The internet demands media specialisation, whether in content, delivery or audience. Arguably, that’s a reversal from the heyday of print media when advertising often upstaged copy sales, relegated readers and pushed for ever larger audiences because that produced even more ads. Free “promotional” copies, constrained cover prices, and non-core readers were, perversely, good for profits.
The sugar-rush strategies only caused self-inflicted wounds when Google and LinkedIn arrived to suck up the advertising. For all the talk of journalism being subsidised by ads, those same clients also funded what became unsustainable increases in costs and staffing. Beyond all else, print media enjoyed decades of limited competition, due to their scale economies in print, distribution and sales. But, in a largely post-advertising world, the search for a sustainable business model now goes back to readers. Nowhere is this clearer than in B2B media which was long dominated by racks of single-sector trade magazines published by magazine conglomerates, especially in the UK and US.
Whether or not print survives in any given business and professional sector is less important than the fact that (in most cases) it can now only be relatively small, compared with the rich potential for live information, events and services. The internet has brought into the realms of B2B media a range of high-value business services that were once provided by other specialists. Some B2B media companies now provide consulting, executive search, market price reporting, research, and workflow systems as well as news, data, and events. These immersive strategies enable “narrow but deep” specialists to develop diversified and recurring revenues beyond the whims of advertisers, and to be embedded into their global markets and be not just, well, media.
This attractive model of integration is helping to create an increasing number of single-sector specialists, especially in the UK, where recruitment classified advertising and a handful of large companies had, for decades, accounted for more than 100% of all B2B magazine profits. Here are some stand-out UK examples:
The private equity-owned AgriBriefing was launched in 2010 by long-time B2B executives. Its path from operating as a UK-centric publisher of digital and print media, medical and agriculture sectors to becoming an increasingly global specialist in food and farming is a perfect case study.
The fledgling company’s emphasis on creating membership, building events, and acquiring high-value data including ‘price reporting agencies’ helped it deliver strong growth, not least in the revenues of the 175-year-old Farmers Guardian weekly. It also motivated the founders to ditch media and medical and seek global leadership in food and farming. The success was consolidated by acquisition of the 40-year-old LAMMA agricultural machinery show, the launch of the CropTec exhibition for arable farming, and LAMMA Exchange machinery digital classifieds. Then came the rapid climb up the B2B value chain with well-targeted data-rich acquisitions.
In 2014, AgriBriefing paid some £300k for the Agrimoney investment site which gave a foothold in the international agribusiness and commodities market, where it claimed 70,000 users in 170 countries. Next came the complementary £13m acquisition of Global Data Systems, the France-based owner of FeedInfo, the pricing platform for global animal feed. In 2017, it plunged into the US market with the £17m acquisition of Urner Barry, the 160-year-old provider of news and prices in the poultry, egg, meat, and seafood segments of the food industry. That deal alone was said to have added more than 3,000 clients.
The once UK-centric business now has some £30m revenues, 50% from non-UK markets, and more than 50% from subscriptions/membership. EBITDA profit margins are estimated to be some 30%, and the total audience is claimed to comprise some 500k agribusiness professionals in 200 countries. The company is believed to be negotiating the acquisition of Informa’s £30m-revenue Agribusiness Intelligence and Inflexion’s £40m-revenue Kynetec. If these deals are concluded, they would make AgriBriefing a clear leader in global farming-food prices, research and consulting – with considerable scope for further consolidation of what has been a heavily fragmented market.
The appetising combination would turn the nine-year-old B2B startup into an international information specialist employing some 500 people, with £100m of revenue, perhaps £40m EBITDA and a valuation of more than £400m.
Carnyx Group, publisher of The Drum information and services for the international media, marketing and advertising industries, was founded in Scotland in 1984 to publish B2B magazines initially in architecture, law – and marketing.
More than 15 years later, it chose to concentrate on the media-marketing sectors – and to go global. Today, The Drum (formerly ScotMedia) has an estimated revenue of £8-10m, EBITDA margin of c10%, and 90 people in Glasgow, London, New York and Singapore. It is “the most widely read marketing web site in Europe” with a claimed 1m monthly visitors, 30% from outside the UK. CEO Diane Young says the company’s base in Glasgow contributed significantly to The Drum’s success: “It’s… a little bit of luck I suppose from where we came from in Scotland. You couldn’t sustain different magazines for all the different parts of marketing for PR, design and advertising so we covered them all and, as time has gone on, the market has changed so that actually all the different disciplines are converging.”
The Scottish base also gave the company low costs and an ability to survive those early painful years and to build audiences patiently. Unlike key competitors Marketing Week and Campaign in the UK and Advertising Age in the US, The Drum’s lively web site is free while revenues are generated from content marketing, research – and 30 annual events (which account for 40% of revenues and perhaps 100% of the profit).
The company has also built its impressive Recommended Agency Register “that helps brands to choose agencies based on ratings. It is a bit like TripAdvisor where you don’t just blindly go in and you know, choose your agency. You get some real insight into what it is like to work with them.” It is easy to sense that, after years of struggling, The Drum (still owned by its three founders) is on the brink of major breakthrough.
There are all kinds of companies which might value it highly, including Penske (Deadline, Variety and WWD), Crain (Ad Age and Creativity), Centaur Media (Marketing Week, eConsultancy, Festival of Marketing, and Oystercatchers), Haymarket (Campaign, Brand Republic and PR Week), and Prometheus (Hollywood Reporter and Billboard). Perhaps one of them will want to get The Drum’s team to manage their own properties in the sector, a sort of reverse takeover. A world of possibilities.
