Chicago—In an era of shrinking advertising margins, paid business information can generate robust returns, according to data from American Business Media and InfoCommerce Group presented Tuesday at the ABM Executive Forum here.
Michael Alterio, ABM director of research, said business information product sales offer “probably the biggest opportunity for the growth of paid content.” He said sales of such products last year generated $18.2 billion in revenue in the U.S.
Margins of 40% to 50% are not uncommon for business information products, Alterio said. According to ABM research, 25% of business information revenue comes from products that are less than three years old.
Russell Perkins, managing director of InfoCommerce Group, said business information offers “annuity characteristics,” with a dependable return over time. “It's a great way to provide revenue diversity,” he said.
Perkins listed several companies that enjoy big returns from business information sales. These include IHS Inc., which has renewal rates of close to 100% from its 1,000 largest customers. Hearst Business Media has average contracts of five years with its business information customers.
Publishers also benefit from the phenomenon that as the revenue of particular business information products goes up, so does the renewal rate, Perkins said.
According to ABM research, the growth for such products is typically in the 4%-to-7% range.
“Pricing does seem to be trending upward in the industry,” Perkins said. “These are must-have products.”