2010 FOLIO: B-to-B CEO Survey
Coming off the worst year in decades, b-to-b publishers are prepping a comeback.
Shuttered magazines, canceled events, a dip in digital and of course, mass lay-offs. Those four things pretty much defined b-to-b publishing in 2009 for most players.
After the high-flying years of 2003-2007, 2008 was a warning shot and 2009 a cruel reality check. In 2010, many publishers are starting to see signs of life but is that simply in comparison to the terribleness of 2009 or are we finally on the slow road to recovery?
Revenue Sources in 2009
Even with the massive drop in print spending, b-to-b publishers remained solidly print-driven in 2009, with larger publishers (those with more than $5 million in annual revenues) and smaller publishers (those under $5 million in revenue) seeing print account for 53 percent and 54 percent of revenues, respectively.
E-media was the second largest revenue stream for both larger and small publishers and again, only one percentage point separated the two (e-media accounted for 13 percent of revenue for larger publishers and 12 percent of revenue for smaller publishers).
Changes In 2010
Business-to-business publishers are far more optimistic for 2010, with 62 percent of smaller publishers and 76 percent of larger publishers expecting an increase in revenue this year. Among larger publishers expecting an increase, the majority (27 percent) expect revenue to grow between 10 percent and 19 percent—an aggressive jump. Only 3 percent of larger publishers expect revenue to decrease this year.
Meanwhile, 30 percent of smaller publishers expect revenue to stay the same in 2010 while 8 percent expect it to decrease.
A 10 to 19 percent jump was again the margin chosen by the majority of smaller publishers expecting an increase (22 percent).
Revenue Sources 2010: Print Drops Below 50%
2010 could be a historic year for b-to-b publishers in that most are expecting print revenue to drop below 50 percent of total revenue for the first time. Larger publishers expect print to account for 49 percent of total revenue this year, compared to 48 percent for smaller publishers.
Meanwhile, digital will grow to 17 percent of revenue for larger publishers and 16 percent of revenue for smaller publishers. An improving event market will boost live events slightly, accounting for 15 percent of overall revenue for larger publishers (compared to 14 percent in 2009) and 8 percent for smaller publishers (compared to 7 percent last year).
Despite the buzz over emerging revenue sources such as custom and data and market information sales, those revenue streams will stay largely flat in 2010 as most b-to-b publishers struggle with developing the infrastructure to execute on those types of products.
However, information sales were the second most profitable product after online for both larger and b-to-b- publishers (13.2 percent margin for smaller publishers, 16.5 percent for larger publishers) in 2009. Print offered the lowest profit margins, although still at a healthy 10 percent for smaller publishers and 11.8 percent for larger publishers.
Areas of Investment: E-Media and Sales
While cost control was the priority for b-to-b publishers in 2009 (and remains so in 2010) operating expenses have crept up, particularly in e-media as many publishers scrambled to play catch-up and generate digital dollars to make up for print [Charts 8 and 9].
Operating expenses around sales took the next highest jump, even as many publishers say finding qualified sales people who can sell the entire package remains one of their biggest challenges (even as “laying off talented people” is one of the biggest disappointments).
Surprisingly, the majority of b-to-b publishers said they invested in new technology in 2009, even at low levels (the majority of smaller publishers—31 percent—said they invested less than $10,000 in new technology last year while the majority of larger publishers—14 percent—say they spent between $100,000 and $249,999 on new technology last year. Twenty-four percent of smaller publishers and 8 percent of larger publishers said they did not invest in new technology last year.
Web sites and core computer/hardware/software products remained the largest individual technology expenses for b-to-b publishers [Chart 11]. Content management systems received the next most investment. Larger and small b-to-b publishers spent roughly the same on social media services (5 percent for smaller publishers, 4 percent for larger publishers), as many publishers continue to shift away from focusing on social media at their own branded sites for outlets such as Facebook and Twitter.
When it comes to new hires in 2010, both larger and smaller publishers are focused on expanding their sales staffs [Chart 12]. E-media is the second highest concern for larger publishers (41 percent say they want to make more e-media hires in 2010).
However, editorial is the second highest priority for smaller publishers (19 percent expect to hire more editors, compared to 16 percent hiring more e-media staffers).
Priorities in 2010
In 2010, 31 percent of smaller publishers and 32 percent of larger publishers anticipate launching an online startup, while 13 percent of the smaller players and 12 percent of the larger players plan to launch a print magazine [Chart 13].
While 30 percent of larger publishers expect to buy another company in 2010, just 8 percent of smaller publishers expect to make an acquisition.
The survey sample of 926 was selected by Folio: and Readex Research from all FOLIO:’s domestic subscribers with executive management job titles whose primary focus is b-to-b publishing.
Data was collected via mail survey from Dec. 31 2009 to Feb. 16, 2010. The survey closed with 226 usable responses. Results were filtered to only those involved in b-to-b publishing. The margin of error based on 182 respondents is plus or minus 6.3 percent at the 95 percent confidence level.