Business magazines: changing with the times; Business Week, Forbes and Fortune saw traditional ad categories slide a decade ago and successfully pursued new markets

Folio: The Magazine for Magazine Management, Jan 1, 1991 by Bert Peller

Business Week, Forbes and Fortune saw traditional ad categories slide a decade ago and successfully pursued new markets.

Business ad pages
(first nine months 1990)
Business Week         245
Forbes                279
Fortune               254

NEW YORK CITY-Business magazines have strengthened their lead in advertising pages and revenues over the last decade by keeping pace with major shifts in their markets. The changes provide a model that other publishers having problems selling ads to their traditional advertisers may wish to follow.

As a group, the big three-Business Week, Forbes and Fortune-increased ad pages by an average of nearly 27 percent and revenue by an average of 162 percent between 1980 and 1989.

This growth was accomplished despite losses in what were traditionally the strongest advertising categories for these magazines; the gains came from categories that had been less important for all three at the beginning of the decade.

Throughout the eighties, Business Week maintained its position as the ad page leader among all U.S. magazines measured by Leading National Advertisers, although it ran slightly fewer pages in 1989 than in 1980. Forbes moved from 18th to second place, and Fortune, from 12th to third.

Revenue gains for the group were even more impressive. Business Week's take for 1989 was $260.0 million, $137.6 million higher than its 1980 revenue. That gain was exceeded by only a handful of mass circulation publications with high page rates (Time, Sports Illustrated and Parade). Forbes's revenue increased by 201.1 percent, while Fortune increased by 251.3 percent. All three were in the top 10 among magazines. (See table, page 60.)

In this year's less friendly atmosphere, the three titles as a group were down only 7.32 percent in ad revenue and 1.27 percent in ad pages through October, so their basic strength seems well established.

Replacing categories:

The success for the decade has been achieved in the face of a rapid decline in advertising in one previously very important category: We call it business-to-business advertising.

The category includes advertisers of capital equipment, machine tools, raw materials and various business services. Business-to-business had traditionally been Business Week's largest category and the core of its support. The category was also important for the other two titles. But in the early eighties, with the decline in advertising by basic industries like steel, business-to-business was sharply reduced, and what was left was being channeled into specialized trade magazines. it became obvious that little would be available again in the foreseeable future.

What to do?

Management at the three publications soon recognized that there wasn't much they could do about advertising budgets that didn't exist anymore. But they recognized there was new opportunity in the restructuring of the service economy, and the sharp growth in computers and telecommunications. In addition, personal affluence was increasing for business executives who were and are now readers of these magazines and could be considered logical users of lifestyle products.

During the 1980s, each of the three modified its editorial thrust and changed the way it went about marketing space.

The categories we've used, such as "lifestyle," don't officially exist. Publishers Information Bureau (PIB) doesn't track them, and PIB categories have unquestionably long been accepted by the industry. The numbers we present are not absolute, and they may be considered debatable. But they provide an overview that may be helpful in understanding what's been going on during the 10-year period.

Each magazine saw some traditional ad categories erode and successfully focused on new categories, which allowed them not only to replace lost pages, but to surge ahead in total pages.

The following trends offered new opportunities:

* Increased need for information processing products and services and other new technologies.

* Interest in lifestyle information among business magazine readers.

* The need for companies with diverse products to define corporate image.

* The thrust of globalization as a pre-emptive marketing priority.

* Interest in regular measurement of financial market activities and in mergers and acquisitions.

The new positions:

In the last decade, both Business Week and Forbes have become more heavily involved in high-technology office arena advertising, and lifestyle products and services. Business-to-business advertising has been sharply cut back. Fortune has become increasingly involved in corporate image advertising and lifestyle products and services.

Let's take a look at individual, broad-based ad categories:

The office arena. This arena began to take on increased importance in 1982, when the U.S. Government settled its suits against IBM and AT&T, signaling open competition in computer-related markets. There was a surge in computer and computer-related products and services and news that thrust the office arena into a major classification of advertising.