Media Outlook: Trade Media

Trade magazines offer clients a variety of venues in which to advertise.When last June's figures for ad revenue and pages were announced, the prevailing wisdom in the business-to-business industry was that the worst was over. Ad pages in the month of June increased 0.9 percent over the corresponding month for the first time since November 2000. Revenue was up 5 percent, according to the Business Information Network, part of American Business Media. Retail, automotive, home and building, and drugs and toiletries experienced significant growth. However, telecom and technology (the computer and software categories) were down 30 and 20 percent, respectively.Still, these figures were well ahead of year-end tallies for 2002, when the only category out of 12 with a positive ad revenue increase over 2001 was drugs and toiletries. Heavy decreases were seen in finance, telecom and tech sectors, the biggest B-to-B categories. Though total 2002 B-to-B spending declined for the second year, by 8.7 percent to $19.2 billion, 2001 spending was only half that, at $10.8 billion, reports Veronis Suhler.Circulation also declined for the second consecutive year, falling 2.6 percent to $2.1 billion in 2002, reports Veronis Suhler. This led to more reliance on controlled circ, which accounted for nearly two-thirds of overall B-to-B circ last year, its share of total circulation having increased the last two years. Heading into 2004, the industry is expected to finish the year up 3 percent in ad spending. PriceWaterhouseCoopers forecasts next year's spending at $7.7 billion with a growth of 3.5 percent. Veronis Suhler projects a slow, steady compound annual growth of 4.8 percent in the industry through 2007, and expenditures of $24.2 billion by 2007.The source of such growth can be summed up in the catch-phrases "value-added" and "integrated marketing" packages. "There has been a leveling out of ad pages," says Dan Belmont, president of Carat Media's business and technology group. "Money went from ad pages to other lead-generation programs." Belmont, cites the Internet, direct mail and data analytics as examples. Gordon Hughes, president/CEO of American Business Media, agrees. "The topline has to come through new products," he says. He offers as examples custom publishing, sponsorships, print and digital ad packages, manipulating databases for narrowed demos and rich data, or exclusive market intelligence information. Technology advertising, the largest category, is expected to pick up in second quarter 2004. "Most companies made computer investments in 1999 for Y2K, and now it's time to invest in new machines," explains Hughes. "Many companies will go to Ziff and IDG books [for that information]." In the healthcare sector, "Pharmaceutical spending in [mass-circ] medical journals has had a weak year," says Steve Stoneburn, president/CEO of healthcare publisher Quadrant Media Corp. But with the introduction of new drugs next year, he says, pharmaceutical companies will have to create innovative marketing campaigns in B-to-B journals to compete for doctors. Smaller, specialty medical journals have fared better, and biotechnology and biodefense are growing categories. The Acumen Journal of Sciences launched in May as a bimonthly covering these burgeoning fields.Other revenue streams are tech-driven, such as sponsored events broadcast by satellite to the Web (and requiring paid access) and combination online/print packages. Healthcare publishers are also going into the medical education industry, offering newsletters, symposia and Web-based information traditionally offered by other companies. The trade show category is an important revenue generator for B-to-B titles. Last year, trade shows was flat once the computer and finance sectors were extrapolated. Health-care, home and building, and auto either grew or felt much smaller declines. Trade show and exhibition spending is projected to grow alongside the rest of the B-to-B industry next year. A new model appears to be emerging for trade shows in light of the nation's decreased travel—multiple shows in several major markets instead of one big show. However, many of these on-the-road shows are developed by single companies, thereby taking money from industry-wide events. "It's been a very crowded marketplace the last couple years," says Belmont. "More companies are doing their own events and competing with the industry event in the marketplace," explains Belmont, who buys in multiple technology and business trade books.Industry executives anticipate mergers and acquisitions activity to grow next year. As exemplified Aug. 25 when Advanstar Communications acquired health-industry magazines from Thomson Healthcare for $135 million in cash, big companies will continue to acquire mid-size companies. Then, as they trim off single properties, smaller companies will buy those entities and become mid-size.The recent advertising data and revenue-building trends in full swing finally signal an industry-wide recovery in 2004. "B-to-B felt [the recession] starting in September 2000, before other economic sectors. It's been a rough three years for us," notes Hughes. "But with all the cuts that have been made, this industry will be more profitable than ever once we bounce back." Aimee Deeken is an assistant editor at Mediaweek.

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