The State of B-to-B 2008


           Today’s Speakers:
Tony Silber, editor and publisher, Folio:
    Bill Mickey, senior ...
Today‟s Sponsor:




Mark Logic Corporation is the provider of the industry's leading XML
content server. Mark Logic works...
What We‟ll Cover Today

• A look at the previous three-year trends
• 2007 trends
• A snapshot of ABM‟s Cost Report
• The o...
Leading up to 2008

• A strong trailing three years

• Revenues and profitability generally up

• Print advertising still ...
Trends By the Numbers
B-To-B Profitability: 2004-2006




                                        Source: B-to-B CEO Surveys; Folio: and
       ...
B-to-B Revenue Change: 2004-2006
70%

60%

50%

40%

30%

20%

10%

0%
        2006            2005             2004
     ...
Revenue is Moving Online
70

60

50

40

30

20

10

0
             2006            2005               2004
              ...
Fastest Growing Parts
      of the Business: 2004-06




                                                    Source: B-to-...
On the Cost Side
               4,000

               3,500

               3,000
                                        ...
Costs Outpacing Revenues

                                  Percent Change in Expenses 2005-
Percent Change in Revenue 200...
A Look at 2007

• Print revenues remain flat, despite being
largest contributor

• Costs are increasing due to materials p...
Likely Sources of Increased Revenue: 2007
 90
 80
 70
 60
 50
 40
 30
 20
 10
  0
      Online   Ne w Print Existing    Ev...
Changes in 2007
50
45
40
35
30
25
                                                           < $5 million
20
             ...
Challenges in 2007
25


20


15


10


 5


 0
     Bus . Dev.      Executing   Pr ofitability   Top line Gro w th   Sales...
Outlook for 2008

  What does this all mean for next
  year and beyond?
These categories loom large in the minds of B-to-B...
The Economy
  Execs are wary about the economy in 2008. A bad
            economy is bad for business.


• “For b-to-b ove...
Downward Pressure on Print
         Flat to single-digit growth to continue.

• “After a couple years of „relative‟ stabil...
Increasing Costs
        Publishers are taking on increasing costs at a faster
                     rate than revenue grow...
E-Media
   Along with events, e-media is often cited as the fastest-growing
 business segment. But will growth slow as the...
Staffing
Publishers will continue to grapple with staffing issues. The search
  is on for not just volume, but specialists...
What to do?
              Advice from the field.
• Review your operation and “batten down the hatches.”
• Review pricing s...
Questions?

If we did not get to your question today, you may e-mail
Tony and Bill directly:

Tony Silber: tsilber@red7med...
Thanks to our Sponsor!




   www.marklogic.com
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State Of B2 B 2008 Presentation

