February 7, 2014 Last Updated 2:45 pm

B2B: Ad page declines continue as segments fails to recover from fiscal crisis

Latest BIN report from the ABM show ad pages down over 7.5 percent year-to-date

The fiscal crisis of 2008 hit at a particularly bad time for both incumbent politicians and B2B magazine publishers. For politicians, it dominated the news right when their November campaigns were in full swing. (Remember when John McCain put his presidential campaign on hold ahead of a debate with Barack Obama? It didn’t work.) For B2B publishers, the news of the banking crisis came right in the middle of fall planning, that time of the year when reps visit their clients to secure ad schedules for the following year. It was a disaster.

BIN-8-13-chartCompared to 2009, the last few years have been less about precipitously falling ad pages as much as their failure to recover to pre-crisis levels.

The latest BIN report published by the ABM, shows that ad pages in August fell 8.14 percent. For the year, through August, pages are down just over 7.5 percent. The losses are not extreme, but they are on top of three years in a row where pages have not significantly recovered from the steep declines experienced in 2009.

Particularly hard hit this year are the automotive, aviation, banking and retail categories, each showing declines of between 11 and 23 percent year-to-date. Doing better are the agriculture, construction and engineering categories which are recording only modest declines in page counts. The environmental category is actually up nearly 3 percent year-to-date, the only bright spot in a dismal report.

The B2B segment was probably at its zenith in 1999 and 2000, at the height of the dot com boom. Publishers were often judged not by whether they recorded ad page increases, but how big those increases were.

I attended many a meeting in 1999 in which the president of our company lambasted me for running issues where the ad to edit ratio was 60/40 (that’s 60 percent advertising). I left for Cahners (later Reed Business Information) shortly thereafter – as they were absolutely crazy – but the point was that good was never good enough in 1999.

That was also the height of investment in B2B by private equity firms. The strategy-du-jour was roll-ups, buying as many properties as possible to increase the value of the company, then sell it all off to some other PE. It was a game of musical chairs that came somewhat to a halt with the bursting of the dot com bubble in March 2000 (when the NASDAQ peaked at 5,408, today it is at around 4,090).

The early ’90s did see some ad page growth, with ad pages recording a 5 percent gain in 2005, for instance. But gone were the days of 20 percent increases and the PEs started to grow impatient. The pressure for growth, and the failure to achieve that growth, led to many B2B firms instituting staff reductions. Editors that were familiar with one industry soon found themselves in charge of multiple magazines. Involvement with trade associations and travel was cut back. The cycle of self-destruction was set in motion at many B2B firms.

Since the second jolt, the economic crisis, many B2B executives having been looking for a solid recovery – one that has not materialized. Publishers have told me on several occasions that until they start seeing ad page increases they are hesitant to invest in tablet editions or mobile apps. This lack of investment in new digital platforms can not be good for their businesses, but reducing staff more really isn’t an option.

The one strategy that is showing results is the move away from print magazines and towards events and information services. Print ad revenue is a smaller portion of most B2B publishers overall revenue. Even the trade journals that cover the magazine industry have deemphasized their print titles and website to concentrate on events and other sources of revenue.

  • Matt Kinsman 4 years ago

    “The one strategy that is showing results is the move away from print magazines and towards events and information services.” And yet no citing of those numbers from ABM, including 7.2% growth in data revenue, 4.4% growth in events, 27% growth in digital or overall industry growth of 4.9% for the quarter?

  • Josh Gordon 4 years ago

    As always Matt, you are on target. Data, events, and digital media are the future growth of ABM members. Why these numbers were not included is an impractical omission. Also, I am not sure of the logic of assuming that a sectors economic health alone is causing ad pages to rise and fall. Auto industry is down and agriculture up because ad pages track that way? I think there are other factors at play.

    • D.B. Hebbard 4 years ago

      That is a startling thing to say, Josh. As the former publisher of a transportation construction magazine, I can say with certainty that categories can be very much effected by the economic health of the category. The highway bill of 1998 played a huge role in the growth of the sector. Further, the problems with the auto companies in 2009 decimated the ad pages of many magazines in that sector. Pages were down 32% in 2009, but in 2010 they rebounded and were up per 9% in a year where B2B ad pages were generally down (thanks to the bailout).