The twenty first century has not been an especially good one so far for the trade publishing sector. As an advertising medium, Business magazines were hit hard by the events of September 11 2001, as confidence evaporated and advertisers reined-in their budgets. The following downturn in long-term growth industries like technology only served to deepen the sense of gloom. Since then, the horizon has brightened, and throughout 2004 optimism has grown as money began to return to the sector – research from the World Advertising Research Council (WARC) shows growth in spend of over four per cent for the Q3 and 4. Yet whilst the worst may be over, most observers agree that trade magazines are not out of the woods: Jane Burgess, UK marketing director at Reed Business Information (RBI), comments succinctly, “Do I think display advertisers will ever come back to spending the same amounts they were in 2001? No, I don’t.” Clearly then, business magazine publishers face some tough questions: why have the advertisers deserted them? What, if anything, can they do to win them back? In short, what is wrong with trade publishing, and what can they do about it?
Slow starter
Perhaps the best illustration of the current state of health of UK trade magazines as a marketing medium comes from the ‘Advertising Forecast’ figures that WARC produces for the Advertising Association. Whilst recent figures have been cause for some cautious celebrations, the broader picture is less heartening: growth in advertising in trade magazines being outstripped by growth in other mediums such as consumer magazines, newspapers, broadcast and online.
For 2005, WARC and the AA are predicting that spend in business magazines will grow by a modest 1.8 per cent, the lowest growth in any medium measured. By contrast, radio spend is expected to rise by 4.5 per cent, outdoor by 6.2 per cent and online by a massive 38.1 per cent.
But despite these slightly negative predictions, Colin Macleod, head of research at WARC, does not believe it is all doom and gloom for advertising in business publications. “The signs are that it is picking up. Business press suffered badly over the last two or three years because the IT sector was badly hit and the decline in commercial advertising. The future is looking brighter now than it has done for some time.”
Macleod also acknowledges the link between the growth in spend online and the relative sluggishness of revival in trade press advertising. “The rise of search marketing is a particular part of this – it has done phenomenally well,” he comments.
Evan Ivey, chair of the Business Communications Group at the IPA, says competition from other channels has also had an impact on business press advertising. “Targeting has become more sophisticated, and the growth in CRM systems has been gradually chipping away at magazines’ revenues.” Such systems enable business brands to be far more accurate in their targeting and less reliant on broad-brush methods such as advertising explains Ivey. “There is too much competition for the marketing pound these days.”
He adds that media owners have sometimes exacerbated this situation by refusing to work with advertisers to develop innovative display opportunities. “I still believe in advertising, but if you talk to publications about using different types of space (wrap-arounds or diagonal spaces) they refuse saying the other advertisers in the magazine complain. I’d like to try and use this space in interesting ways, but if I can’t I might look to spend it elsewhere, or on DM.”
Industry initiatives
For its part, the publishing industry has not taken the recent fall in advertising revenues – and the greater potential future threat – lying down. The Periodical Publishers Association (PPA) launched an advocacy programme in 2004 designed to help sales staff better communicate the benefits of advertising in trade magazines to their staff. The programme was initially rolled out in the pharmaceuticals sector last year, but a wider expansion is being planned for 2005, for which the PPA is working with McCann Erickson (more details of which will be announced as they are confirmed). The issue is also set to be a topic of discussion at the association’s annual conference ‘Magazines 2005’ (May 3-4, Grosvenor House Hotel).
Meanwhile, although some publishers are losing revenues to the Internet due to the growth of search marketing, others are actively encouraging this migration of spend and exploiting it with new products. Reed Business Information is one such company, and has invested heavily in various forms of online media, including its Kellysearch search engine, Totaljobs site and interactive versions of some of its paper titles. Jane Burgess explains that from an early date Reed took a strategic view of online publishing, regarding it as both a threat and an opportunity. “There were different schools of thought about what the impact of online publishing would be. We planned for Armageddon [of print publishing]. This made building a successful online business much easier.”
