For small publishers, size isn't an issue

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Alan Douglas, president of Douglas Publications Inc., a small b-to-b publishing company based in Richmond, Va., has a message for big competitors made skittish by the economic downturn and softening advertising market: Welcome to my world.

"We’re used to dealing with these kinds of problems, because we’re not buffered by layers of management. We’re used to being nimble," said Douglas, who oversees a diverse portfolio of eight magazines and 12 directories, ranging from Robotics World and Compliance to The Salesman’s Guide directories.

"Small publishers have certainly been affected by the downturn," said Roland DeSilva, a partner with New York-based media investment bank DeSilva & Phillips. "But they’ve seen this before and understand how to control costs and how to market with limited dollars."

DeSilva also said that last week’s unprecedented terrorist attack against the U.S. would not deter small publishers in their efforts to deal with the downturn. "They’re not going to let the bastards get them down," he said.

While some small publishers said the downturn has actually presented an opportunity for expansion—such as launching e-mail newsletters—others said the economic climate and soft ad market have forced them to make some hard decisions about their businesses.

Making tough decisions

Their moves have included raising ad rates; cutting frequencies, staffs or circulation; selling publications deemed marginal; retooling sales staffs, and working closely with vendors to create innovative marketing. But while the current economy may not threaten their existence, riding out the bumpy economy has become increasingly critical for the 65% of American Business Media members who have $25 million or less in annual print advertising revenue.

Brooke Taliaferro, president-CEO of Yarmouth, Maine-based United Publications Inc., which publishes several titles covering the golfing, gourmet and home security markets, said he recently streamlined his sales staff in response to the downturn. There’s now one sales representative for each of the company’s six print publications.

"You get better penetration rates that way," Taliaferro said, adding that accommodations for the sales staff these days are less than plush. "They’re staying at the Super 8 instead of the Marriott."

United Publication’s revenues are expected to be down 20% this year compared with last year, Taliaferro said. He has made several moves to cushion the financial blow, including reducing staff and circulation "where it makes sense." He would not elaborate. Earlier this year he sold Golf Course News International to London-based Amenity Technologies Inc.—terms were not disclosed—and stepped up efforts to convert all of his titles to digital pre-press, which cuts pre-press costs by 30%. "We can’t afford to drag our feet any more on these things," he said.

Accelerating benefits

Guy Wendler, president of Stamats Communications Inc. and current chairman of the ABM, said the downturn has accelerated a trend that could benefit small publishers.

"Small publishers have to be market-needs-driven now," Wendler said. "We’re no longer in the publishing business, per se, but in the meetings business or the buildings interiors business or whatever market you’re in. It doesn’t matter whether your company is worth $10 million or $100 million."

Wendler said he’s raised advertising rates an average of 5% to 7% to deal not only with the downturn but with rising postal costs. This past summer he sold Commercial Building to Mercor Media to focus on his meetings titles such as Meetings South and Meetings West. He also launched Meetings East. The result: $25 million in predicted sales for 2001, a 10% increase from 2000.

"We’re in growth mode," Wendler said. The downturn presents "an opportunity to make decisions quickly because we can get to the decision-makers more quickly" through relatively flat organizations.

Ad rates raised

Bill Springer, VP of Portland, Maine-based Diversified Publications Inc., said he’s raised his ad rates 3% to 5% for his four titles, reflecting the increased cost of doing business. He said he’s hopeful a 13th issue of Seafood Business—normally a monthly—will provide a revenue boost.

Michael Ross, president of Vance Publishing Corp., Lincolnshire, Ill., said his company’s revenues were down 6% in the first half of the year, and the publisher raised ad rates about 4% overall—a typical increase even in good times. Some of Vance’s retail titles, such as Furniture Style, have seen revenue declines, while a couple of his agricultural titles, Citrus & Vegetable Magazine and Cotton Farming Management, are picking up the slack.

Like other small publishers, Vance is offering e-mail newsletters and custom publishing for advertisers to offset the effects of the downturn.

Douglas said Douglas Publications’ revenues are expected to be down 12% to 15% this year, but profits are projected to rise 15% because of more efficient operations and the creation of alternative revenue streams. He’s currently working with list management company Edith Roman Associates Inc. to create e-mail lists connected to all of his magazines and directories, as well as with 365 Media Inc. to build 110 new databases that Web users can subscribe to or download.

"You go after what you can in terms of partners and joint enterprises to build something for the future" when the economy starts to bounce back, Douglas said.

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