The b-to-b communications segment is one of the healthiest parts of the media industry, with spending posting a robust annual growth rate of 8.2% from 1995 through 1999, according to Veronis, Suhler & Associates Inc.'s annual report.
In its "Communications Industry Forecast," the media investment banking company reports that expenditures on b-to-b communications, including trade magazines, trade shows and exhibitions, rose 7.5% to $23.1 billion in 1999, from $21.5 billion in 1998, slightly more than earlier projections. Spending on trade magazines rose 7.1% to $14.6 billion in 1999, more than double the growth rate of 3% in 1998; trade publications represent 63.2% of all b-to-b communications expenditures.
Total b-to-b communications expenditures are projected to increase at a compound annual rate of 6.8% from 1999 through 2004, reaching $32 billion in 2004, according to the report.
The recent vigor in the segment, the New York-based company says, reflects not only strong corporate profits and spending, but also a tremendous surge in dot-com advertising.
Still, this is not a time to coast on one's gains, the study warns. Already there are signs of significant moderation in the years ahead. Veronis, Suhler anticipates a "broad-based softening of the business-to-business publications market as the Internet siphons off a greater share of business-to-business advertising dollars."
While trade publishing companies may recapture some of those ad dollars for their own Web sites, that should not be counted upon as a done deal, the study points out. "We would expect that there will be growth in overall business-to-business publication ad spending as print and Web ad programs are packaged under a print umbrella," but how much and to what extent, the investment banking firm does not speculate.
At the same time, business publications "will continue to be viewed as objective, third-party information providers that readers can turn to for information," the study says."This assumption will be reinforced as more publishers expand their Web presence."
Veronis, Suhler expects spending in business magazines to continue, albeit at a slower pace by 2002. By 2004, total expenditures on trade publications are expected to reach $19.3 billion, a compound annual growth rate of only 5.7% from 1999 to 2004. In contrast, spending on b-to-b magazines posted a 7.4% compound annual growth rate from 1995 to 1999.
The strongest portion of the trade communications segment continues to be trade shows. With operating margins ranging from 30% to 52%, the number of shows produced each year is increasing, despite slow growth in the number of attendees.
Total trade show expenditures jumped 8.2% in 1999 to $8.5 billion, due primarily to an increase in the available rental footage and associated increases in rental costs.