BtoB Media Business - February 2009 - (Page 30)

Endnote By Ellis Booker Candid comments about a tough year ahead M edia company executives everywhere are asking the same tough questions: How bad is 2009 going to be? Where can we cut? Where should we invest? And what will our company and our industry look like when the economy rebounds? Amid a daily stream of unprecedented, negative business and financial news, it’s natural to focus on the challenges, not the opportunities. But in several interviews with b-to-b media and advertising agency executives last week, one could also see a glimmer of optimism—a belief that innovation, investment and, yes, risk-taking will continue this year and may, in fact, mean the difference between winners and losers. Bracing for 2009 “I’m an optimist by nature, but I’m a realist, too,” said ABM President-CEO Gordon T. Hughes II, adding, “I think ’09 will be the most brutal year our industry has ever faced.” Hughes said he doesn’t expect recovery until the second quarter of 2010. Peter Goldstone, president of Hanley Wood Business Media, is in the unenviable epicenter of the economic meltdown: housing and construction. The company has 30 titles serving these markets. Nevertheless, Hanley Wood is fortunate to have a No. 1 market share in nearly every one of the categories it serves, Goldstone said. “I don’t see how brands that aren’t No. 1 stay around,” he said flatly, echoing an observation heard several times last week. As Media Editor Sean Callahan writes in our annual “State of B-to-B Media” report (see page 6): “The M&A market in trade publications was weak in 2008, with the number of deals off 46.3% and the value of those deals down an astonishing 91.9% compared with 2007, according to media investment bank Jordan, Edmiston Group.” With the credit markets essentially frozen, is it a good time for strategic buyers to purchase synergistic properties? Not so fast, said Keith Crain, chairman of Crain Communications Inc., which publishes Media Business. “No one can tell how long or how deep” this downturn will be, Crain said. Given that, he insisted, media companies must be very conservative and very flexible. “I think you would be foolhardy to spend your cash when you don’t know what the future holds for your own company right now,” Crain said. are competing with their advertisers’ own in-house efforts, such as search, Web sites and e-mail marketing. While this suggests an opportunity for custom publishing revenue—already a $5 billion industry, and growing faster than digital—it is by no means a given that media companies will capture all this work. What’s more, the competition online is getting worse, said BtoB’s “New Channels” columnist Paul Gillin, a consultant who specializes in community journalism and social media. Instead of shifting a portion of their suspended or diminished print budgets straight to media companies’ interactive portfolios, marketers are rapidly embracing social media messaging techniques, which may bypass traditional media entirely. “Social media tactics are getting a real hard look because of the cost factor,” said Gillin, adding he was having his best January in three years, including a raft of new clients. Several executives voiced concern about softness in the event business. “Over the past couple of months, we’ve noticed a trend—last-minute attendance and ad spending are off, as the event gets closer,” said Jeff DeBalko, who last month was named president of Reed Business Information’s newly formed Business Media Division. While acknowledging the challenge of managing the profitability of the print side, DeBalko said he is pleased by the performance of some new initiatives. “Mobile, contextual advertising, lead gen—those things are really doing well,” he said. Media companies offering integrated products tailored to buying cycles will remain relevant, said longtime b-to-b agency executive John Favalo, managing partner-Group B2B at Eric Mower & Associates. Favalo and other agency executives report that their clients have cut budgets as much as 20%, with some holding up commitments until the second half—a clear sign of nervousness that the economy will continue its slide. Time to rethink? “The environment is so roiled and the future is so unclear that no one can speak to what level the business will come back,” said Neal Vitale, CEO of 1105 Media. “So if there’s good news out of these times, it’s a good time to rethink the business and [have a] better-structured business in the future.” By far the biggest challenge, Vitale and other executives said, is maintaining investments in forward-looking initiatives in a moment when managing revenue has become a daily top priority. Ellis Booker is editor of BtoB and BtoB’s Media Business. He can be reached at ebooker@crain.com. Digital isn’t a panacea True, the recession will increase the percentage of marketing budgets spent on interactive media. But publishers 30 | Media Business | February 2009 | mediabusinessonline.com http://www.mediabusinessonline.com

Table of Contents for the Digital Edition of BtoB Media Business - February 2009

BtoB Media Business - February 2009
Contents
Upfront
State of B-to-B Media
Cover Story
Sales & Marketing
Events
Production
Circulation
People
Benchmarks
Endnote

BtoB Media Business - February 2009