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Budgeting for 2008

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Peter Goldstone, president of Hanley Wood Business Media, which specializes in construction markets, doesn't think the housing market will start to emerge from its current doldrums before early 2008.

But the ongoing softness in the residential market hasn't deterred Goldstone's division from budgeting aggressively for its entire portfolio next year. In addition to several residential titles, including Builder and Custom Home, the division has media properties targeting commercial construction, such as Architect, which debuted last October.

"We're looking at the biggest housing recession since the early 1990s, but we have more financial and capital investment than ever before," Goldstone said. "We've got more launches, more Web expansion, more trade shows and more acquisitions in the pipeline for 2008. Now is the time to invest for the long haul."

For instance, Hanley Wood plans to introduce a "green" construction platform next year that will include a print publication, online companion and event, Goldstone said. The company is also investing in its database to help b-to-b marketers navigate the downturn—and eventual upturn—in housing markets.

As the example of Hanley Wood indicates, budgeting for 2008 calls for a delicate balance among an array of revenue streams and a variety of audiences. No matter what the mix, one thing is clear: Most additional investment dollars these days are being devoted to two solid growth areas—events and digital.

Indeed, face-to-face revenue for the first time surpassed print revenue in 2006, according to a report by American Business Media. Events accounted for 36% ($11.3 billion) of overall b-to-b media revenue of $31.1 billion, compared with 35% ($10.9 billion) for print; and 14% ($4.3 billion) for e-media. The remaining 15% consisted primarily of rich data/business information and traditional data, such as lists and reprints.

Despite the growth of events and digital, print remains a crucial part of the budget calculus. Publishing executives see the medium, which still generates about 70% of b-to-b media companies' revenues, as a springboard into new products and a key component of the integrated ad buys that are fast becoming the norm in b-to-b media sales.

"We're creating new print opportunities in concert with our digital properties and events," said Gary Fitzgerald, chairman-CEO of Meister Media Worldwide, which focuses on agricultural markets.

Fitzgerald said Meister plans to boost its investment across the board in 2008. That includes providing additional money for CropLife, which covers crop-protection products. Earlier this year, Meister debuted a tabloid companion, CropLife Iron, launched four e-newsletters tied to the brand and opened PrecisionAg Institute, an online and in-person forum affiliated with the publication that focuses on both U.S. and international agricultural markets.

"We don't trade dollars across media," Fitzgerald said. "We want the dollars for each segment so each of them can grow in revenue. The whole of the brand is stronger than the individual components."

Bobit Business Media plans to boost its print and events budgets by 5% in 2008 and its budget for digital operations by 25%, said Ty Bobit, president-CEO.

Among its products that will see increased funding is Marine Interiors & Accessories, which will move to a quarterly frequency in 2008 from two appearances this year. The magazine, which debuted in June, is an offshoot of the company's Auto Trim & Restyling News and Mobile Electronics.

"Print is tough and you have to work it, but it's still a great way to come up with new products to address new markets," Bobit said.

The company is also investing in a new digital asset management system to help it repurpose content across multiple media platforms. "We know it's going to pay for itself within a year and reduce costs going forward," Bobit said.

Overall, Bobit Business Media is budgeting for a 7% increase in 2008, not including potential acquisitions or start-ups. With Web revenue up 50% this year, Bobit said he wants to grow his online staff by 25% and is looking to replace "printcentric" employees with "dualcentric" employees, or people who can easily shift between print and online operations.

"It's pretty clear-cut that any [b-to-b media] investment dollars are 100% focused on digital resources," said Tom Kemp, a managing director at media investment bank Veronis Suhler Stevenson and former chairman-CEO of Penton Media.

Kemp stressed that the largest expense in creating online properties is not necessarily purchasing state-of-the-art software but attracting new talent to develop and market online properties. "The biggest commitment for resources is finding the right people who can build product, train people, transform the culture and migrate within the broad Internet realm," he said.

An increasing amount of investment is also flowing into databases, which can help inoculate business information companies against advertising cycles. "We're spending a significant amount of money building data products because that's where a good chunk of the b-to-b future is headed," said John French, president-CEO of Penton Media.

Penton has several database operations that it intends to beef up with additional funding. These include Ward's Automotive Group, which provides auto industry news, data and analysis, and Transportation Technical Services, a database and directory for the trucking industry.

"The margins are very strong in this area," French said. "A good strong data product is like an annuity. It's not exposed to ad cycles, and, more important, it gives b-to-b media companies a different information flow."

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