Business ad pages stay flat

Folio: The Magazine for Magazine Management, June, 1990 by Barbara Love

First half of 1990 tough; business press marketing creativity and cost-cutting skills tested

RANCHO MIRAGE, CALIF.-For the business press, it's possible today to improve circulation quality, gain market share and still be worse off than last year. The current dwindling market is forcing business publishers to find new ways to grow while cutting expenses.

The business press's financial health follows the up-and-down economic health of its markets. But, overall, publishers attending the American Business Press spring meeting say business has been static for the first half of the year, with slightly better expectations for the second half.

Here's how individual publishers are faring:

"I don't think anybody is jumping for joy at this point," says Daniel J. Ramella, senior vice president at 30-title Penton Publishing.

"Most publications are sticking with their original budgets," he points out. "Nobody blinks. In every field, someone says there are one or two books too many."

One problem has been advertiser mergers and consolidations. Some of these companies haven't started advertising yet, and some may not spend as much as they did independently, says Ramella. Moreover, we're getting mixed signals about the economy," he adds. "That makes a lot of people cautious."

To supplement revenues, Penton is trying extra issues and ad supplements, and one title is attempting a catalog in electronic format.

We need to enhance our revenue stream," Ramella states. "It's no longer good enough to just sell a page. And it's no longer good enough to just have a good magazine. Now it's, How can you help advertisers increase their market share?' "

* The first half of 1990 has been difficult for Hearst Business Publishing, as well, according to group vice president Gordon jones. For the eight business magazines, advertising pages are down at least 10 percent, with revenues off about 5 percent.

"I think the rest of the year is going to be tough," Jones says. "There's a lot of scrapping for pages. And there are a lot of deals: not illegitimate deals, smart deals.

"We've tried to stay very fast with our rate structure," he continues. "Added value has become a euphemism for cutting rates. But publishers have a responsibility to treat all advertisers the same way. We have to sell our values. We've been through these things before, and we have to look at the long term.

Fighting back

To cope with lower revenues, Hearst, like others, is cost-cutting. "We're holding back on some T&E to see how things shake out," jones says. "And we've taken a hard look at the comp list. We've also taken a hard look at our mailing costs and tried to find efficiencies there."

Roger Friedman, president of Lebhar-Friedman, Inc., indicates that restaurant, discount store and drug store fields are flat in pages; and apparel, accounting, building and home center fields are off Only the chain store shopping field is up 4 or 5 percent in pages, he reports.

"It's difficult to increase rates, so we're looking at ways to cut costs," he says. "We're looking at branch office expenses, watching print runs" and cutting unnecessary perks.

He adds, "If you're not prepared for that postal rate increase January 1, you're dead."

On balance, business is flat to up slightly for the ABC Publishing Company titles, according to president Bob Burton. Publications in the agricultural group arc up-, the auto and manufacturing titles are down.

Burton, however, is still looking for a growth year. Network sales, created by the joining of Chilton and Fairchild, are expected to help, but advertisers are still reluctant to make long-term commitments.

Burton expects 1991 to be a strong year, although the big problem will be postal rates. "Some of the books will have 27 to 30 percent postal rate increases," he says. "Everyone's talking about it. It's impossible to pass those costs on, so it will be very challenging."

At FM Business Publications, Jeffrey Schaeffer, president of marketing/ service publications, says pages are off about 5 percent for Supermarket Business, but revenues are stronger than ever. He expects the second half to be better.

"There are strong signs that contract business is beginning to develop," he says. "We had a lot of late-starting advertisers as a result of LBOs in the packaged goods field."

* At 19-title Gralla Publications, president Robert Boucher reports pages are off 6 to 8 percent through May and revenues are off about 5 percent. For 1990 overall, he's looking at flat pages and slightly higher revenues.

Profits should be up slightly or flat for the year, Boucher adds, in spite of substantial, recent investment and two new publications, Resorts & Incentives and Trending, which serves the imprinted sportswear field. Both are ahead of plan.

Only a handful of smaller business publishers, it seems, report a good first half.

* Tom King, executive vice president of Schnell Publishing Company, reports that, for the first four months, Chemical Marketing Reporter was up 4 percent in pages and almost 20 percent in revenue, while Chemical Business was up 3 percent in pages and about 11 percent in dollars. A directory, published in November, closed with a record 450 ad pages.