Ad pages are falling at many leading technology publications. But the dip appears attributable more to a shift to other media than to advertiser cutbacks.
The key question for tech publishers is whether they will be able to win back share next year if the economy goes into recession. Both Ziff-Davis and CMP Media folded publications in recent weeks, citing softness in advertising brought on by tech-market turmoil.
CMP President-CEO Michael Leeds said the majority of tech advertisers he has spoken with plan to increase spending in computer and business publications.
"But I don't think that will necessarily bear itself out if the economy is not there," he said. "It's easy to be confident when you're in the planning stages and when you're looking ahead. ... How that bears out in the realities of 1999 is to be seen."
IBM SPENDING STEADY
The biggest tech advertiser, IBM Corp., expects '99 global spending to be "pretty consistent" with this year's estimated $600 million, VP-Worldwide Marketing Communications Maureen McGuire said in a recent interview.
Microsoft Corp., meanwhile, intends to increase its global budget about 14% to about $400 million. That's a sizable increase, but below the growth rate in Microsoft revenues.
The biggest shift in media weight at IBM and Microsoft will benefit the Web. Both companies are likely to spend 10% or more of their ad budgets on the Internet in 1999.
Intel Corp. in the second half of this year stepped up ad spending in part to give a boost to a sluggish market, said Joann OBrien, consumer advertising manager.
"These times are challenging for us," she said. "We felt this was not the time to cut back, [but] the time to look to advertising and marketing to help jump-start [PC sales]." It may have helped: Intel revenues increased 9% to $6.7 billion in the third quarter.
TECH MARKET LONG TERM
Serious questions remain about the health of the tech market. In an employee memo this month announcing a 10% staff cut and the closing of three small magazines, Ziff-Davis Chairman-CEO Eric Hippeau cited computer industry profit pressures, product delays, the Asian financial crisis and worries over the "Year 2000" computer bug.
"We must assume these conditions may continue into 1999," Mr. Hippeau wrote.
Mr. Leeds said CMP has been taking steps to ride out the storm, cutting staff earlier this year and closing LANTimes last week.
"It's better as a business professional to prepare for a recession and devaluation and plan your business accordingly," he said. "If business is stronger than expected, then we'll all do much better."
Ad pages in tech titles fell 8% through August, according to an analysis of data from tracking service Adscope. Ziff-Davis and CMP slipped; rival International Data Group has seen a small page increase so far this year.
SHIFT IN MEDIA
The overall decline largely reflects a shift in media. Tech pages in business titles have been booming, with strong double-digit page growth at such publications as The Wall Street Journal and Fortune.
Computer spending on network, spot and syndicated TV is also sharply rising; it leaped 50.7% in the first half to $329.4 million, according to Competitive Media Reporting.
Computer and software media spending on the Internet rose 75.7% in the first quarter to $96.7 million, CMR's InterMedia Advertising Solutions reported.
Copyright October 1998, Crain Communications Inc.