That forecast by the New York-based private equity firm is just one indication of the changes awaiting the b-to-b media sector, changes that have been set in motion by the rise of the Internet over the past 15 years. The next five years in b-to-b media, according to VSS, will see a continuation of these changes: the solidification of trade shows as the largest segment of this sector, the rapid growth of e-media spending and the long-term decline of print advertising.
“I think it’s pretty much what people would have assumed,” said Hal Greenberg, partner at VSS Structured Capital Funds. “Certainly, I think most people assumed there will be a continued decline in [print] advertising.”
The VSS report anticipates that spending on b-to-b print spending will decline 11.2% to $7.22 billion this year. Between 2009 and 2014, print spending will continue to drop at a compound annual rate of 4.8%. By 2014, print spending will plummet to $6.36 billion, down from $10.34 billion in 2004, VSS predicted.
The decline in spending will be due in part to the closure of underperforming magazines across a number of industry verticals. “Where there were maybe three or four titles in any given market, there are probably only one or two that are viable,” Greenberg said.
E-media will continue to grow, according to the “Communications Industry Forecast.” This year, e-media spending is anticipated to reach $4.78 billion, an 8.7% increase over 2009. By 2014, e-media spending should reach $8.03 billion on a CAGR of 12.8% from 2009 to 2014.
VSS is also bullish on trade shows, which is fitting for a firm that is heavily invested in Advanstar, itself a large producer of such exhibitions as the MAGIC fashion industry shows. Although the exhibitions and conferences sector is expected to decline 3.0% to $12.36 billion this year, it will return to growth next year, VSS predicted. It anticipates that trade show spending will reach $15.63 billion by 2014, on CAGR of 4.2%.
Overall, VSS predicted that b-to-b media will increase by a CAGR of 3.5% between 2010 and 2014, which would lift industry spending to $30.01 billion in 2014. Even with that steady growth, it will be barely enough over the next five years to erase the devastation that the 2009 recession wreaked on the b-to-b media sector. VSS said overall b-to-b media spending will not reach 2008 levels until 2014.
Despite that sobering projection, there are reasons to be optimistic about the b-to-b information sector in general. When VSS factored in custom publishing, a growth area for b-to-b media, the b-to-b media sector is expected to expand at a CAGR of 4.1% and reach $33.41 billion by 2014.
Additionally, business and professional information and services, an area which many traditional b-to-b media companies are exploring, will be the fastest-growing industry sector between 2009 and 2014, growing at a CAGR of 8.2%.