The last couple of years have been turbulent, to say the least, for B2B publishers with several filing for Chapter 11 protection in the ‘States or going through near-closure and massive re-structuring.
The most recent casualty to seek the protection of the US courts is Summit Business Media, who are seeking to effectively restructure $135m of debt having failed to reach agreement on its latest plan with about a fifth of its creditors.
On paper, Summit’s management team has done pretty much everything that could be expected of them since the bottom fell out of their market in the last quarter of 2008. They disposed of all their ‘non-core’ businesses, closed anything that wasn’t making a profit, and reduced headcount by nearly a third.
Summit is far from alone, joining such luminaries as Ziff Davis, Penton and Cygnus in seeking to turn around their business by removing a large debt burden.
Some of the numbers are truly staggering – Penton’s debt mountain was nearly $300m. For an industry that has always been one where you generate the bulk of your revenue before even producing the product, that kind of compound loss suggests something is seriously awry.
The key point that this unhappy position underlines is that it’s getting a lot harder to run B2B publications profitably. This drives another critical question- ‘how are trade and tech publishers going to evolve their business model to match the needs of 21st Century clients?’
I call them ‘clients’ because the relationship has to change and be more in line with the sort of relationship other suppliers of marketing services supply.
Back in the dim and distant past when yours truly was in the elevated position of running a B2B publishing business, our income primarily came from three sources – classified ads, display ads and events. We had two groups of stakeholders – readers, who were considered to be the most important as without readers we would never attract the other group – Advertisers.
The publishing industry at the tail end of the 20th Centry did little to charm advertisers, certainly it was not a service-led industry.
All of which was fine as long as competition was limited. In our own group we had both the market leader and immediate competitor in three of the sectors we covered. This made it very had for another publisher to intrude and break our hold, as the cost of carrying a competitive launch long enough to dent our ability to control the ad market was prohibitive.
Such a monopolistic situation does not pervade today in any market, especially since the ability to become a publisher and command a weekly audience of many thousands now requires little more than a strong opinion and modest fluency with WordPress.
But very few of these ‘bloggers’ generate advertising revenue. In fact advertising income has fallen dramatically across the board – as can be seen from the poor profit performance of several key players.
Advertiser fatigue is often quoted as one of the principal reasons that B2B publishers are struggling – after all it’s the same group of companies who fill their vacancies and take stands at events as run full-page ads.
But in reality marketing budgets have been growing steadily.
The difference is that these budgets are being spent in a much more controlled and measurable way – display advertising in B2B is now viewed as a very costly way of reaching an audience that may or may not (a) see your ad, and (b) actually be in your target buyer profile.
The arrival of e-shots, click-throughs and interactive web pages has meant that advertisers can now measure the effectiveness of their campaigns in hard numbers rather than ‘Opportunities To See.’
Remember also that buyers today are far better informed than at any time in history, thanks in no small measure to the Internet, with analysts like Gartner reporting that 90% of all purchase decisions are now made based largely on Internet research.
The traditional B2B publication is playing a decreasing role in that scenario. Advertisers will now spend much more in building and maintaining their won websites – becoming self-publishers.
The publishing industry’s historic reliance on the three pillars of revenue – advertising, circulation and events has been under threat for a very long time, yet few have met the challenge head on, and now it’s a headlong rush to find new ways to connect audiences and advertisers.
There are definitely ways that this can be done. Reed now takes far more revenue from recruitment ads than it ever did ten years ago when 200+ pages of classifieds were a regular feature of its mainstream weeklies. By creating totaljobs.com they not only gave themselves a very effective route to preserve revenue, they also created a market leader that has seen off many other competitors and taken share from other publishers.
The digital challenge for publishers today, especially in B2B, is to find new ways to add value to the reader experience to bring them back into the fold and be able to monetise their reader relationship to the advertisers’ benefit.
This means new products, new cost models and above all new thinking.