Global game plan; Penton's Jerry Neff sees international growth as a key to the company's future

Folio: The Magazine for Magazine Management, Feb 1, 1991 by Tony Silber

Penton's Jerry Neff sees international growth as a key to the company's future.

CLEVELAND-From this deliberate, middle American rust belt city Jerry Neff is creating a far-flung international operation for Penton Publishing, a deliberate, middle American company.

The international push-spear-headed by Neff, the senior vice president of marketing- involves building ad sales, circulation and corporate presence in Europe and the Pacific Rim. It represents a new philosophy for Penton.

With about half of its magazines in mature domestic markets, the company is expanding its horizons. Penton recognizes that foreign companies want to reach the U.S. market, and American companies want a greater presence in the incipient European trade bloc, the new East European democracies and the Pacific economic powerhouse-especially in industries like electronics, where Penton has two books, Electronics and Electronic Design.

Other Penton magazines with significant international presence are Air Transport World, whose readership is more than 50 percent international; Machine Design; and a number of the manufacturing titles.

"It's safe to say," states Neff, "that we are becoming a more global economy and there are other companies that have been over there a lot longer and are a lot farther along than us." Says Penton chairman Sal Marino: "There's considerable interest from our advertisers in reaching international readers. We are much more aware of the opportunities in the international market now than we were a few years back."

A key has been to develop a team of independent sales and circulation representatives throughout Europe and Asia. Penton now has close to 20 foreign circulation representatives and 20 foreign sales representatives, 12 in Europe and eight in the Far East. It is well represented across Western Europe and an office is being opened in eastern Germany, Neff says. In Asia, the largest portion of business comes from Japan. The company has 75 to 100 foreign advertisers, with Europeans double those in Japan.

Penton generated in excess of $180 million in revenues in 1990, with about $160 million coming from publishing. Only 5 or 6 percent of the magazine revenue comes from foreign advertising and subscription income, but Neff and others believe it's been a success so far and will grow. "In 1989, international sales were up 38 percent, and this year they're running at a 34 percent increase over last year," Neff says. "So it's been a substantial growth market for us, especially at a time when it's difficult to find growth markets. We have higher visibility now both in Europe and the Far East, and we want to increase that visibility even more."

Neff, 58, a 30-year Penton veteran named to his current post in mid 1989, was chosen to head up the international drive. "He's a very sharp marketing person," Marino says. "He has been on the fringe of this for a number of years and he's the best person that we have who's likely to grow this."

Another critical element in the operation, Neff and Marino say, has been to put an executive, John Allen, in Europe full time as general manager of European operations. Allen, based in Oxford, England, speaks French and German, in addition to English. "I guess they realized they had to have someone here all the time," he says, adding that his task is to reduce misunderstandings and problems in addition to building advertising and circulation. "And we want to build a corporate image over here, which we've never had."

Allen says the Penton international presence is in its infancy but coming along. "There're great opportunities if we can get the magazines into the right doors; and we're always looking for acquisitions."

The company also has an editorial presence in Europe and the Pacific Rim, mainly through licensing arrangements. Two partners now are Usine Nouvelle, a French publisher, and Japan's Nikkei Business. Penton is also working on an editorial agreement with a Korean company and a joint venture with a Dutch firm. "We are attempting to search out foreign publishers that we can develop joint ventures with, because for a company structured the way that Penton is, we think it's best going in as a joint venture," according to Neff, "Penton is just not big enough to go in and publish a Business Week in 17 different languages."

There is one quirky side effect that Neff has had to deal with. While the fledgling program is succeeding nicely, he says, an inevitable result has been that European companies advertising in one or more of Penton's 40 magazines eventually expand their U.S. operations to the point that they open a U.S. office-and stop buying ads from the European and Asian salespeople.

And one of Neff's first overseas mandates was to find a way to offset this situation. "We've had to put a mechanism into effect that compensates our foreign reps for that lost business," he says.

That Catch-22 aside, Penton is clearly evolving purposefully into a more international enterprise than the staid middle American company it traditionally has been. "We've had representation as a company in Europe for some time, but we never put a lot of focus on it," Neff says. "We've decided to become more aggressive in how we go about it."