Budgeting accurately in a growth environment is a challenge. Budgeting in a downturn is even harder. No one wants to budget for decline. The professional pressure against it is intense. The corporate imperative for growth might be even more intense. At many companies, decline is simply not an option, not if you want to keep your job very long. So the outlook for next year presents a dilemma.
A recent exchange illustrates the point: A group publisher, responsible for a multi-million dollar portfolio, indicated he’d budgeted flat for 2009, but that corporate nevertheless wanted growth. He said if he were being honest, however, he’d budget 10 percent down.
FOLIO: asked a number of executives about this dynamic and how they’re handling it for 2009.
Aspire Media CEO Clay Hall said this: “Aspire’s investors have never and are not now pushing us to project more than we are confident we can achieve. I’d be very concerned and resistant if they did.”
But he added another critical point. “Because of the uncertainties in the world economy, I’ve pushed back on executives during our strategic planning and budgeting meetings, asking them to take a more conservative view for 2009. This is the first time I’ve gone back and asked them to lower their projections. I hope it’s the last.”
The Glass-Half-Full Perspective
Adam Japko, president of the home design unit of Network Communications, described the condition of diverging expectations. “We at corporate probably are more realistic about conservative performance next year than the folks on the ground creating budgets and driving revenue,” he says. “I’m just not sure that the best publishers, those who are closest to their markets, want to embrace that their businesses, which have been sailing along nicely, could experience a new level of pressure.”
Professional pride often produces a glass-half-full perspective. Following are excerpts from the respondents.
Q: What is your estimate for next year, overall?
Adam Japko | President | NCI/Home Design
It’s extremely hard to really know what next year is going to bring. There has been a significant shift downwards in this last calendar quarter and if the levels persist, then year-over-year performance will be down. Building a sound operating plan around growth would leave us unprepared to deal with continued fallout from problems in the global economy.
Steve Stoneburn | CEO | Quadrant Media
Digital sales should expand both in absolute terms and as a percentage of overall revenues. Project (non-CME) sales are also expected to improve. Ad sales will be flat.
Tony Uphoff | CEO | TechWeb
Given the environment, we are being pragmatic about budgets for 2009. We are projecting flat to very slight growth overall. We anticipate continued double-digit growth in online, events to be relatively flat and we project we will continue to gain share in print as we balance the growth in online with a managed decline in print year over year.
Mike Dandrea | Group Publisher | 1to1 Media/Peppers & Rogers Group
We are estimating overall advertising and sponsor revenues to be approximately 5 percent to 7 percent higher in 2009. We are projecting growth in our turnkey demand-gen programs and Web revenue, and slight declines in traditional print and e-newsletter advertising.
Clay Hall | CEO | Aspire Media
For 2009, we will be budgeting for flat print advertising. We’re budgeting small growth in book sales; and about the same growth rates we had in 2008 for subscriptions, single copy sales, and events. We expect significant growth from our e-media, television and video businesses.
Joan Henderson | Publisher | Oklahoma Today
We budgeted flat for 2009, but we’ve already started to watch the bottom line very carefully as a precaution. The Oklahoma economy is healthy, but my gut and long experience tells me to hope for the best and prepare for the worst. We’re finishing 2008 with our strongest advertising year in history, but my crystal ball tells me 2009 will slip a bit, maybe 10 percent to 15 percent. We’ll cut expenses to compensate and come through it intact.