The challenges that come along with the online shift, though, are shaking business publishers to the core because they require new thinking and new ways of doing things: content that changes daily if not hourly; redesigns of Web sites to incorporate new Web 2.0 functions and media such as video; the need for constant audience acquisition rather than requalification every year or two; development of totally new skills such as search engine marketing and optimization—the list goes on and on.
Perhaps the most daunting challenge of all is the transparency of the Internet. Metrics strip off the kimono altogether to reveal exactly what the audience does and doesn't do on your site. And advertisers, as they better understand how to use these measurements, are gaining leverage unimagined in the past.
"We know that technology changes are always going to happen," said Seth Nichols, VP-digital media for Questex Media Group. "The bigger challenge is to get the organization to think very differently about finding an audience and engaging them in new ways. Additional skill sets and roles are required for us to continue our evolution into an online publisher."
Nichols said Questex is investing in expanding its staff to develop more online expertise in-house. "We're hiring someone to manage and drive analytics and someone else to manage search engine optimization," he said. "In addition, we have a new director of marketing who is focusing on using digital techniques to get people to our sites."
"We are becoming a metrics-driven company," said Jeff DeBalko, chief Internet officer for Reed Business Information, who runs RBInteractive, the company's recently created, centralized online division. "We are measuring everything we do and are investing in new technology to allow us to do even more."
Alec Dann, general manager-magazines online at Hanley Wood, said: "For a lot of publishers, the basic blocking and tackling that comes with online advertising is as important as new innovation. As online sales volume goes up, you have to develop all sorts of new business processes to execute those programs. You can no longer handle them on the fly."
Using metrics and developing new business processes are still only part of the solution, however. "On a macro level, our challenges are mostly on the human side," said Virginia Hines, VP-general manager of IDG 's InfoWorld.com. "It's difficult to get people to examine their outdated assumptions and accept new ones. On a day-to-day basis, our challenge is operational—just being able to do everything we need to get done with limited resources."
Tom Cintorino, senior VP-digital media for PennWell Corp., agreed. "Our two major challenges are, one, balancing online investment with profit goals and, two, organizational learning. The shifts we're seeing in the media are transformational. With the Internet, there can never be enough education and training, and it never stops."
In addition to educating their own staffs, executives at ThomasNet, a vertical destination site featuring industrial news and a deep database of suppliers, are reaching out to educate their customers.
Brad Mehl, VP-marketing at ThomasNet, said many marketers still don't know enough about Web metrics. So, for the past year or more, ThomasNet has been taking its message to places like Georgia, Ohio and West Virginia, where it runs free seminars for groups of 50 to 100 sellers of industrial equipment to explain online marketing tactics and measurements.
To support the seminars, ThomasNet has developed a white paper featuring survey data from Google and its own research that highlights the role of search engines and industrial destination Web sites in the purchase process. The white paper tells suppliers what customers expect their Web sites to contain—and where many company sites fall short.
The feedback has been overwhelmingly positive, Mehl said, and helps foster a much more consultative relationship between ThomasNet sellers and their customers.
As difficult as it is to manage through these changes, every one of these executives emphasized that the business opportunity presented by digital media—which is increasingly wireless rather than "online"—is well worth the hassle.
More of the same. Much more.
The more things change, the more they stay the same. This maxim still applies to the types of advertising and sponsorships that produce the most money for b-to-b media companies—although those revenue streams are consistently getting bigger and new opportunities, such as online video, continually bubble up.
"Online ads are still providing the majority of our revenue, but the types of online ads have changed dramatically over time," Cintorino said. "We've gone from buttons to banners to universal ad packages, and we're in the early phases of using video. The change is not only in the ad sizes and use of rich media, but the number of advertisers and the ad rates have also gone up incrementally."
The second most valuable digital revenue source for PennWell is e-newsletters, followed by webcasts. "Our newsletters have gotten smarter and more targeted over time, and our webcasts have evolved," Cintorino said. "For example, the model where the sponsor provides all webinar content represented roughly 90% of our webcasts three years ago. Now, it's more like a 50/50 split between editorial-generated and sponsor-generated content."
Cintorino expects the current revenue trends to continue. "We don't think our online growth in 2007 will come from a single new hot technology," he said. "Rather it will be from the continual reinvention of our online products."
Dann said traditional Web ads and e-newsletters have been the bread-and-butter online revenue sources for Hanley Wood's magazine Web sites. (His purview does not include Hanley Wood's separate e-commerce business.)
"In 2007, we will be expanding our e-newsletters with new subject-related e-newsletters that cross titles, such as `green' building," Dann said. "Web seminars will be a big new initiative for Hanley Wood magazines online. This will be a third new revenue stream that's almost totally new for us. We only did one webinar last year."
Paul Caplan, who was recently named chief sales integration officer at Cygnus Business Media, said webinars will be a growth area for his company, too. "For some of our markets, this is still a nascent business, but we've done enough of these in the company to understand best practices and get the additional markets up and running," he said.
Cygnus is also expanding online by launching additional e-newsletters, introducing a number of searchable online buyers' guides based on a single platform and building out some of its sites to provide additional inventory, Caplan added. Online video also will be a growth area in 2007, he said.
Last December, the Cygnus Video Network was launched in the construction market. "We're launching new channels at a rapid clip," Caplan said. "Every Cygnus market will have a video channel before the year is out." (For more on Cygnus' transformation, see story on page 6.)
The lead-gen binge
CMP Technology is "seeing healthy growth with a broad mix of offerings," said Peter Spande, VP-online media for the Business Technology Group. "We've still got strong demand for lead-generation products such as webinars and anything else that requires registration. However, I think b-to-b marketers are finally getting over their binge of all lead-gen, all the time. They are starting to see the Web as a medium to build awareness and educate. As a result, we saw really strong growth last year in online advertising."
At Reed Business, the tune is somewhat different. "From a revenue category perspective, traditional advertising and e-newsletter revenue still lead the way, but lead generation will be the major revenue driver of our business in the near future," DeBalko said. "With our recent acquisition of BuyerZone.com, we now have a lead-generation solution for every stage of the buying process."
The formation of RBInteractive is part of a larger strategy to transform Reed Business into a world-class online media company, DeBalko said. "The activity that is having the greatest impact on online revenue today is our effort to optimize every aspect of our online business, effectively analyzing what works best—in pricing, products, content strategy, sales execution—and applying it consistently across the portfolio," he said.
Questex's Nichols said that neither revenue nor profit figures capture the full value of the Internet to a b-to-b media company. "For example, when we do trade show registrations online, that cost savings accrues to the trade show group," he said. "When we enable readers to sign up for or renew subscriptions online, we contribute to the print magazine's bottom line. We bring a lot of value that doesn't show up in an online P&L."