Signs of the b-to-b media sector's health were everywhere at American Business Media's annual spring meeting last month in Boca Raton, Fla., which attracted about 350 attendees, the most since 2000.
One particularly noteworthy sign was that investment bankers stayed on their cell phones and off the golf course-where afternoon networking traditionally takes place at the spring meeting-as they tried to stay abreast of the two big pending b-to-b media deals, for construction industry media company Hanley Wood and for Primedia Business Magazines & Media.
In his official remarks, Gordon T. Hughes II, ABM's president-CEO, lauded the power of the industry, comparing its growth to a "rocket ship." Penton Media CEO David Nussbaum, who was a member of a CEO panel that spoke at the conference, pointed out that in 2004, his company had its first year of revenue growth since 2000. And Stephen Davis, group publisher at VNU Business Media's SRDS, discussing the new code of ethics being created by ABM's publishers committee, cracked, "When publishers are talking about ethics, you know times are getting better."
On the surface, however, the b-to-b media sector doesn't appear that strong. Ad pages grew 1.44% in 2004 compared with 2003, according to ABM's Business Information Network figures. In the same period, b-to-b print ad spending increased 3.83%. TNS Media Intelligence calculated that ad spending grew only 1.7% in 2004; by comparison Internet spending grew 21.4% and consumer magazines grew 11.2%.
But the good news for b-to-b media is that print ad spending is no longer the only indicator of the sector's health. The growth in both top- and bottom-line performance for many b-to-b media companies stems from the Internet, a source that seemed unlikely in 2000, when companies such as VerticalNet were boasting about turning traditional media companies into dinosaurs.
But old-line b-to-b media companies have adapted and evolved. ABM member companies no longer depend solely on print advertising revenue, and a key growth source is the Web, where brand extensions are thriving.
Many of the speakers at the spring meeting focused on Web growth. Penton's Nussbaum, for instance, pointed out that his company's online revenue grew from 5.4% of overall revenue in 2002 to 8.3% in 2004. Between 2003 and last year, Penton's e-media revenue increased 26.6%.
During a panel discussion, Jim Casella, president-CEO of Reed Business Information U.S., said he expected his company's total online revenue to approach 20% of overall revenue this year.
Another panel member, Jeffrey Klein, president-CEO of 101communications, said online revenue for his company grew 37% last year and in the first quarter of this year was up 34%.
The final member of the panel, Forbes.com CEO Jim Spanfeller, predicted that his unit's revenue would overtake Forbes magazine's ad revenue in the next "18 to 20 months."
Another topic of discussion at the meeting was Google and the search engine company's announcement that it would begin testing a new CPM-based advertising program that provides targeted, graphical ads on Web sites. Media Business asked b-to-b media executives about the expected impact.
Some said publishers needed to rely more on their own strengths. "If you're a publisher and you have a third party selling ads for your Web site, it suggests some level of defeat to me," Spanfeller said.
Richard Mead, managing director at Jordan, Edmiston Group, said: "[Publishers] would do better to be as standoffish as they can [regarding Google]. [Publishers] command what Google doesn't have-relationships."
Others thought the announcement might ultimately help publishers. "In terms of the new image advertising, most of our [inventory] is sold out, so it won't move the needle for us. But what's most exciting is the ability to bid for specific sites, which will help strong [media] brands," said Greg Strakosch, CEO of TechTarget.
And one media executive read in the announcement signs that Google foresees increased competition in the search arena. "I can tell you, competition in the search field is starting to happen," Patrick Kenealy, CEO of International Data Group, said during a panel discussion. "[The] idea that there's one overarching search engine is already starting to pass. [There's] lots of diversification to come. I think Google will see itself with lots of competitors."
While publishers seemed more confident in their ability to take on Google, the most prominent indication of b-to-b media's resurgence was the talk surrounding the anticipated sales of Hanley Wood and Primedia Business Magazines & Media. In fact, the two most talked-about ABM members were two who canceled at the last minute: Frank Anton, president of Hanley Wood, and Peter Goldstone, head of the company's magazine division. This led to speculation that a deal for Hanley Wood was imminent.
The speculation officially ended May 26, when Veronis Suhler Stevenson announced an agreement to sell Hanley Wood for $650 million to an investment group led by JPMorgan Partners, a private equity affiliate of J.P. Morgan Chase & Co. (See story, p. 4.)