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— Backstory —
In fact, of respondents representing 20 B2B media companies of varying size, 94.4% claim to have no print initiatives planned for this year. That's as close to unanimity as one can expect from a sample that ABM characterizes as "total B2B media companies." The survey also reveals the reason behind this consensus. Magazines are the weakest performers of six B2B categories ABM now monitors (magazines, custom publishing, data, online, trade shows and conferences), posting a revenue decline of 8.4% in 2008 versus 2007 and recording a negative 3.9% compound annual growth rate from 2006 to 2008.
The category's profitability contribution (revenue less operating expenses) is even worse. Magazines published by the sample's B2B media companies made a negative 26.8% profitability contribution in 2008 versus 2007 and delivered a negative 16.5% CAGR from 2006 to 2008. But that's pretty much the bad news. The good news: the ability of B2B media companies to keep from imploding as badly as their magazines, which until a few years ago all but defined the sector. While contributions for both revenue and profitability for all six ABM-monitored B2B categories were off in 2008 versus 2007 -- minus 2.2% and minus 7.8%, respectively -- their collective CAGRs from 2006 to 2008 came in at a positive 3.7% and a positive 2.8%, respectively. This means that, as bad as 2008 turned out to be, B2B media companies were still better off than in 2006. The collective results in B2B media also serve as testament to the effectiveness of relatively new revenue streams in keeping B2B media on course. Four ABM-monitored categories (data, online, trade shows and conferences) even managed positive double-digit CAGRs in terms of revenue and contribution. What's more, the three-year CAGR of 27.5% recorded for online moved the category ahead of magazines last year as B2B's leading profitability contributor: $245 million versus $236 million. Any number of survey data points signal that online's newly realized B2B supremacy won't soon be surrendered. While only 5.6% of respondents plan to launch print products this year, 61.1% are planning new Web sites. Conversely, while 44.4% expect to fold publications, only 11.1% expect to close Web sites. Online is clearly ascendant, and it's unlikely M&A or other external factors will reverse its trajectory. Indeed, contrary to earlier surveys addressed in this column, M&A activity may not be much of a B2B factor at all. Only 12.5% of ABM respondents anticipate making an acquisition this year, and only 5.6% expect a divestiture. Richard Mead, the Jordan, Edmiston Group Inc. managing director who last weekend presented findings from the survey at ABM's annual conference, offers his own interpretation of its M&A expectations. "B2B media companies are completely focused on their survival and on getting staffing and cost structures right," he says. "But that could change for companies with access to capital should a great strategic fit come on the market." What won't change for B2B media companies is the durability of their mission. "They focus on marketing channels, on bringing buyers and sellers together," Mead explains. "And while their overall purpose is solidly established, the channels they use keeping changing within." Results from the survey, which used JEGI for analysis and presentation, corroborate the notion that B2B media companies are managing their channels better than commonly perceived. Operating profit (contribution minus general and administrative costs) has held up even better than revenue and profitability contribution, producing a positive 5.5% CAGR from 2006 to 2008. Margins, meanwhile, hover around 20% -- a level Mead recognizes "many manufacturing companies would love to have." As for total employees, the number at ABM's 20 sample companies fell only 0.1% in 2008 versus 2007, whereas those same staffs actually increased at a 4.6% CAGR from 2006 to 2008. While this hardly seems consistent with the wholesale layoffs the media in general have been reporting about themselves, the survey offers up its own reason for the stability of B2B employment: Revenue per employee has held steady from 2006 to 2008 at a very impressive $290,000. Richard Morgan covers media for The Deal. |
There are many surprises in American Business Media's just-released Media Financial Survey for 2009, but the responses of B2B publishers about launching print publications isn't one of them. 
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