Time was when business-to-business media groups seemed the least likely to be disrupted by the web. Executives routinely boasted that the success of business and professional magazines for everyone from engineers to farmers and doctors to retailers was based on “need to know” information – rather than the supposedly “nice to know” content of consumer magazines.
Many also felt reassured that B2B involvement across print, events and (early into) online would protect them. This “revenue diversity” felt like a life-saver. It helped create a promising outlook for media whose business audiences themselves were pioneering web users and seemed more interested in words and data than pictures and video.
Single-sector B2B magazines and events just seemed to be beyond the reach of the new digital powerhouses like Google and Facebook. But, suddenly, everything seemed to change. Google search turned sharply to sweep away print classified advertising and directories. And B2B media groups started to suffer just like consumer publishers: the loss of print advertising without compensating revenues from digital. Even the soaring growth of exhibitions as a face-to-face antidote to the virtual world was mostly seized by specialist organisers or companies separated out by traditional media groups.
The upshot is that the decline in print readership and advertising has all but wrecked the B2B magazine model, even though some of the age-old brands remain powerful and profitable. The challenge is to maximise the impact of these magazine-centric brands in an era when print will be increasingly ancillary to other information services and events. The competition is everywhere and includes the ever more powerful social networks of LinkedIn, Twitter, and Facebook.
The “must have” information owned by many of the best B2B magazines once included relatively high-value statistics on salaries, costs, and prices. But now B2B markets are inundated with data from global research firms, sometimes integrated formidably into business-critical digital systems.
It makes the point that the challenge for traditional B2B media is not simply about the shift from print to digital, but mostly about the loss of must-have content – and the commoditisation of news. Once-regular magazine readers are now less likely to become intensive users of the online equivalents – let alone pay for them.
Many companies have found it easy is to attract huge online audiences only to discover almost insurmountable hurdles to monetisation – and nobody feels this more acutely than magazine publishers. It’s not about migrating from print to digital, but about reinventing brands and businesses for a completely new medium. And that starts with producing at least some valued content that is not readily available elsewhere.
‘You can’t own the news’
The real value is in owning original data, building its value over time and distributing it on the most appropriate platforms. But nobody can “own” the news for which, anyway, relatively few people are prepared to pay. The long-time advertising boom papered over the cracks because it gave B2B publishers great profits – even while neglecting the development of exclusive content. They just didn’t have to bother. And, in the UK for example, that success was turbo-charged by jobs advertising, most of which has now gone online and taken magazine-media profits with it.
So, publishers are searching anxiously for diversification across market research, consulting, executive search and other services only to come up against formidable competition from worldwide specialists. This challenging outlook is reflected in the demise of the once huge B2B magazine-centric groups owned by the likes of Reed Elsevier, United Business Media, Advanstar, Penton, and EMAP to be muscled out by small clusters of ‘multi-platform’ activities – or by single-sector ‘narrow and deep’ specialists. The scale economies of print magazines have (mostly) been replaced by the need for high-value expertise in delivery systems and customer databases.
The scale of the challenge is underlined by the UK company Centaur Media, which sprang from the launch of Marketing Week magazine in 1978. It was founded by Graham Sherren, a doyen of B2B publishing who had pioneered “controlled circulation” free magazines at Morgan Grampian (which later became Miller Freeman and United Business Media).
Sherren built a formidable magazine and events business round brands like The Lawyer, Design Week, Money Marketing, Creative Review, Employee Benefits, and Marketing Week. He was among the first UK publishers to promote conferences in glamorous European centres like Cannes. It was a sparkling company which built strong magazine brands and exploited the 20th century market for jobs advertising and events.
The Centaur founder actually launched more B2B weeklies than anyone else in the UK during a quarter-century when such magazines (laden with classified jobs advertising) accounted for 100% of all B2B publishing profit. In the pre-internet age, he had the magic touch – even with successive private equity investors who backed the company and left him to get on with it.
Sherren’s IPO coup
Sherren’s ultimate coup was the March 2004 “accelerated IPO” (a short-run financing wheeze) under which Centaur’s broker Numis acquired the company from its majority shareholder Veronis Suhler Stevenson and then almost immediately floated it on the London stock exchange. Centaur’s IPO value was £140m, on the back of EBITDA profits of £9.6m and profit margin of 14%. The company had 24 magazines, 20 exhibitions and 100 conferences.
But, six years later, profit had fallen to £6.6m, principally due to shrinking jobs advertising. And the share price was 50% of its IPO level. By then, Graham Sherren had retired as chairman of Centaur Media, after almost 30 years.
The company went on a spree acquiring business information companies as it sought to diversify beyond magazines. But a profit dip effectively cost the CEO his job.
Enter Andria Vidler, sometime marketing director who had risen quickly through commercial radio, magazines and music. She had been UK boss of EMI Music when a private equity sale gave Centaur the opportunity to recruit a highly-experienced media CEO who, shortly before her appointment in November 2013, had been tipped for the much larger role at the helm of Time Inc’s UK consumer magazines.
This month, the new CEO unveiled her first annual results which showed operating profit of £10.2m on revenues of £72.8m. The numbers were reasonable enough and safely ahead of those
that had seemed promising in the company’s IPO 11 years before. But the detail was even better. Paid-for content – driven by some high-performing acquired operations – now accounts for 28% of revenues. Events are a further 40%. Advertising, which has declined 9% in the past year, is now 31% of all revenues – half that of a decade ago. Behind the numbers and revitalised management team are sparky new digital services and events, and clear evidence that the company is successfully milking its declining print magazines. Shareholders are loudly supporting the CEO and her strategy.
