As b-to-b media executives look to the remainder of this year and into 2010, many factors cloud their budgeting processes. “It's like trying to look through a jar of peanut butter,” said Bob Faletra, CEO of United Business Media's Everything Channel, which publishes CRN, a magazine for computer resellers.
In the current economic climate, with b-to-b marketers on ever-tightening budgets, publishing executives often lack visibility into incoming revenue more than a month or two into the future.
In addition, as marketing expenditures continue to migrate away from print and toward digital alternatives, it is unclear how the most effective b-to-b media companies of the future will be structured. This transformation means executives have so many viable options for generating revenue—print, online, events, training, lead generation, paid content—that making the right budgeting decisions is more important than ever.
Over the past three years, Faletra has seen Everything Channel transformed. “Print was 70% of the business,” he said. “This year it's about 12%.”
While Everything Channel remains about the same size in terms of revenue, where that revenue comes from has changed substantially, Faletra said. “I don't consider this a media company,” he said. “I consider this a service company.”
The proof of this statement lies in where Everything Channel is placing its bets. The company recently partnered with Encover, which makes an application that helps automate the renewal of computer software licenses and maintenance contracts. “The vendors make money. The solution providers [computer resellers] make money. We get a cut, and now everybody's happy,” Faletra said.
He also said the Institute for Partner Education & Development, Everything Channel's research, consulting and education business, is growing. IPED, which provides subscription-based research and training programs, is a key investment opportunity for the second half of the year, he said.
Underscoring Everything Channel's move away from media was the shuttering earlier this year of VARBusiness, which had been a top 50 trade publication in terms of revenue as recently as 2008, according to data from IMS-The Auditor.
As a technology publisher, Everything Channel serves a market that is far ahead of most in the adoption of Internet innovations and the abandonment of print. It may also offer a glimpse of things to come for publishers in nontech sectors.
Most b-to-b media executives agree that they need to invest in new initiatives—especially digital products—to adjust to the new economic reality of their industry, which has spent much of the past nine months cutting costs and staff. The hard part for many companies is finding money to support new projects.
Tom Kemp, chairman-CEO of Northstar Travel Media, pointed out that many b-to-b media companies are leveraged and struggling to find cash in the current recession, which has hit print advertising especially hard.
“Cash is king,” Kemp said. “Our business is down just like everyone else's. We're lucky we don't have some of the balance sheet and debt problems that some other companies have.”
Nonetheless, Kemp said Northstar is looking to invest cautiously. “You really have to squeeze as much as you can to make sure you get a quick return on that investment,” he said.
Northstar is betting on webinars, virtual summits, online lead-generation programs and digital directory products. “We're investing in expanding our suite of digital media products and going far beyond display advertising,” he said.
Kemp added that Northstar is also pursuing nondigital initiatives. “We're investing in face-to-face events with new hosted appointment models,” he said.
As the number of products that Northstar offers grows, the company has budgeted for internal training. “We also just made a commit to some additional sales training for the whole team,” Kemp said. “We're investing in our staff and expanding our training programs.”
Charles McCurdy, chairman-CEO of Canon Communications, which produces MD&M West and other medical device manufacturing trade shows, agreed that figuring out a way to fund new initiatives is critical. “The question is, how do we maintain cost discipline while also encouraging innovation?” he said. “You could also say, how do you play offense and defense at the same time?”
McCurdy said Senior VP-Publications Ron Wall, who joined the company in 2007, suggested that Canon could automate part of the magazine production process, which helped cut costs. Some of these savings were applied to creating new products.
After launching four new trade shows in its current fiscal year—three outside the U.S., in France, Germany and Japan—Canon aims to continue investing in face-to-face events in the coming fiscal year, McCurdy said. He also emphasized that Canon plans to continue expanding its digital investment, including lead-generation initiatives.
