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State Of B2 B 2008 Presentation
1. The State of B-to-B 2008
Today’s Speakers:
Tony Silber, editor and publisher, Folio:
Bill Mickey, senior editor, Folio:
2. Today‟s Sponsor:
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3. What We‟ll Cover Today
• A look at the previous three-year trends
• 2007 trends
• A snapshot of ABM‟s Cost Report
• The outlook for 2008
• Conclusions
4. Leading up to 2008
• A strong trailing three years
• Revenues and profitability generally up
• Print advertising still dominant revenue contributor
• Online is the fastest growing sector
• Events also a strong contributor
• Diversification plans firmly in place
7. B-to-B Revenue Change: 2004-2006
70%
60%
50%
40%
30%
20%
10%
0%
2006 2005 2004
Source: B-to-B CEO Surveys; Folio:
Increased Decreased Stayed the same and Readex Research
Revenues have been on the rise, too. E-media
and events have been key drivers.
8. Revenue is Moving Online
70
60
50
40
30
20
10
0
2006 2005 2004
Source: B-to-B CEO Surveys;
Folio: and Readex Research
Print Events E-Media Custom Paid Subs
E-Media and events, along with custom
publishing have been on the rise.
9. Fastest Growing Parts
of the Business: 2004-06
Source: B-to-B CEO Surveys;
Folio: and Readex Research
Print takes a dramatic plunge, while e-media overtakes
it as the fastest growing business segment.
10. On the Cost Side
4,000
3,500
3,000
Advertising expenses
Circulation
2,500
Editorial
2,000
Production
Distribution
1,500
Ancillary
1,000
Total
500
0
2004 2005 2006
Figures in thousands (000)
Source: ABM Cost Report, JEGI, Padin Estabrook LLC
On the cost side, circ, edit, production and
distribution expenses have been on the rise.
11. Costs Outpacing Revenues
Percent Change in Expenses 2005-
Percent Change in Revenue 2005-
2006
2006
Advertising Expenses 2.5%
Advertising Revenue 0.4%
Circulation Revenue 3.3% Circulation Expenses 9.5%
Total Ancillary Revenue 23.2% Editorial Expenses6.5%
Total Revenue 2.5% Production Expenses 5.1%
Distribution Expenses 3.9%
Total Ancillary Expenses 34%
Total Operating Expenses 6.0%
Source: ABM Cost Report, JEGI, Padin Estabrook LLC
12. A Look at 2007
• Print revenues remain flat, despite being
largest contributor
• Costs are increasing due to materials pricing
and more business development
• Staffing remains a challenge: Not just hiring
more people, but specialists
13. Likely Sources of Increased Revenue: 2007
90
80
70
60
50
40
30
20
10
0
Online Ne w Print Existing Ev e nts Custom Data Subs
M edia Ads Print Ads Pub
< $5 million > $5 million
Despite favoring e-media, publishers still optimistic for
print revenues this year.
14. Changes in 2007
50
45
40
35
30
25
< $5 million
20
> $5 million
15
10
5
0
Ancillary M agazine Acquisition of
Acquisition by
Star tup Star tup Anothe r Anothe r
Company Company
Publishers have remained bullish this year on
continued business development.
15. Challenges in 2007
25
20
15
10
5
0
Bus . Dev. Executing Pr ofitability Top line Gro w th Sales Staffing
Ove rall
Direction
< $5 m illion > $5 m illion
Large and small companies differ in their revenue
and profitability challenges.
16. Outlook for 2008
What does this all mean for next
year and beyond?
These categories loom large in the minds of B-to-B execs:
• The Economy
• Downward Pressure on Print
• Increasing Costs—Materials and Otherwise
• E-Media
• Staffing
17. The Economy
Execs are wary about the economy in 2008. A bad
economy is bad for business.
• “For b-to-b overall, I believe there is only one thing to watch in
2008—the economy.”
—Paul Mackler, CEO, HMP Communications
• “I think it‟s going to be a tough year, with lots of economic
worries. Batten down the hatches. It‟s a good time to review
what you do and how you operate.”
—Neal Vitale, CEO, 1105 Media
18. Downward Pressure on Print
Flat to single-digit growth to continue.
• “After a couple years of „relative‟ stability in print (flat to down single
digits), I am expecting next year we will see a much bigger decline in print
on average across the industry as economic issues within certain markets will
likely lead to a pull back from some of the larger advertisers.”
—James Ogle, CFO, Cygnus Business Media
• “The „same-old/same-olds‟ hold true for next year—higher postage and
possible paper price increases continue to put pressure on print. Served
market and overall economic enviroment will influence our businesses.”
—Don Pazour, CEO, Access Intelligence
19. Increasing Costs
Publishers are taking on increasing costs at a faster
rate than revenue growth.
• “Rising production costs (paper/postage) will not help us a I think it is
hard to maintain margins without a deadly focus on page yields when ad
pages are a challenge to increase in a material way.”
—James Ogle, CFO, Cygnus
• “There is an out-of-control escalation of paper prices. A tight paper
market has been created by consolidation and an industry-orchestrated
change of the supply and demand dynamics.”
—Dave Kamis, VP, production & manufacturing, Crain Communications
20. E-Media
Along with events, e-media is often cited as the fastest-growing
business segment. But will growth slow as the medium matures? And
when will returns surpass investment?
• “Certain publishers that have seen dramatic growth rates of 40-plus
percent will not be as common. The recent ABM release stated an
average of 18 to 22 percent growth online for 2007. I do not anticipate
the industry average being much more than that next year.”
—James Ogle, CFO, Cygnus
• “I think that, ultimately, the marketing pendulum will swing back from
short-term programs to more integrated and thoughtful multimedia
plans, but I don‟t know if we‟ll see that in the coming year.”
—Neal Vitale, CEO, 1105 Media
21. Staffing
Publishers will continue to grapple with staffing issues. The search
is on for not just volume, but specialists, especially in cross-
platform content and sales.
• “It is difficult to find experienced talent that „gets it‟ in the integration
of print and online for any job—sales, marketing or editorial.”
—Cam Bishop, CEO, Ascend Media
• “There is a huge cost implication with digital. Once you have a mature
business and the revenue catches up with the cost, that falls to the bottom
line. But I think we‟re still five years out from that. We have such skeletal
staffs on print right now and there is this tidal wave of digital coming. You
can‟t staff up fast enough.”
—Peter Goldstone, president, business media, Hanley Wood
22. What to do?
Advice from the field.
• Review your operation and “batten down the hatches.”
• Review pricing strategies across all platforms.
• If in buying mode, consider a digital media business.
• Keep close tabs on materials pricing
• Continue to build out and offer truly integrated multimedia ad
programs. As tastes mature among marketers, they‟ll want to move
from short-term to on-going programs. It won‟t be just about “display.”
• Recruit specialists. Look for new talent from a variety of sectors, not
just traditional media.
23. Questions?
If we did not get to your question today, you may e-mail
Tony and Bill directly:
Tony Silber: tsilber@red7media.com
Bill Mickey: bmickey@red7media.com