BtoB Media Business - June 2009 - (Page 26)

Endnote By Thomas L. Kemp The end of b-to-b media? A merican Business Media just released the BIN numbers for the first quarter and the results are alarming: Business-to-business ad pages are down by 30% from 2008. Perhaps more surprising, ABM also reports (without providing the data) that b-to-b trade show revenues are down by 20% in the first quarter as well. Gordon Hughes II, the presidentCEO of ABM, said, “We are not surprised by these numbers given the current state of the economy.” As John Suhler, co-founder and general partner of Veronis Suhler Stevenson, more candidly stated at the ABM management meeting in Chicago last November, “Business sucks.” The first-quarter decline in b-to-b ad pages this year is double the 15% decline experienced by the industry in 2002, the last major downturn. Furthermore, trade show revenues and volumes, apart from specific verticals like technology, were limited to low single-digit declines in 2002, leading many of us to believe that the trade show industry was somewhat immune to economic disruptions. There are also reports that the panacea of the industry, digital revenues, are also soft this year, with many advertisers demanding significant price breaks for digital programs and CPMs eroding fast in the face of excess inventory and ad networks. Many industry veterans and pundits are publicly stating that the end is near and things will get much worse. Furthermore, they add that business will never recover from this downturn as a result of the secular industry changes combined with the severity and breadth of the recession. These reports beg the question: Is this the end of b-to-b media? The answer: Yes and no. Yes, there are profound changes in our industry that will forever change the way we do business and work with our customers. I believe that most of these secular changes are positive in the long run as we fully integrate digital marketing programs into offerings to our customers. Yes, print ad pages will likely never return to the volume and yields in most of the vertical markets. However, this is a trend that has continued for several decades following almost every economic downturn in existing vertical b-to-b markets. The development of new technologies and industries has created new companies and stimulated spending that have offset ad page declines in existing verticals. We are already seeing the green shoots of new verticals in developing markets such as alternative energy and green industries. “Digital technology offers the most exciting new technology to serve our customers since the invention of the printing press.” Yes, the b-to-b media M&A market is dead for all practical purposes. Sure, there will continue to be some opportunistic acquisitions by well-capitalized strategic buyers, but the major engines of M&A capital—private equity and leveraged lenders—have essentially zero interest in doing any new b-to-b media transactions. Yes, the balance sheets of many of the leading companies in the industry are distressed and have put added pressures on their management, staff, owners and lenders. Acquisitions executed with high single-digit leverage in better times can quickly convert to double-digit leverage with the declines the industry is experiencing this year. Nevertheless, most of these companies continue to produce positive cash flows, and their management teams are aggressively responding with painful cost reductions and creative changes to their business models to achieve growth. Yes, we will see some ownership changes as lenders become owners but most of these companies and the strong brands will survive to serve their customers and markets in new and exciting ways. The core competency of businessto-business media is to bring buyers and sellers together in highly niched vertical markets through creative, compelling and proprietary content. If we continue to successfully fulfill this important need for our customers, we have a strong and rewarding future to our industry. In fact, rather than a threat to the b-to-b media industry, digital technology offers the most exciting new technology to serve our customers since the invention of the printing press. By providing our customers with exciting tactical programs to generate leads and sales, we have the most accountable measurement tools to demonstrate the value of our services in the history of the industry. Yes, business sucks right now. Yes, some of the brands, executives and companies serving our industry will not survive. Yes, we will see entrepreneurs creating exciting new b-to-b media companies as we have witnessed in past times of economic turmoil. Yes, this economic recession will end. Yes, we will achieve profitable growth and valuations will become attractive again to investors. Yes, folks, the M&A markets will recover. No, this is not the end of b-to-b media. Thomas L. Kemp is chairman-CEO of Northstar Travel Media. He can be reached at tkemp@ntmllc.com. 26 | Media Business | June 2009 | mediabusinessonline.com http://www.mediabusinessonline.com

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

BtoB Media Business - June 2009
Contens
Publishers Reassess Google AdSense Programs
Amid Cutbacks, Media Firms Are Still Investing
Open-source CMS Advantages Outweigh Problems
Sales & Marketing
M&A
Online
Production
Events
Circulation
People
Benchmarks
The End of B-to-B Media As We Know It?

BtoB Media Business - June 2009