Monday, May 8, 2006

Heady Days for Print at B2B Publishers, but Online Investments Cut New Title Growth

A rising tide lifts all presses, it could be said, and the latest publisher CEO survey from FOLIO: Magazine seems to underscore the overall buoyancy of B2B print publishing. In 2004, survey results showed 20 percent of publishers with margins of 5 to 9 percent, the 2005 study shows the greatest number of publishers falling in the 15 to 19 percent profit range. 80 percent expect revenue increases for 2006. Print is playing a key component of this mix, with more than two thirds of respondents expecting new print advertisers in 2006 and more than half expecting print ad increases from existing clients. But while print is still holding up current revenues, online revenues were cited as the fastest growing contributor.

Online is not for everyone: 42 percent of survey respondents have NO online revenues. This paints a picture of an increasingly divided B2B publishing market, with those able to invest in online services doing so robustly and those late to the game challenged to make the transition effectively any time soon. With only five percent of respondents planning to start a new magazine title, it appears that publishers that have missed the online transition are going to be riding along as long as they can on their existing folios. Instead of new titles, most new investment appears to be going into online services, broadening out relationships with readership via an array of new services that provide contextuality for ads and content without having to invest in new title launches.

So although we'll continue to see print as an important component of B2B publishing overall, the split between those with strong commitments to online publishing revenues and those who shy away from online is leading to a split in the industry as a whole. Within the next few years it's safe to say that many leading B2B publishers will see more than half of their revenues coming from online publishing, with those slow to commit to the online shift lacking the leverage to keep up with the more quickly growing core of online revenues available in the market. In this environment it's not clear that B2B publishers without a strong online strategy will be able to sustain their operations indefinitely. 2006 will be a comfortable year for many, but expect much tougher sledding in 2007 that may witness a new round of consolidations at rates very favorable to buyers.
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