B-to-B Study Forecasts Growth through 2002

By Silber, Tony | Folio: the Magazine for Magazine Management, November 1, 1998 | Go to article overview
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B-to-B Study Forecasts Growth through 2002

Silber, Tony, Folio: the Magazine for Magazine Management

Driven by increases in advertising and marketing expenditures, business-to-business publishing and trade shows will become a $26.2 billion industry by 2002, according to a forecast by Veronis, Suhler & Associates. That represents a projected compound annual growth rate of 8.9 percent over the five-year period from 1997, when industry revenues stood at $17.1 billion. During the same period, economists predict that the nation's GDP will grow by only 5.3 percent.

The upbeat forecast, presented to publishing executives and the media last month in New York, was contained in the firm's second annual report on b-to-b communications. In projecting this level of growth, the study paints a rosy scenario in which b-to-b publishers continue to build on gains made in the past several years, including last year's 10.6 percent increase. "The economic picture is in a state of flux, but we are still bullish on the future," said Joel Novak, a VS&A managing director. "We expect to see a cooling off in the short term, but longer term we see a strong rebound."

Over the 1997-2002 period, overall growth will average 8.9 percent, according to the report. Shows and exhibitions will grow at a rate of 10.1 percent, to $11.6 billion, while magazine revenues will increase by 8 percent, to $14.6 billion.

Among the categories leading the way will be technology and healthcare, which combined accounted for nearly 55 percent of total business-magazine ad revenue in 1997. In fact, b-to-b technology publishers raked in $3.5 billion in revenues in 1997- or 43.5 percent of total b-to-b ad spending for the year.

Profit motive

What's driving these numbers, Novak said, is not overall economic prosperity per se, but growth in individual corporate profits. "The more the profits, the more money there is to grow the business, and one of the mechanisms for growing the business is to invest in advertising and marketing," he said.

Magazine publishers who attended the event seemed to concur with the report's conclusions. "I think this makes sense if you have a footnote that says the first 18 to 24 months may be knocked askew in certain segments-because clearly, corporate profits in some sectors may move down," said Peter F. Sprague, partner and COO at Medical World Communications in Jamesburg, New Jersey.

Indeed, b-to-b technology advertising has actually leveled off or declined in recent months, according to some estimates. AdScope, a Eugene, Oregon-based group that tracks consumer and business ad spending, notes in its latest report that two of the nation's three largest tech publishers suffered drops in ad pages in the first half of 1998.

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