Centaur Media proclaims: “From our digital media and iconic print brands to our award-winning events and cutting-edge data products, we enable and inspire the very best performance in a range of selected markets. We have the information that people want and need. We create products and services that make content valuable, combining the deepest knowledge with the best user experience. Centaur Media is – at heart – a content business. But we are continually redefining what content means in the 21st Century and seeking new ways of communicating that content to our customers.”
It’s all about data, research, magazines, awards, conferences, exhibitions and successful launches like Celebrity Intelligence, which is described as “an engagement tool provides detailed insight into the professional activities of 40,000 global celebrities” in the US and UK.
Vidler is an energetic and enthusiastic CEO but Centaur’s challenges are the tough reality of traditional media:
- Print profits are declining and not yet being matched by digital growth.
- It is a mini-conglomerate primarily involved in six reasonably distinct sectors – and yet it is almost wholly concerned with the UK. In that sense, it is simultaneously too wide and too narrow.
- Its principal sectors are ones where there is considerable competition from international, information-rich companies
Centaur must maximise the power – and skills – of magazine-media, while building businesses that are no longer slaves to print. Easier said than done, but it is important to value the journalism that has built these brands.
New value of journalism
The greater the volume of available information, the greater the value of the editor’s role in interpreting, analysing and selecting content for readers. Journalists can be key to the building of the “owned” original information and statistics on which B2B media again needs to concentrate. Good journalism can be as valued in digital as it has been in print.
- Almost 40% of revenue and profits comes from the marketing sector whose profitability increased by 63% in the past year
- The next most profitable sector is financial services accounting for 20% of total profit – but it declined 23%
- The seemingly non-core (but soundly profitable) home interest consumer sector accounts for c15% of revenue and profits – but did not grow
One strategic ‘giveaway’ in the presentation was the catch-all grouping of ‘professional’ (embracing legal, engineering, and HR) which had aggregate profit growth of 45% but operating margins of just 11%. So the marketing sector is the runaway winner with almost 40% of Centaur’s revenue and profit, the highest growth and 15% margins. The group is led by Marketing Week, which is said to reach an audience of some 130,000 marketing professionals weekly through the magazine, jobs board and website. Other brands include: eConsultancy, Design Week, Creative Review, Celebrity Intelligence, and the Festival of Marketing. Together, they have some 1.6m Twitter followers, 1.5m unique monthly web users, 22,500 event attendees and 90,000 print readers.
It is reasonable to surmise that these increasingly powerful services, now branded “Centaur Marketing”, might soon account for almost 75% of the company’s total profit in any kind of break-up calculation. That might prompt Vidler to be bold and recognise that the synergies between her marketing portfolio and a complementary intelligence business would be much greater than with the rest of her magazines and events, not least because the future depends on international expansion. She will recognise Centaur’s strategic dilemma as being similar, in some respects, to that of her former employer, the ill-fated EMAP Plc.
Although that high-flying £2bn UK company was grounded by a deadly plunge into US magazines, its scope for much-needed international development was actually hobbled by being a media conglomerate spread thinly across consumer magazines, business media, radio and TV. It all meant the group simply could not afford to compete globally. You can say the same about the much smaller Centaur Media whose diverse portfolio – like that of EMAP – can be explained only by history and inheritance.
A global breakthrough?
The new Centaur CEO may already have started to think about the possibilities of using her favourite brands to secure an expansive international deal. Perhaps she has even thought about just how well it would fit with the quoted UK company Ebiquity whose self-description makes it sound like a natural partner:
“We collect, aggregate and analyze vast amounts of online and offline marketing data to enable our experts to provide brands with a better understanding of what is going on in their market, how they are performing, and what they can do to improve. Our consultancy and software services are built upon this data, expertise and our independence from the media transaction process. Across the three areas of our business, we enhance brands’ capabilities, instil greater accountability and assist their pursuit of transparency with their agency partners.”
Then, there’s the clincher: “The advertising and marketing industry is becoming increasingly consolidated and globalized. Advertisers are under extreme pressure to demonstrate marketing spend RoI. Marketing and media channels have proliferated even further. Consumer data available to brands has dramatically increased. Rapid technological change, which has in turn, caused consumer and corporate behaviour to change, has increased the complexity of advertising and marketing.”
Ebiquity has over 1,200 clients in 60 countries including no fewer than 90 of the world’s 100 largest advertisers. It has offices across the world but revenues of just £70m and 16% margins. So, while it is a highly-rated, fast-growth company, it too might be considered sub-scale for the global task it has set itself. The combination of Centaur Marketing with Ebiquity would produce a very smart business with combined revenues of more than £100m – and plenty of scope for shared innovation internationally. It could be a brilliant tech-driven merger of data, journalism, consulting, research, and events. A real B2B game-changer.
But such a single-sector merger would be a pretty sizeable challenge, not least because it would need to include a workable plan to maximise the proceeds from Centaur’s other sectors. Not a small task, though there would be many possible partners for the company’s attractive legal, financial and home interest media. But that’s the price of ambition.