In reality, both paper and online publications have continued to be viable, according to Burgess. “We launched an online version of Estates Gazette in 1996 (EGI – Estates Gazette Interactive) in order to look into the future, but since then the paper product has and gone from strength-to-strength.” She adds that Reed has continued to investigate new formats.
Although she says RBI is reporting growth across-the-board in 2005, she does acknowledge that advertising is migrating. “Recruitment is proving particularly strong online – 30 per cent of our recruitment revenue now comes from this channel.- Whilst the recruitment expenditure in its paper products such as Computer Weekly may have declined, Totaljobs.com has seen significant growth. At the same time, she says printed magazines remain strong for branding purposes, hence to date there has been less of a shift in display advertising.
Measuring multiple channels
Jane Burgess’s perspective on this migration in ad sales is echoed by the Audit Bureau of Circulation (ABC), which tracks circulation data from business and consumer media, including traditional publishing, online and exhibitions. “If you measure advertising by the page, there is little growth,” comments Jan Pitt, head of B2B at ABC. “But if you include online, it is a different story. Increasingly B2B publications are operating over multiple platforms, but with a single brand.” As a consequence she is bullish about any suggestions that the business publishing sector is in any difficulties, and says the situation is too complex to sum up in a single soundbite.
As a result, advertisers are increasingly having a relationship with a media brand via multiple channels, and in order to attempt to track this, Pitt explains that ABC has brought out its Group Report product, which illustrates stats for online, print and face-to-face media carrying a single brand in one report. However, she acknowledges, “take-up has not been huge, but we expect it to grow.” It seems as if the theory of spreading previous ad budgets across multiple channels is more advanced than practice, with little analysis of effectiveness.
New revenue streams
Reed Business Information may be ahead of the game in terms of experimenting with and developing online publishing models, helped no doubt by its size and the resources at its disposal. But the migration of revenue which Reed is experiencing suggests that it is a trend which will have repercussions across the whole of the trade publishing sector.
Lucy Fairclough, head of B2B at PPA, says that as revenue from recruitment advertising appears to be migrating online, there is a trend for many publishers to seek to drive income from other sources. “There is a trend for revenues shifting from advertising to subscriptions,” she comments, suggesting that the days of the ‘free’ business publication may be numbered due to the erosion of ad revenues. “Other revenue streams which publishers are developing include face-to-face media such as conferences, events and exhibitions,” she adds.
At the same time, says Fairclough, publishers are increasingly focusing on maximising the amount of ‘must-have’ information they supply, thereby breaking down resistance to paying for content. Jaakko Alanko, MD of McCann Erickson Business Communications, which has been appointed by the PPA to develop its advocacy campaign, says this approach is essential for trade magazines if they are to survive in the trade publishing marketing of the future. “Specialist trade magazines must make sure that they are indispensable, and adapt their product accordingly. The editorial must support business thinkers. The magazine must be a knowledge centre.”
Integrating different channels
So what does the future hold for trade publishing? A greater integration with online products is the overwhelming opinion of observers, but in what way and at what speed is more of a moot point.
“In five years time, magazines will have accept that they have to have a web presence,” comments Martin Casimir, channel director of legal publishers LexisNexis (also part of RBI), including trade magazines such as New Law Journal and Counsel. “The balance will shift and print will no-longer be pre-eminent – clever publications will make sure the media they use is appropriate to their market, but magazines in different markets will move in different speeds. Publications in the catering industry, for example, might take decades, whilst IT magazines will probably move more quickly.”
But Jane Burgess of RBI is quick to dismiss suggestions of the end being in sight for traditional printed trade magazines. “I don’t believe that printed magazines will disappear in my lifetime, but publishers need to operate a broad portfolio.” She also refutes claims that the move online will penalise smaller publishers, with lower budgets for new formats. “It is an opportunity rather than a threat for small players. The competitive landscape has changed dramatically, and these days some of our main competitors are smaller niche online operators.”
Martin Casimir of LexisNexis concludes, “great magazines with great brands will always thrive, but they must be careful with their value propositions and with their intellectual property.”
