San Francisco—American Business Media’s Annual Conference opened Monday and sessions hewed closely to the event’s central theme of growing business off of consumer insights and data.
Morning sessions looked at ways to monetize the audience. Justin Greeves, vice president of research and Margaret Mohr, chief marketing officer, at e.Republic, a media company that targets the state and local government markets, talked about creating "intelligent products," meaning the company builds its products off of what it understands about its audience. "We have a lot of information coming into e.Republic, but not enough intelligence," said Greeves. "Information is a commodity, people get it from many sources, but what we do is take the information and put together intelligence for our sponsors and people looking to sell into state and local government."
In that same session, John Siefert, CEO of Virgo, described how his company has determined the value of each audience member in each step through their content consumption process. "We created what we refer to as a ‘ladder of engagement,’" he said. "We created literal dollar signs next to each rung of the ladder and by creating this approach we were able to see how much an audience member was worth to us at each rung of the ladder."
By looking at the content customers were accessing, Siefert could score each of them according to where they were in the lead pipeline. From there, Virgo began mapping its content according to the expectations of the audience and where each person was in what Siefert called the "information journey."
This organizational and value scoring process led to the creation of content libraries and web stores where customers can purchase products—from event session videos to PDFs to digital magazines and webinars—on demand. The event videos, for example, are $50 each and run for 45 minutes. The store has been up for about 3 months and Siefert says he has about 500 customers from 22 countries.
Ecommerce Supplants Advertising
Ecommerce has become a huge push for F+W Media on the digital front, and the company’s chief digital officer Chad Phelps described the company’s move into ecommerce and other non-advertising related revenue streams in the "Putting Metrics Into Action" session. Facing declining CPMs and limited inventory, and being a largely ad-driven company online in 2008 with about 90 percent of digital revenue coming from advertising, Phelps determined future growth was limited.
F+W’s first ecommerce store was opened in 2009 that sold content products ranging from DVDs to books and PDFs. In 2010 the company launched 16 more stores. "One of my goals is to create as many content products as I can," said Phelps. "And it’s not just words on a page, it’s online education, it’s paid seminars, it’s data products, any form of content that has value to our audience and to us."
By 2011, online advertising accounted for only 16 percent of F+W’s overall digital revenue, which Phelps described as "into eight figures."
Phelps buys so heavily into the customer-centric view, that advertising has become an afterthought in the overall digital strategy. "Advertising is gravy for me now. We put all of our thought and energy into the consumer."
Revenue, Profits and Valuations for B-to-B
An afternoon session highlighted ABM’s new study "Managing Profits in a Changing Media Industry," which broke down revenue, costs and profits among a a select group of ABM membership survey respondents.
About 30 companies responded, with 26 providing fully completed data, which, said Michael Alterio, ABM’s research and content director, was up from previous surveys. According to the study, digital and events grew by 15.5 percent and 9.8 percent respectively, but print was down -2.3 percent. The revenue share among the three for the year was print at 44 percent, events at 28 percent and digital at about 21 percent.
John Wickersham, a partner at Atwood Capital Partners, meshed the ABM financial data with his firm’s own projections and extended the data through 2016.
Print, said Wickersham, will continue to decline at a rate of about 2 percentage points through the next 4 years. Events will start strong but moderate to about 3 percent growth during that same period. Overall, however, Wickersham said most companies will likely see their revenue pies split into thirds between the print, digital and event buckets by 2016.
EBITDA multiples at the current revenue mix are sitting at about 4x-6x and, said Wickersham, "There are a significant number of b-to-b media companies that have yet to achieve the current average revenue mix."
Broken out, print multiples go for 4x or under, said Wickersham. Events are now at about 7x-8x and digital, depending on its core business—lead gen versus display, for example—is at least as high as events or sometimes well above.
Wickersham was bullish on multiples 4 years from now. By 2016 an advanced media platform could achieve a multiple range of 8x-12x.
The buyer pool will be much different as well, with private equity, said Wickersham bowing out due to waning interest. Big strategics, except for UBM, are largely out of the picture. International is where the action will be. "From our vantage point, we see a lot of international buyers," said Wickersham. "We’re predicting that well before five years there will be a lot of international buyers jumping into this market and many from Asia."