As the recession lingers, cost reductions cut closer to the bone throughout b-to-b media
The double whammy of mass layoffs and severe cost reductions throughout b-to-b media in the last several months has started to accelerate already-dramatic changes in how publishers deal with clients and compensate their sales execs.
In response to the ongoing recession, publishers are scaling back on multiple fronts, including the two areas most closely associated with revenue: sales and marketing.
For example, 78% of b-to-b media companies have cut travel and entertainment budgets or plan to do so, while 25% of companies reduced the number of employees receiving annual incentives, according to a recent survey released by American Business Media.
The online survey, which was released in July, was conducted by Towers Perrin to gauge how ABM's members are coping with the economic downturn and the implications for compensation and other work force decisions.
About 20% of ABM's 130 media member companies participated in the study; 73% of those respondents estimated their total personnel costs for 2009 will be reduced by up to 15%.
More than 80% of respondents said they have frozen or plan to freeze salary-increase budgets for all employees while 16% have reduced the number of employees receiving stock or cash-based long-term incentives.
“Sales may have gotten a pass in the past, but now everything is on the table,” said Gordon Hughes II, president-CEO of ABM.
Publishers started to restructure their sales and marketing departments well before the current recession kicked in, but its lingering effects are forcing the issue.
“We're looking at a larger allocation of inside sales resources versus field sources,” said Kerry Gumas, president-CEO of Questex Media, which has had a total of 90 layoffs since December. The job cuts included several sales and marketing executives who were let go due to the closings of Cadalyst, Paperboard Packaging and Roofing & Siding magazines.
“More business can be done efficiently by phone and e-mail in today's world, but field sales is necessary for certain accounts,” Gumas added. “It all depends on the nature of the program. You also have to pay attention to high-level accounts that may have gone dark but will come back into the fold [when the economy recovers].”
Gumas added that a possible sales model for the future is having more “contractors,” or partnerships with sales execs in which a lower percentage of compensation comes from a fixed salary and higher percentage comes from commission and bonus packages.
“Integrated marketing is the driving force,” in business markets right now, adds Don Pazour, president-CEO of Access Intelligence, which earlier this summer announced a reorganization that resulted in a 6% reduction in staff and a realignment of assets to emphasize subscription-driven products and events.
As part of the reorganization, the company merged its print-based Business Media Group with the Business Information Group, which resulted in the departure of Paul McPherson, who had led the Business Media Group.
The closings of Aviation Maintenance (the company is sticking with aviationtoday.com) and Studio Monthly resulted in a “handful” of layoffs within AI's sales and marketing departments, Pazour said.
“I think even before the recession, travel was overdone; but still it's critical that, if a client wants to talk about an integration package, a sales exec has got to be able to get on a plane and explain it,” Pazour said.
Chuck Richard, VP-lead analyst at Outsell, a research company focused on the information industry, said the ongoing recession presents publishers with a conundrum when it comes to properly budgeting for sales.
“Publishers have to decide whether they're going to dial down the more expensive direct sales force or dial up the less expensive outbound marketing, e-mail marketing and SEO [search engine optimization] to get prospects directly to the Web site for e-commerce,” he said. “Do they invest in outbound marketing, which is lower-dollar, smaller, often one-off purchases, or the one sales guy who brings in $1 million a year, relationships and a long-term, repeat buy?” M