Canon is fortunate in serving the medical device market, which has remained relatively healthy even in the current recession, McCurdy said. “I can't say that every day is a cake walk here at Canon. We're not immune to the economy, but we have a pocket—actually, it's more than a pocket; it's more like a pretty big briefcase—in the medical device sector that has been fairly healthy economically,” he said.
The recession has hit the commercial and business aviation industry hard, but McGraw-Hill Cos.' Aviation Week & Space Technology plans continued investment in a number of products, with special emphasis on online, events and paid-content initiatives.
In addition to some experimentation with social media, Aviation Week is delving into video postings on its Web site. At the recent Paris Air Show, it posted numerous interviews and other videos. “We did 30 different videos during the show,” said Mark Flinn, Aviation Week's VP-global sales and marketing.
The market Aviation Week covers is a good fit for video. “There's lots of movement,” Flinn noted. “It's how people get excited about these products. Even on the business aviation side, video has long been something used to illustrate the value of what their products do.”
Flinn said Aviation Week has been investing in face-to-face events this year, something that he expects will continue next year. The number of scheduled Aviation Week forums increased from eight in 2008 to 16 this year. The forums bring together 75 to 100 paying executives to discuss a particular topic.
One forum, for example, discussed the state of business aviation.
“It's a very important topic in the news right now,” Flinn said, acknowledging the criticism auto industry CEOs took for flying in private jets to a congressional hearing earlier this year. “Business aviation has taken a pretty major hit from all sides. It's obviously very timely.”
Aviation Week also produces round-tables, which, rather than offering paid content, are paid for by sponsors. “They're very much custom and built around what a sponsor is interested in,” Flinn said.
Aviation Week is a 100%-paid magazine, and Flinn said online paid content also remains central to the publication's plans. One example is the database of aircraft fleets that Aviation Week has compiled and sells access to for maintenance, repair and operations companies. “This is a business development tool,” Flinn said.
Incisive Media, which publishes American Lawyer, is another company that relies on paid content. It is also making a big push into expanding its digital footprint.
Incisive CEO Bill Pollak said the company aims to improve its content management, search engine optimization and e-commerce offerings. “We're putting every nickel we can into the technology that goes behind electronic publishing,” he said.
Incisive currently generates about half its revenue from content paid for by end-users—attorneys in most cases. Pollak wants even more of this type of revenue. Incisive is currently investing in expanding its database and research for small and midsize law firms.
“We're putting our eggs in the end-user basket,” Pollak said. “We're not leaving the marketer behind. We sell a considerable amount of advertising, but we think our future is on the end-user side.”
Pollak added: “I think probably we've invested in our last new magazine. I don't see us launching a magazine or a newspaper.”
WTWH Media, which publishes Design World, is a rare business media company that is willing to launch a new print publication in the current environment. WTWH plans to publish Windpower Engineering two times this year and six times in 2010.
Additionally, in collaboration with Canon Communications, Windpower Engineering and Design World will be the primary media sponsors for a one-day event titled, Wind Power Explained—Design and Component Integration. It will be co-located at the Design and Manufacturing Midwest show in September in Rosemont, Ill.
Scott McCafferty, WTWH's co-founder, along with Mike Emich, believes that print can still anchor a b-to-b media brand; but his company is not stopping its investment there. WTWH, which is benefiting from renegotiated print contracts and reduced postage rates after a postal audit, is investing heavily in various Web-oriented offerings for its engineering audience.
“Our basic goal is to surround engineers with avenues and resources to help them do their job; and we recognize Design World is not always going to be their first choice, especially with the use of tools like Google out there,” McCafferty said. “We're constantly updating our site. We're using podcasts. We're starting to do video tutorials. We're allowing for the engineer himself to consume the information on his terms.”
One element of this plan is Design World's calculator/widget library, which offers thousands of engineering calculations that are available in portable code for sharing with colleagues.
Many in the b-to-b media sector may find it comforting that there is a publisher still hiring. McCafferty said that WTWH hired two salespeople last year and added four new employees—three in editorial and one in circulation—this year. M