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Small publishers, big ideas

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Peter Hoyt, now the president of his own small b-to-b media company, started his career working for larger publishing companies. He didn't like it much. Before he started Hoyt Publishing Co., which publishes P-O-P Times, he sold space for Design News, which was then a Cahners magazine. He described the big publishing experience as too much internal politicking and too little focus on the customer.

"Life in a big publishing company is planning your trajectory to the water cooler so you can run into the guy you want to pretend will be your mentor," Hoyt said. "There's a lot of that."

Hoyt has more than held his own against large publishing companies such as Reed Elsevier and VNU Business Media. In fact, he says he would rather take on larger companies than smaller ones.

As an example, he points to his thriving P-O-P Times, a monthly covering the point-of-purchase industry. He rejoiced when in 1998 smaller publisher Shore-Varrone sold Point of Purchase to Bill Communications, which was eventually subsumed into VNU Business Media. The magazine ceased publication in 2003.

"The worst guy you want to compete with is a well-financed small publisher," Hoyt said.

Today, Hoyt is respected as an innovative, aggressive publisher, just the sort that Richard Mead, managing director of Jordan, Edmiston Group, was talking about in a recent article in the media investment bank's newsletter, "Client Briefing." According to Mead, innovation and the launching of new products by small publishers are the "lifeblood" of the b-to-b media industry at large.

Smaller publishers-those with less than $50 million in annual revenue-comprise the lion's share of the b-to-b media industry. Using data from SRDS, Mead calculated that 55% of the 2,043 b-to-b publishers in the U.S. are smaller publishers. These companies account for most of the magazine launches. In 2003 and 2004, for instance, smaller publishers launched 283 of the 423 new magazines-or 67% of the total, according to data supplied to Jordan, Edmiston by "The Business Publisher," a newsletter.

The challenge, according to Mead, is for smaller publishers to adjust to the new landscape, where b-to-b marketers are relying less on print advertising, embracing integrated marketing and spending more on Internet marketing. In coping with this difficult environment, smaller publishers have some strengths and weaknesses.

Lacking larger rivals' clout

In some respects, smaller publishers are at an economic disadvantage compared with larger publishers, which generally have easier access to capital to make acquisitions or other investments. Additionally, larger publishers enjoy economies of scale that allow savings in back-office functions and on magazine production expenses.

"The disadvantage [for smaller publishers] is that we don't have their clout," said Norman Kamikow, president and editor in chief of smaller publisher MediaTec Publishing, whose properties include Chief Learning Officer. "So when paper mills raise their prices, we're at the mercy of the printer to buy our paper for us. When the print companies want to raise their prices, we don't have a whole lot of leverage. The same thing holds true with the fulfillment agencies."

In the meantime, smaller publishers increasingly have ways to cut their costs. Some printers are offering co-palletization to reduce distribution costs. And some smaller publishers are discussing the formation of a buying group to reduce paper and printing costs, although antitrust issues may derail that effort. "Stay tuned," said Humphrey Tyler, president of National Trade Publications, which publishes Water Technology and other magazines.

Of course, the flip side of larger publishers' size advantage is that they move at a glacial pace. "The bureaucracy and the demands of the corporate life always undermine the soul of publishing for the most part," Hoyt said.

Like many other owners of small b-to-b publishing companies, Hoyt believes that smaller companies enjoy many advantages because of their flat management structure and entrepreneurial culture. The speed to market they enjoy is certainly an advantage in fast-changing times. "Small publishers can make decisions over lunch," said Robert Crosland, managing director at media investment bank AdMedia Partners.

In the minds of some observers, small publishing companies' best attributes are innovation and a sense of urgency to put those new ideas into practice. "We are very nimble," said Dick Ryan, CEO of Zweig White Information Services, which publishes Bridge Builder and other construction industry magazines. "If I have an idea, I have one call to make, and we're off and running."

At the same time, smaller, privately held publishers have the luxury of having more patience than larger, publicly traded publishers, which have to generate quarterly profits quickly to satisfy Wall Street. Smaller publishers, on the other hand, can stick with a magazine as it endures growing pains for years before it turns a profit.

Hoyt's success

For its part, Hoyt Publishing has demonstrated all three of these characteristics-speed, innovation and patience. Peter Hoyt himself has a bit of iconoclastic gumption thrown in for good measure. He seems to thrive on taking on larger publishers.

In 2000, Hoyt Publishing launched Home Decor Buyer to challenge Reed Business Information's Home Accents Today, part of the company's powerful furniture magazine group. Hoyt attacked on many fronts, but a key area of battle was circulation. "We doubled the circulation they had," Hoyt said.

That differentiation has allowed Hoyt's magazine to slowly make inroads against the Reed Business publication. Today, Home Decor Buyer is a formidable competitor, and Hoyt expects it to make its first profit-four years after it launched.

Few large publishers-especially publicly traded ones-are willing to wait so long for a publication to make a profit. But Hoyt said he believed in his gut that his magazine would be a success. "I knew it in my bones, and that's all that matters," he said. "But you couldn't sell that [at a big company]: my instincts."

Hoyt's iconoclastic approach was also evident in his creation of the In-Store Marketing Institute. With this for-profit association, Hoyt Publishing takes on not a large publishing company but an established industry association, Point-of-Purchase Advertising International.

Hoyt started the organization about a year and a half ago. Membership includes access to a Web site that has a library of point-of-purchase displays.

Although many b-to-b publishers blanche at the notion of taking on an industry association, Hoyt said it was little different from two decades ago when publishing companies began to launch their own trade shows to take on association events. His institute is making headway and may approach profitability in 2005.

"I love this business," Hoyt said. "It's an awful lot of fun."

Like Hoyt Publishing, MediaTec is a smaller publisher that has the luxury of taking risks and being patient. Two years ago, it chose to launch Chief Learning Officer in the middle of a protracted b-to-b media recession and into a field already crowded with three magazines. "Our board thought we were nuts," Kamikow said.

But the case was made, and CLO was launched in September 2002. It's hard to imagine a large publisher in that time frame launching a magazine into a crowded market.

Among MediaTec's advantages was having a strong title for the magazine, which moved it up the ladder into the C-suite. "The name positioned us well," Kamikow said.

Additionally, MediaTec did what smaller publishers are supposed to do: It moved with speed and flexibility. Kamikow said a key to the successful launch was CLO staff's adopting the suggestion of a pre-launch advisory board that the magazine offer more case studies.

Now, two of the magazines in the market are gone, and CLO is thriving. "I love doing what I do," Kamikow said. M

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