Jacobs Media Group
It is 10 years since the restless travel entrepreneur Clive Jacobs acquired the UK trade magazine Travel Weekly from Reed Elsevier. It had once been part of the expensively global and ultimately ill-fated Reed Travel Group, incorporating not just Travel Weekly in the US and across Asia but also the OAG aviation data group, and Hotel & Travel Index. But Jacobs bought the UK edition as Reed’s local subsidiary made its big shift from domestic B2B print to global data-tech.
Most of Reed’s non-UK travel operations (including Travel Weekly in the US and Asia) became part of what is now the Wasserstein-owned Northstar Travel Media. Three years after buying Travel Weekly, Jacobs Media Group (JMG) acquired an even longer established print brand from Reed, The Caterer. The six years since have witnessed JMG’s transformation from a dependance on print to what is rapidly becoming an international events business. It self-describes as “Europe’s largest travel & hospitality B2B media company” and is believed to have made 2018 adjusted EBITDA of £1.3m (2017: £893k) on £11.5m revenue (£10.6m).
Revenue has more than doubled in the past five years, almost exclusively through organic development. It is believed that some 50% of revenues (and rising) come from events and about 30% from outside the UK, a substantial shift in the past few years. The company, whose “newer” brands include Travolution, Aspire, Connections, and ATAS, operates more than 120 events annually including, arguably, the UK’s biggest awards brand The Cateys in the hospitality market.
JMG still publishes the print trade magazines with which it started but now claims 650k monthly uniques for its travel and hospitality web sites. The privately-owned, London-based JMG has impressively weaponised its print brands and seems to have found plenty of growth by pushing into events and internationally.
You can bet that companies like Northstar, Ascential, and OAG are keeping watch on Jacobs. Perhaps even exhibition organisers like the UK’s Tarsus and Reed (both of which have travel trade shows) might just be reviewing the options. But consumer operators like CNN and Discovery’s Travel Channel, and the UK’s travel-involved Daily Mail and Telegraph newspapers may also be followers. You also wonder where the upstart Skift might figure in this sector’s deals in the future.
The 15-year-old London-based Procurement Leaders (formerly called Sigaria) has given a voice to an international market of professionals once known primarily as ‘purchasing directors’ but now mostly Chief Purchasing Officers or Procurement Directors. It was founded by Alex Martinez, Mark Perera and Richard Pope as “a global membership network serving major corporations and procurement, sourcing and supply chain executives.”
It provides independent intelligence, professional development and peer-to-peer networking through online, events, publishing and training. It has an international client base of some 700 leading companies with 15,000 members and hundreds of thousands of senior executives accessing online news, benchmarking and other services each year.
The company employs some 120 people (50% in membership functions) spread across offices in the UK, US, and India – and has revenue of £12.3m. It exploits the rising importance of procurement in international companies which now realise that these functions can be the key to strategic supplier relationships, production security, reputation, and risk management.
Martinez got the idea for Procurement Leaders while working for a recruitment software company almost 20 years ago, during the crazy times of the first dotcom boom. He found himself selling to purchasing departments and realised that these executives were often the unsung heroes, seen as the difficult people who pared down budgets and struck fear into the hearts of visiting sales people. But, all their hard work found its way straight to the bottom line.
Martinez and his co-founders (none of whom had previous experience either in media or purchasing) set out to extract and centralise the knowledge from among the best minds in procurement and share the insights with a wider group via the whole range of platforms. They quickly discovered how readily even highly-competitive companies would share information in order to get something valuable (other people’s data) in return. Procurement Leaders, 60% of whose revenue is membership subscriptions (39% is events), is growing strongly on the back of its unique database – intellectual property provided (and constantly updated) by the membership itself.
CEO Nandini Basuthakur says CPOs are uniquely able to learn from their thousands of suppliers in many of the world’s best companies. Her “Supplier Enabled Innovation Centre” is intended to emphasise the opportunity that CPOs have to improve the efficiency of their own companies. The capacity of Procurement Leaders to grow substantially is underlined by its 2017 results. While revenue was up by 8% to £12.3m, adjusted EBITDA actually dropped by 18% to £938k. But this reflected a strategy to increase membership revenues by adopting corporate enterprise licenses instead of a seat-based license model. This has resulted in 35% growth in the average value of annual membership contracts. This is almost certain to have produced strong profit growth in 2018.
A sign of the expansion potential, after a fair few years of erratic financial performance, is the geographical profile of revenues which – in 2017 – were 36% from the UK, 28% each from the US and from Europe, the Middle East and Africa. The US and Asia were the fastest growing. It is revealing to hear members of Procurement Leaders talk about the company as if it is a professional association; they have a strong sense of belonging. It’s the kind of relationship and support that companies of all kinds would die for and that includes the major consulting firms that will – one day – be lining up to acquire the still privately-owned company.
These are just four examples of B2B specialists in the UK which are increasingly attracting the attention of investors, especially in private equity. But there are many other single-sector B2B companies with £10-20m-revenue in, for example, the finance, law, education and film/TV sectors. Not all would even think of themselves as media companies. But they share a commitment to the information requirements and relationships of a specific market sector.
Some (like Procurement Leaders) are funded largely by their readers/members. Others (like The Drum and Jacobs) are more dependant on events. Some (like AgriBriefing and Jacobs) have used traditional media as a springboard to international expansion in digital media and events. Some are more obviously embedded in their markets than others but all are focused single-sector specialists.
Most have not gone very far at all in seeking to “own” key industry statistical information in their sectors, which would be nirvana for any data business and whose compilation remains easier for specialist publishers than almost anyone else. But, together, these entrepreneurial UK-based companies do demonstrate the breadth of high-value business opportunities in individual sectors. To think, B2B media success was once all about publishing trade magazines in as many sectors as possible.