Federal IT market thriving

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While most technology advertising continues its steady, three-year decline, at least one tech sector is looking up. U.S. federal government spending on information technology products and services is expected to increase to $68.2 billion in fiscal 2008, up from $45.4 billion in fiscal 2003—a compound annual growth rate of 8.5%, according to INPUT, a Reston, Va.-based market research firm. INPUT expects the departments of Defense, Homeland Security, Transportation, Energy and Treasury to generate the most federal spending.

Among the beneficiaries of this anticipated growth are the publications directly reaching the government IT market. Leaders in this sector are PostNewsweek Tech Media’s Government Computer News and Washington Technology and 101Communications’ Federal Computer Week.

Against the trend

While some broad b-to-b IT publications are still experiencing double-digit declines in ad pages, magazines targeting the government IT sector report increases in pages. Through October of this year, Federal Computer Week was up 3% in ad pages compared with the same period last year, according to data provided by IMS/The Auditor. In the same period, Government Computer News’ ad pages rose 9%, and Washington Technology’s were up 5%.

"We’ve had a wonderful year in just about every metric," said David Greene, PostNewsweek Tech Media’s president. "Renewals are up. Ad pages are up. Attendance at our show [FOSE] is up. Hits on the Internet site are up."

Greene said the federal government has been charged with making more information available to citizens, who access this information via the Internet through electronic databases such as the Securities and Exchange Commission’s EDGAR.

"The things government is being asked to do grow every year," he said. "And while government IT spending grows, government spending overall doesn’t necessarily grow. A lot of things are getting automated that will save money for the taxpayers ultimately."

According to Anne Armstrong, Federal Computer Week’s publisher, "The government market is a steady market. In times when the commercial market is very hot, like in the dot-com era, there were a lot of people not as interested in the government market. Now, with the dip in tech publishing generally, people have turned back to this market."

Enterprise-oriented tech publishers are also entering the fray. CMP Media’s InformationWeek, for instance, launched a quarterly titled Government Enterprise. Next year, the publication will increase its frequency to six times a year, said Mike Friedenberg, InformationWeek VP-publisher. He expects ad pages to hold steady at about 15 to 20 per issue, resulting in an increase in annual pages approaching 50%. Advertisers in the magazine have included InformationWeek regulars such as IBM Corp., as well as defense contractor Lockheed Martin Corp.

As corporate IT budgets have lagged behind federal IT spending, government IT magazines have attracted a spectrum of advertisers, ranging from giant tech corporations to smaller companies created expressly to pursue government contracts. Armstrong said Federal Computer Week’s advertisers include Hewlett-Packard Co. and Dell Computer Corp., as well as CDW-G (CDW Corp.’s public-sector arm) and GTSI Corp., a value-added reseller that targets government IT buyers.

Like a gold rush

"I’ve likened it to a gold rush," Armstrong said. "Someone announced that ‘there’s gold in them thar hills,’ and the race is on. There are a lot of newcomers in the market, but not everyone realizes that this is a market with long lead times and that there are a lot of special rules and regulations which people have to be aware of."

Nonetheless, Armstrong doesn’t expect the growth to stop any time soon. In September, the last month of the federal government’s fiscal year, ad pages in Federal Computer Week were up 44% compared with September 2002. She said the surge in spending was a good omen for fiscal 2004.

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