  1. 1. The State of B-to-B 2008 Today’s Speakers: Tony Silber, editor and publisher, Folio: Bill Mickey, senior editor, Folio:
  2. 2. Today‟s Sponsor: Mark Logic Corporation is the provider of the industry's leading XML content server. Mark Logic works with providers of information products to accelerate new product creation, deliver products through multiple channels, integrate content from different sources, repurpose content into multiple products, build custom publishing systems, and to search-and-discover previously unknown information.
  3. 3. What We‟ll Cover Today • A look at the previous three-year trends • 2007 trends • A snapshot of ABM‟s Cost Report • The outlook for 2008 • Conclusions
  4. 4. Leading up to 2008 • A strong trailing three years • Revenues and profitability generally up • Print advertising still dominant revenue contributor • Online is the fastest growing sector • Events also a strong contributor • Diversification plans firmly in place
  5. 5. Trends By the Numbers
  6. 6. B-To-B Profitability: 2004-2006 Source: B-to-B CEO Surveys; Folio: and Readex Research Profitability has been on the rise.
  7. 7. B-to-B Revenue Change: 2004-2006 70% 60% 50% 40% 30% 20% 10% 0% 2006 2005 2004 Source: B-to-B CEO Surveys; Folio: Increased Decreased Stayed the same and Readex Research Revenues have been on the rise, too. E-media and events have been key drivers.
  8. 8. Revenue is Moving Online 70 60 50 40 30 20 10 0 2006 2005 2004 Source: B-to-B CEO Surveys; Folio: and Readex Research Print Events E-Media Custom Paid Subs E-Media and events, along with custom publishing have been on the rise.
  9. 9. Fastest Growing Parts of the Business: 2004-06 Source: B-to-B CEO Surveys; Folio: and Readex Research Print takes a dramatic plunge, while e-media overtakes it as the fastest growing business segment.
  10. 10. On the Cost Side 4,000 3,500 3,000 Advertising expenses Circulation 2,500 Editorial 2,000 Production Distribution 1,500 Ancillary 1,000 Total 500 0 2004 2005 2006 Figures in thousands (000) Source: ABM Cost Report, JEGI, Padin Estabrook LLC On the cost side, circ, edit, production and distribution expenses have been on the rise.
  11. 11. Costs Outpacing Revenues Percent Change in Expenses 2005- Percent Change in Revenue 2005- 2006 2006 Advertising Expenses 2.5% Advertising Revenue 0.4% Circulation Revenue 3.3% Circulation Expenses 9.5% Total Ancillary Revenue 23.2% Editorial Expenses6.5% Total Revenue 2.5% Production Expenses 5.1% Distribution Expenses 3.9% Total Ancillary Expenses 34% Total Operating Expenses 6.0% Source: ABM Cost Report, JEGI, Padin Estabrook LLC
  12. 12. A Look at 2007 • Print revenues remain flat, despite being largest contributor • Costs are increasing due to materials pricing and more business development • Staffing remains a challenge: Not just hiring more people, but specialists
  13. 13. Likely Sources of Increased Revenue: 2007 90 80 70 60 50 40 30 20 10 0 Online Ne w Print Existing Ev e nts Custom Data Subs M edia Ads Print Ads Pub < $5 million > $5 million Despite favoring e-media, publishers still optimistic for print revenues this year.
  14. 14. Changes in 2007 50 45 40 35 30 25 < $5 million 20 > $5 million 15 10 5 0 Ancillary M agazine Acquisition of Acquisition by Star tup Star tup Anothe r Anothe r Company Company Publishers have remained bullish this year on continued business development.
  15. 15. Challenges in 2007 25 20 15 10 5 0 Bus . Dev. Executing Pr ofitability Top line Gro w th Sales Staffing Ove rall Direction < $5 m illion > $5 m illion Large and small companies differ in their revenue and profitability challenges.
  16. 16. Outlook for 2008 What does this all mean for next year and beyond? These categories loom large in the minds of B-to-B execs: • The Economy • Downward Pressure on Print • Increasing Costs—Materials and Otherwise • E-Media • Staffing
  17. 17. The Economy Execs are wary about the economy in 2008. A bad economy is bad for business. • “For b-to-b overall, I believe there is only one thing to watch in 2008—the economy.” —Paul Mackler, CEO, HMP Communications • “I think it‟s going to be a tough year, with lots of economic worries. Batten down the hatches. It‟s a good time to review what you do and how you operate.” —Neal Vitale, CEO, 1105 Media
  18. 18. Downward Pressure on Print Flat to single-digit growth to continue. • “After a couple years of „relative‟ stability in print (flat to down single digits), I am expecting next year we will see a much bigger decline in print on average across the industry as economic issues within certain markets will likely lead to a pull back from some of the larger advertisers.” —James Ogle, CFO, Cygnus Business Media • “The „same-old/same-olds‟ hold true for next year—higher postage and possible paper price increases continue to put pressure on print. Served market and overall economic enviroment will influence our businesses.” —Don Pazour, CEO, Access Intelligence
  19. 19. Increasing Costs Publishers are taking on increasing costs at a faster rate than revenue growth. • “Rising production costs (paper/postage) will not help us a I think it is hard to maintain margins without a deadly focus on page yields when ad pages are a challenge to increase in a material way.” —James Ogle, CFO, Cygnus • “There is an out-of-control escalation of paper prices. A tight paper market has been created by consolidation and an industry-orchestrated change of the supply and demand dynamics.” —Dave Kamis, VP, production & manufacturing, Crain Communications
  20. 20. E-Media Along with events, e-media is often cited as the fastest-growing business segment. But will growth slow as the medium matures? And when will returns surpass investment? • “Certain publishers that have seen dramatic growth rates of 40-plus percent will not be as common. The recent ABM release stated an average of 18 to 22 percent growth online for 2007. I do not anticipate the industry average being much more than that next year.” —James Ogle, CFO, Cygnus • “I think that, ultimately, the marketing pendulum will swing back from short-term programs to more integrated and thoughtful multimedia plans, but I don‟t know if we‟ll see that in the coming year.” —Neal Vitale, CEO, 1105 Media
  21. 21. Staffing Publishers will continue to grapple with staffing issues. The search is on for not just volume, but specialists, especially in cross- platform content and sales. • “It is difficult to find experienced talent that „gets it‟ in the integration of print and online for any job—sales, marketing or editorial.” —Cam Bishop, CEO, Ascend Media • “There is a huge cost implication with digital. Once you have a mature business and the revenue catches up with the cost, that falls to the bottom line. But I think we‟re still five years out from that. We have such skeletal staffs on print right now and there is this tidal wave of digital coming. You can‟t staff up fast enough.” —Peter Goldstone, president, business media, Hanley Wood
  22. 22. What to do? Advice from the field. • Review your operation and “batten down the hatches.” • Review pricing strategies across all platforms. • If in buying mode, consider a digital media business. • Keep close tabs on materials pricing • Continue to build out and offer truly integrated multimedia ad programs. As tastes mature among marketers, they‟ll want to move from short-term to on-going programs. It won‟t be just about “display.” • Recruit specialists. Look for new talent from a variety of sectors, not just traditional media.
  23. 23. Questions? If we did not get to your question today, you may e-mail Tony and Bill directly: Tony Silber: tsilber@red7media.com Bill Mickey: bmickey@red7media.com
  24. 24. Thanks to our Sponsor! www.marklogic.com

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