page 4). “We're in good shape as a business,” he said. “I'm pretty sure we will be able to grow in 2013 because of everything we've been doing over the past five years, making sure our portfolio is correct, making technology investments and strategic acquisitions, and hiring people with a good mix of experience and skill sets.”

Chuck Richard, VP-lead analyst at Outsell, is forecasting a moderate performance for the b-to-b media and information industry in 2013, and he anticipates a “half-speed recovery” for the next few years. Richard pegs the sector's actual growth rate in 2011 at 3.4% and forecasts growth in the range of 3.1% to 3.5% annually for 2012 through 2015. Comparing these projections to a growth rate that averaged 6.5% annually for 2004 through 2007, he said, “We will see positive growth, but it will be at half the pace we saw after the last recession.”

Strong forecast for digital, events

Business media executives said digital media (including marketing services) and face-to-face events were their top-performing platforms this year, and they are relying on those areas to stay strong in the coming year. Although mobile revenue will grow and become increasingly important, they said, the business requires more investment before significant returns will be realized.

“Online is not the shiny new object anymore,” said David Adler, CEO of BizBash Media, which covers the business of meetings and live events. “Because the economy is getting better, our advertisers are hiring new marketing people who are steeped in digital. We're providing our sales team with more digital tools, including marketing automation software and Salesforce.com.

“We also redesigned our website earlier this year and launched a feature called Idea Books. Something like Pinterest, Idea Books allows our users to create personal accounts and store photos from our site,” Adler said.

At Northstar, “digital marketing overall for the company is up [in the] mid-teens off of a significant base,” Kemp said. “We've made significant investments in capabilities and platforms for our Web businesses. With our websites, we're not only updating the designs, we're also bringing in new technologies and world-class partners, resulting in increased traffic and revenues.” Northstar launched its full-service, strategic marketing business unit in April 2011. Although marketing services is still a relatively small part of Northstar's overall revenue, Kemp said the company is “seeing significant and substantial impact on revenue and profits.”

Starting over with a new viewpoint

Michael Cyger, chairman of Cyger Media, is reinventing the b-to-b media business he started after an unusual turn of events. In early 2000, Cyger launched CTQ Media with iSixSigma, a b-to-b portal dedicated to information related to the Lean Six Sigma managerial concept and operational excellence. CTQ, which had grown to include a print magazine, conferences, a research division and an online store, was sold in February 2008 to Schofield Media Group. After unexpectedly losing its bank funding in July 2011, Schofield shuttered its U.S. business. Cyger purchased the remaining assets of CTQ Media in November 2011 and began to rebuild. By that time, the iSixSigma website had not been updated for four months.

“My outlook on publishing has changed almost 180 degrees since I started 10 years ago,” Cyger said. “Back then, I would have said content is the most important thing. Now I say content is on an equal footing with what technology provides to a community. We're fortunate to be able to step back and rebuild our company from a technology, software and community standpoint.”

In addition to monetizing online media through advertising and lead generation, Cyger said he plans to build two additional revenue streams—user-paid memberships and software-as-a-service tools.

In January, Cyger relaunched iSixSigma.com on a new WordPress-based content management system. “We're adding new technology features to the site, such as a gamelike experience where people will be rewarded for being interviewed, writing articles, contributing to discussion forum threads or answering other people's questions,” he said. “We have not launched any membership models yet so I can't give specifics, but it's not going to be a cookie-cutter approach.

“Software as a service [SaaS] is our third focus area,” Cyger added. “Because we have communities that reach hundreds of thousands of users each month, we're able to gather certain intelligence that we will put inside software and sell for a recurring monthly fee.” The first SaaS product, which will incorporate elements of a software deck and metrics, is scheduled to debut this month on www.hashtags.org.

Cyger said his plans are in line with his outlook on the economy. “I'm looking for slow but positive growth. That's why I have the confidence to take earnings from my company and invest them back into technology and people,” he said.

Originally posted on: 9/14/12