Hitting the ad page wall; business press revenues are growing, but pages are not. Can the industry recoup the ad page growth of yesteryear?

Folio: The Magazine for Magazine Management, May, 1989 by Jean Marie Angelo

The revenue growth is easily explained. Average annual ad rate increases of 7 percent for the business titles have been keeping the bottom line healthy. The ad page erosion is harder to explain.

Hesitant buyers

The business press giants have their own explanations. "There is a lot of concern coming off the stock market crash," explains Robert Burton, president of ABC Publishing, parent company of Chilton Company and Hitchcock Publishing. Advertisers are hesitant. "We feel very positive about the business press area. If we didn't, we wouldn't be in this business," he says. But he adds, "It is much more challenging now than it has ever been."

The proliferation of business titles is also bringing change, says Sal Marino, president of Penton Publishing: "There is hardly a field today where there are not five, 10 and sometimes 20 magazines," he says. These new entries may be taking pages away from the long-established titles. "Down the road," he adds, "the publishing companies that survive will be the ones that are most innovative."

Rosenfield attributes part of the page loss to the merger and acquisition climate of today's economy. Corporations are acquiring other corporations; publishers are acquiring other publishers. The activity has created a period of uncertainty. Corporate acquisitions among the larger companies in an industry especially shrink the ad dollar, since these larger companies account for most of the ad spending. For example, the top 50 advertisers in the general merchandising field account for almost 50 percent of the advertising. In the food service industry, the top 50 control almost 43 percent.

Another explanation comes from Cahners Publishing Company. The lack of page growth reflects an economy that has been slowing down, says Dr. Martin Fleming, vice president, planning. The business press does well when industries are making large capital investments, buying new equipment, he says. Although this spending in the business sector may be slow in the next year, it will be picking up in the early 1990s, creating more need for advertising--and hence more ad pages.

The business activity during the 1970s explains the percentage page gains in the business press during that time. "The second half of the 1970s was a time of strong economic activity, which ultimately led to high inflation," says Fleming. "There were too many demands chasing too few goods. Almost all industries, from housing to machine tools, experienced peak levels of activity and prices got pushed up. But business publishers benefited from the strong activity."

In the early 1980s, the economy began another period of recovery, setting off unprecedented revenue growth for the business press. The strong areas for this recovery have been in the computer, electronics and building and construction sectors, which explains why these categories are some of the strongest in the business press today, he notes. Advertising page growth is related to the economy, and our pages will grow again, Fleming says.