Study finds b-to-b media spending declines for first time in a decade

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B-to-b media spending in 2001 fell for the first time in a decade, and the sector still hasn’t bottomed out, according to a newly released study by Veronis Suhler Stevenson L.L.C.

In its annual "Communications Industry Forecast" the New York-based media merchant bank predicts that spending on b-to-b magazine advertising will decline again this year, by 11.7% to $9.6 billion, and that it will rise 4.9% in 2003. For the period 2001-2006, ad spending on b-to-b magazines is expected to grow at a compound annual rate of 2.2%, to $12.1 billion.

B-to-b hardest hit

The study showed that b-to-b was the hardest hit among all media sectors last year, as total spending fell nearly 13% to $13 billion. Advertising fell nearly 20%, largely due to double-digit declines among technology and insurance/financial/legal advertisers.

Circulation spending dropped 5.4% to $2.1 billion. However, total b-to-b unit circulation was up 2.7% due to a 4.8% gain for controlled-circulation magazines. Circulation spending in the period 2001-2006 is expected to grow at a compound annual rate of 3.7%, reaching $10 billion, Veronis Suhler predicted.

B-to-b media traditionally lag the general economy by six months to a year. With the latest economic indicators dicey at best, a rebound may not occur soon, industry observers indicated.

"People talk about recovery, recovery, but nobody is coming into our office with bags of cash," said David Sable, president-CEO of Wunderman, a New York-based ad agency whose b-to-b clients include IBM Corp., AT&T Corp., Pfizer Inc. and Citigroup. "Everybody is spending very carefully and starting to ask, ‘What am I getting out of a full-page ad?’ "

Sable added that the industry is still suffering the ill effects of the Internet boom. "The problem is you had companies that shouldn’t have been advertising, with no message and no cash. And it wasn’t our finest hour either. We should have been saying, ‘Maybe you shouldn’t be buying that spot on the Super Bowl when you have a b-to-b product, because that spot is going to be irrelevant.’ "

A major factor in the advertising drop, of course, was the dizzying shakeout among dot-com companies after the economy started to slump in 2001. In a short period of time, the huge wave of b-to-b advertising that technology-related publications were riding came crashing down. And while marketers had committed the majority of their spending before Sept. 11, the slowdown in business operations following the terrorist attacks took a toll on the sector. B-to-b magazines lost an estimated $9.7 million in the four days following the tragedy, according to Veronis Suhler.

Sable predicts more contraction among b-to-b publications that focus on technology, but stressed that if the dot-com bubble is taken out of the equation "the decline [in b-to-b media spending] is not that big."

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