American Business Media President-CEO Gordon Hughes said he believes the advertising-based recession is ending.
"I truly believe the worst is over," Hughes said in his opening remarks at the ABMâs annual spring meeting last month in Dana Point, Calif. He added that b-to-b media companies, because they have developed new revenue streams, including the Internet and data mining, are well positioned for a recovery.
"I believe that through hard work and spartanizing, we will come roaring out of the recession with high margins and more profitable than weâve ever been," he said.
In an interview last week, Hughes reiterated his optimism. "I think that the [television] upfront went very well, and weâre seeing that radio is getting some more action than they thought," he said. "We [b-to-b publishing] are a lagging indicator, not a leading indicator, so I feel safe saying that in the fourth quarter of this year and the first quarter of next year, weâll see an uptick."
Hughesâ sunny optimism mirrors the ABMâs new marketing campaign, created by Mad Dogs & Englishmen, New York. An ad in the campaign features a visual of blue skies accompanied by the headline, "With the economy expanding, your spending on b-to-b media should, too."
Despite the adâs forceful optimism, b-to-b ad spending continues to decline, falling 20.2% to $633.3 million in March compared with the same period last year, according to the latest Business Information Network figures, which are compiled by Competitive Media Reporting for ABM.
Many executives from ABM member companies attended the spring meeting, and they expressed an outlook as gray as the stubbornly cloudy skies above Dana Point.
"[The recession] will end," said Tom Kemp, chairman-CEO of Penton Media Inc., Cleveland, "but the big question is when." He added that the most recent data he has seen indicate that ad revenue will likely continue to decline in the near term but at a slower rate than last year.
Chuck Roth, president of Farm Progress Cos., Carol Stream, Ill., said: "Weâre pretty sure itâs bottomed out. Itâs not going to get a lot better real soon. We donât think it will rebound until 2003."
"This could be a slow recovery, when a recovery ever starts," said Gary Marshall, president-CEO of CMP Media, which publishes InformationWeek, CRN and other tech titles. Like most b-to-b media companies, CMP has responded to the downturn by cutting staff and shuttering titles such as InternetWeek. The result, said Marshall, is a company primed for a rebound. "We donât need to get back to 2000 revenues to get back to 2000 profits," he said.
Belt-tightening, however, is not the only response CMP has had to the downturn. The company launched a new publication, Optimize, last year, and it has continued to invest in Web initiatives.
Similarly, other b-to-b media companies are developing new revenue streams, as they did during the 1991 recession.
New revenue streams
A decade ago, trade shows and conferences were the most common new revenue streams for b-to-b publishers. Now, b-to-b media companies are looking for new ways to make money from their Web presence and their databases on the industries they cover.
"There is real revenue in data," said Hughes, who pointed to the example of PennWell, which was able to sell its database on oil and gas lines to telecommunications companies.
But Hughes and the ABM also recognize that calls for increased privacy on the Internet and elsewhere may cut into potential revenue from selling data. As a pre-emptive strike to protect this potential revenue, Hughes announced at the spring meeting that ABM plans to take a leadership role in encouraging Congress to recognize the difference between business privacy and consumer privacy.
Robert L. Krakoff, chairman-CEO of Advanstar Communications Inc. and incoming ABM chairman, said, "Capitol Hill must understand the difference between business privacy and public privacy."
In the meantime, publishers are searching for positive signs in the economy. "Weâve got a flat revenue forecast for this year," said Jim Watt, president-CEO of Watt Publishing, which publishes Poultry International, "and if that happens weâll consider it a good year."