Publishers Prepare for Recession
Executives to continue investing, emphasize innovation during tough times.
Publishers are facing a cost crunch and a potential revenue shortfall in 2008, particularly as the economy seems to inch toward recession. American Business Media recently polled some of its members about how they see the economy affecting their business. One was Hanley Wood, one of the hottest b-to-b publishers of the last decade, which is facing a down housing market. “The economy will not be a boost to anyone this year,” CEO Frank Anton told ABM. “Unfortunately, the economy will definitely be sluggish at best and at worst, we will face a recession.”
FOLIO: asked publishing executives around the industry what steps they’re taking, if any, to prepare for a potential recession—where they will invest and where they will scale back, and what products they will turn to for continued growth and what products may bear the brunt of a downturn. Most say they are expecting softness in print while online continues to grow. Following the recession in 2001, publishers claim they learned the hard way about cutting their budgets too much, and that a downturn is the time to reinvest and gain market share while competitors fall back. Whether that will happen remains to be seen.
Below are verbatim responses from publishers representing different aspects of the industry, including large and small, b-to-b and consumer, and city and regional.
NAME: John Koten
TITLE: CEO Mansueto Ventures
RECESSION PLAN: Our plans call for about a 10 percent increase in spending this year. At worst, we will slow the rate of that growth but we will not cut back spending in any of our divisions this year.
We will continue to invest in all areas of our business. We look at our company as a long-term proposition and we can afford to do that because we are not subject to the short-term pressures of public ownership. There’s more opportunity to differentiate ourselves in the marketplace and to offer value to customers right now, when others are cutting back. The Fast Company brand has a lot of momentum right now, so that’s where we will be investing the most.
What we’ve learned from the past is to avoid triggering a downward spiral, where cost cutting exaggerates the negative impact of broader economic forces. If you have to take a hit, take it. But don’t try to pass along all the pain to your customers because your business will pay for it in the end.
NAME: Jeff Lapin
TITLE: President, Farm Progress
RECESSION PLAN: Recessions are transitory but the damage can be permanent if we answer by taking our foot off the gas. It’s important for us to continue to focus on delivering value to our customers and not let up on making targeted investment if we expect our business to deliver solid long-term growth.
NAME: Steve Palm
TITLE: CEO, New Bay Media
RECESSION PLAN: Different segments of our markets are performing differently. Those that are hot will continue, those that are challenged will continue to be challenged. I don’t think it’s any different than 12 months ago.
We’re not holding off on the sales end. We’re continuing to look for good salespeople—with not only print but those with online and integrated sales experience—wherever and whenever we can get them. Where we’re likely to postpone hiring, and we’re not talking about any headcount reduction at this point, are areas where customers don’t feel it—back office, finance, HR, accounting.
We’ll continue to make big investments in the Web as part of planned growth. We have been looking at digital editions in addition to e-newsletters.
NAME: Peggy Walker
TITLE: President and COO, Vance Publishing
RECESSION PLAN: Our fiscal year begins on April 1 so we are in the midst of budgeting right now. We have included a risk factor in our revenue budgets because of economic uncertainty. The factor varies by market segment. For example, some of our products are tied to the housing industry and we’ve accounted for that slowdown. Other markets in which we publish are not as sensitive to the economy such as agriculture where we don’t have a significant risk factor in the budget.
NAME: Christina Grdovic
TITLE: VP and publisher, Food & Wine
RECESSION PLAN: It’s business as usual over here. 2007 was our best ad performance year in our history and the magazine is breaking records at the newsstand. With 2008 being the 30th anniversary of the magazine, we have a lot of exciting things going on. We’re going to continue to invest in our entire brand.
One area of investment of particular focus is our online platform, foodandwine.com. We’re in the process of enhancing the look and feel of this medium while we’re integrating our sales force in a more competitive way. We expect this to be a big growth business for us.
Should advertisers be narrowing their media choices as times get tougher, they will be looking to maximize their buys for the greatest efficiency. Events and platforms such as our Food & Wine Classic in Aspen and Food & Wine Best New Chefs are proven in delivering ROI, so I feel we’re in a very strong place and a clear choice for advertisers and marketers.
NAME: Larry Burstein
TITLE: Publisher, New York
RECESSION PLAN: The interesting thing about us is that we’re a magazine with a very broad ad base. When you hear about different magazine ad sectors—like the auto sector or the beauty sector or the fashion/retail sector—getting hit by the recession, we’re in a position where we can look at the local ad buyers. We’re not dependent on any one category. So the answer to the question of “How are you preparing for a recession?” is we’re not doing anything.
As a weekly magazine with a two week close, it means that ad buyers can make quicker decisions with their money. I suppose conversely they could pull their advertising out quicker (in a recession) but overall I’m happier with a shorter window.
Being in the New York market, there’s a disproportionate amount of (sales opportunities) here, which in a period of economic downturn sometimes take longer to take effect.
NAME: Kerry Gumas
TITLE: President and CEO, Questex Media
RECESSION PLAN: In our case, I would say about 60 percent of our publishing business is serving a marketplace that’s a b-to-b market, but one that’s ultimately consumer demand driven—entertainment, beauty, and travel, for example. So we have a pretty diverse look at the marketplace and my feeling is that so far we’ve been very fortunate because we haven’t seen any significant change in marketers’ plans for 2008 in the sectors that we’re operating in.
We’re still looking at launches–we’ve got a fairly active program. I don’t think we can stop that, I think that’s fundamental now to the business, you have to have some innovation going on. I think you need to be smart about picking the opportunities.
On the acquisition front, we have a pretty active program and we’re going to continue to hold that as part of our strategy going forward. But at this point we’ve been through nine in the last year, so we’ve been pretty busy. I think not so much for economic reasons but for the pace that we were on I do want to slow down and make sure we’re focused on integrating correctly and this is a good time for us to do that.
NAME: Cynthia Good
TITLE: Editor and CEO, Pink
RECESSION PLAN: It will be a challenging time but there will be bright spots of growth. Pink is expanding—I think it’s because it’s a niche and fills a need. We are investing in sales and technology staff. Because of the tight squeeze on the economy, there’s more pressure to bring in revenue and visibility online. With this economy, there’s the same demand for content but it needs to be disseminated in a different way. We are also investing more in strong freelancers. It’s critical to outsource. It’s a way to eliminate risk and be conservative with new ventures.
We are also doing a review of all our numbers, energy and resources. As the owner of a small business, it’s important to pay attention to where every penny is spent. We are not lowering anybody’s salary but there’s pressure to hold down pay raises. I’m frustrated that we can’t give bigger raises. I think writers especially should be paid more.