The Folio: 30 what the real revenues are; The annual list of the top trade titles

Folio: The Magazine for Magazine Management, Dec 15, 2001 by Jillian S. Ambroz

Annus horribilis is probably the best way to describe a year during which terrorists struck at symbols of America, anthrax became a household word and the economy took a nosedive into a recession. For the magazine industry; already suffering from dismal circulation economics and never-ending postal rate hikes, 2001 brought an abrupt halt to some of the most profitable years ever. And trade titles experienced a disproportionate share of the suffering. "Consumer titles have been hit less hard in 2001 because this has largely been a b-to-b economic crisis," says Bart Taylor, group publisher of Penton Media's Windows 2000 Magazine and SQL Server Magazine. "Businesses have stopped investing in technology where consumers continue to spend in this economy. It's one of the notable aspects of this recession."

The b-to-b version of "The Folio: 30"--for which we attempted to uncover the actual revenues of the top magazines, rather than simply provide the reported numbers, as had previously been done for this special report-shows the beginnings of this worrisome trend. Our first-ever rankings cover the fortunes of publishers from July 2000 to June 2001, so the numbers tell a frightening story of how the first half of 2001 sheared away much of the gains of the best year in magazine history. (The chart is on page 20; our methodology can be found on page 23.)

After years of growth, many magazines saw their revenues go down--16 of the top 30, according to our calculations. Technology titles--which, with travel magazines, dominate the top-10-were hammered hardest. "Technology was experiencing such phenomenal growth with such a high plateau that it will be harder to reset back to normal," says Tyler Schaeffer, senior vice president and director of media brand planning for FGB Worldwide. But, he adds, the category is resetting back to levels that other markets wish for.

It's a sentiment echoed by many in the industry, even as they experience extreme financial pain. "I'll take eight great years with two bad years every decade," says Michael Friedenberg, vice president and publisher of the tech juggernaut (and the number-one ranked) Information Week. "Technology hit a speed bump. I've never seen an industry that's so fast-paced. I'd be hard pressed to think of any other industry on the b-to-b side that could surpass technology and change at the pace we are." According to "The Folio: 30," the total revenue of Information Week(owned by United Business Media subsidiary CMP Media) was down 5.6 percent from 2000, to just over $158 million.

Unfortunately, a turnaround is not expected any time soon. Robert Coen, the usually optimistic director of forecasting for ad agency Universal Mccann, predicts that while national media advertising will rise 2.5 percent in 2002 (after falling this year for the first time since World War II), magazine spending will drop 1 percent.

With fewer advertising dollars to go around, the b-to-b world is about to experience even more downsizing. Marketers, instead of casting a wide net, are increasingly concentrating on the top two books within a category, says Kevin Arsham, media supervisor, business-to-business specialist at BBDO New York. "Smart media buyers will say you don't need to be in every magazine," he says. "There's one out there that will speak to the audience that you need to reach. My strategy is to use fewer books with more frequency."

After the deaths of the struggling lower-tier books, the survivors will continue to wage a marketshare war, as Information Week's Friedenberg has noticed is happening in the tech category. To woo advertisers during this downturn, publishers are using package buys across multiple titles and stepping up their integrated media offerings. They're also expanding their editorial focus, in some cases, and offering a wider range of content. The Hollywood Reporter, for example, created some new editorial initiatives this year, such as white papers, says Robert Dowling, editor in chief and publisher. (For more examples of cost-effective ways to grow, read "The Investment Imperative" on page 22. And to make circulation less of a drag on the bottom line, see "Squeezing More out of Circulation" on page 21.)

Some magazines are branching into editorial and advertising areas beyond their usual scope. The agriculture books, for example, are now talking to gun companies and others that don't obviously come to mind as targeting the farming community, says Kathy Kavanaugh, associate communications director, Saatchi & Saatchi Rochester. "They're changing their editorial direction so that they're not concentrating on just agriculture, and are adding more farm family-type articles," she says.

And, of course, discounting has intensified. "Two, three years ago, you couldn't even get a discount," says one media buyer in the technology and finance sectors. "Where the discounts are now is probably pretty normal for a normal economy."

Adds another buyer: "We're pressing them all and they're all giving in. And there are more incentive programs with growth programs--with one more page this year you'll get another page free. It's escalated this year."