The economic slowdown is having a negative effect on b-to-b media companies of all stripes, but smaller publishers may be feeling the most pain. They have fewer financial resources to deal with the rising paper and postal costs that are taking a toll on the traditional part of their business. And they face more risk as they transition to the Internet.
Still, smaller publishers shouldn't be deterred by the downturn, said Brent Kizzire, operations director at Grand View Media Group, which specializes in b-to-b, custom and enthusiast publishing and whose 21 titles include Flow Control, Global Processing and Water Technology.
Pointing to the potential for paper costs to rise up to 30% this year, Kizzire said smaller publishers “have to be smart with ... page counts, tighten up the issues and make sure ad-to-edit ratios are solid.” Regarding online investment, he was blunt: “You have to do it or your competition will eat you alive.”
A year ago, Grand View had Web sites for its various publications along with several e-newsletters. Since then, it has ramped up its online presence with webinars, digital editions and e-commerce tools. Kizzire has hired two full-time Web editors and constantly encourages the company's publishers and sales executives to come up with ideas that can be translated into new online products.
“I've worked for both large publishers and small publishers, and even in a company with 105 employees communication can be a problem,” said Kizzire, who was previously with Southern Progress Corp. “But we give our publishers a lot of freedom and, if they want to do something, we don't have to have 10 meetings to decide whether we're going to do it.”
The flip side is a razor-thin margin for error. “We'll test something with one product and, if it works well, we apply it to others,” Kizzire said, referring to the recent decision to offer a digital edition of Global Processing, with others likely to follow.
Kizzire said Grand View's advertising dollars are growing “slowly but surely” online but would not be more specific. As for Grand View's investment in its online operations, he said, “We're very conservative. If you can't measure it, you can't manage it.”
Indeed, measurement is just one of the many challenges facing smaller b-to-b publishers eager to raise their visibility on the Internet. (Smaller publishers, or those with less than $20 million in annual revenue, comprise about 55% of the b-to-b media industry.)
Recruiting and retaining online talent, sales training and dealing with an ever-growing number of vendors offering Internet services are some of the other challenges keeping Web development front and center for smaller publishers.
“The growth of technology both excites me and keeps me up at night,” said Greg Watt, president-CEO of Watt Publishing, which covers the agricultural and woodworking markets. “Technology is moving so quickly that things we implemented in early 2007 already need to be updated and upgraded.”
In the last 18 months, Watt has redesigned 10 of its Web sites and has added webinars, online video and white papers. The company has also embarked on major upgrades of its production and content management systems. Watt is also looking for partners to distribute his company's content into online markets in China and India.
Digital revenue now accounts for 12% of Watt's overall revenue, compared with 70% for print. In the next two to three years, Watt expects digital to be closer to 30% of revenue and print about 50%.
“The focus on digital infrastructure is a constant and will always be there,” Watt said.
“That's the biggest differentiator in how we're running the business. Web sites used to be an add-on, now they're the focal point of our brands.”
Watt sees the Internet as a way to level the competitive landscape for smaller publishers. “If a small publisher knows his market, knows where the needs of the market are and executes, then the distinction between large and small has been eliminated,” he said.
Norm Kamikow, president-editor in chief of MediaTec Publishing, shares that sentiment. “I don't care what the size of your organization is. You have to have a Web presence that meets the needs of your readers or you are going to lose traffic and lose the stickiness you need on your Web site.”
With that in mind, MediaTec has in the last two years upgraded all its Web sites and made a “huge” investment in its content management system. Digital now represents 24% of MediaTec's revenue while print represents 39% and events 37%.
Ideally, Kamikow said, he would like his business to be evenly divided among print, online and events. “That's going to happen,” he said. “We're resolving those issues. The challenge for smaller publishers is how to put resources that have traditionally been put behind print into digital.”
Media buyers these days are placing less emphasis on size than on a media company's ability to deliver.
“It's not a function of size, but the buyers' needs,” said Mike Parker, managing director of media investment bank AdMedia Partners. “Anyone spending money with a publication of any size expects an integrated marketing solution. It's not just a buzz phrase. It's the real thing.”
Online is increasingly where the marketing pendulum is swinging, with events a close second and print taking on an increasingly subordinate role.
Vance Publishing publishes a weekly tabloid covering the produce industry, The Packer. While the print title is No. 1 in its market, its Web site companion was “so-so,” said Peggy Walker, president of Vance. In the last year or so, the site has incorporated blogs, Web-only content, news updates and more advertising space.
Vance's overall ad revenue declined 8% in fiscal 2008, with digital media accounting for 12% of total revenue. Print revenue for Vance declined from 73% in fiscal year 2007 to 70% in fiscal year 2008, which ended March 31.
“We have to adapt,” Walker said, when asked how small publishers can balance their online investments with limited resources. “You could look at what's happening in the newspaper business or the music business. You have to build out online 100%.”
Walker added: “From my perspective, I don't know what it's like to have a huge budget. You need to ask yourself: Do you have money to invest [online]? How much risk can you [take on], and what kind of ROI do you want?”
What advantages large publishers have in terms of capital and staff size, smaller publishers have a counter-advantage in that they're nimble and can go to market faster—no small thing in a marketplace that increasingly rewards speed.
Take ZweigWhite Information Services, whose titles include CE News and Structural Engineer. In February, the company launched its online store, offering research and information on the architecture, engineering and construction industries. “We were able to roll it out in about 60 days with very little pain or suffering,” said ZweigWhite CEO Dick Ryan. “If a big publisher had tried to launch a store, a lot more people would be involved and you would have a lot more hurt feelings. We're able to end-run those issues because we're not that big.”
Ryan doesn't make any apologies about his company's size. “I've got a better online store than anybody serving the engineering and architectural markets,” he said. “You might expect we have 700 employees when we have 70.”
Rose Southard, IT director of small publisher Putman Media, said “traffic” should be the mantra of smaller publishing companies that want to generate more business online.
“Drive traffic and everything will follow,” she said. “If you don't have traffic, you won't get the advertisers. You get advertisers and word starts to spread. The tricky part is putting your toe in the water and doing it at a reasonable cost.”
Putman is currently looking into building custom Web pages, knowledge centers and advertising sponsorships online. It is also vetting vendors offering products and services for social media and Web 2.0 tools, Southard said.
While trial and error online is standard practice for smaller b-to-b publishers, Web development above all has to be a two-way street. “Focus on keeping communication between IT and edit open, which is something that takes effort,” Southard said. “But there's always a connection to IT, and that needs to be supported from the top.” M