Two events in the past 24 hours has me wondering why anyone would want to in the B2B media business in the U.S. anymore: the continue involvement of PE firms and the continued decline of B2B publications themselves.
The second reason came to mind when I read a tweet from a B2B industry publication promoting its iPad app. I found it strange that the industry trade publication would be promoting its app because my memories of it were that it was an unreadable mess created by one of those replica app makers. I decided to check it out again inside the App Store to see if they have updated it.
No, the app was still the same one as originally released. Based on its lack of reviews, and the fact that its last update was a year ago, I wondered why they would think it important enough to promote. Whatever.
Still, it saddened me to realize that the publishing industry's main trade journals are so backward and completely obvious to the changes occurring in the industry they are supposed to be covering. Instead of leading their industries, they are merely mirroring them – not what a trade journal should be doing, in my mind.
I looked at a few more new and updated apps inside Newsstand and noticed a few more B2B publications, as well. Although each were also replica edition apps, what caught my attention was that one of them was for a publication I had never heard of, despite being fairly familiar with the publications inside that industry. Who were these guys, and why hadn't I heard of the magazine?
I checked out the publication's website to get more information and quickly found the media kit. I shook my head knowingly as I saw that it was one of those consolidated kits, created (theoretically) to promote magazines inside the same family of industries.
I guess I am more than a little cynical about these things, having experienced modern B2B publishing firsthand. While most publishers justify consolidated media kits based on similar subjects, the truth is often that one kit for multiple magazines is simply cheaper than producing multiple kits. Further, it was obvious that the same person was acting as publisher of all the magazines. Again, one publisher is cheaper than two, or three.
As I continued to explore these publications I noticed that "BPA" was mentioned once, but not consistently. In other words, the magazine I had not heard of was not audited – no surprise, less and less B2B magazines are being audited.
There are more than a few reasons media executives give for not auditing their publications, but cost seems the only real reason to being considered**. Some people on the outside of the industry might think that the cost to audit a magazine – that is, the cost paid to the audit firm – is the reason they are being dropped. But the cost of conducting a BPA audit is fairly minor compared to the cost of keeping a subscription list in shape to be audited.
Looking at P&Ls of some B2B, the single biggest circulation expense is the telephone qualification costs. These costs keep rising year after year, even as other costs, such a printing, have remained fairly stable. If a publisher kills off their audit, the next cost - and far bigger cost – that is reduced (or eliminated) is telemarketing.
Of course, soon the reader list for the magazine becomes stale. But looking at several recent BPA audits from magazines still committed to the report, it quickly becomes apparent that the quality of the existing audits are, in some case, being seriously compromised. For instance, the audit of a sister publication of the one not audited shows that less than 25 percent of the circulation is first year written qualified – meaning that this percent of readers actually completed a qualification form or telephone call in the last year. The rest of the circulation is made up of names off of lists, and two and three year qualified names.
Few BPA audits look as good as the audit for MacFadden Communication's audit for Grocery Headquarters. That audit, the latest being from June 2011, shows that over 73 percent of the readership are one year direct request – the number is over 80 percent when you include other forms of one year direct request (other than lists). That, my friends, is a good looking audit.
Do advertisers really care anymore about things like audits? Yes, some do. But most are also concerned with editorial content, the professionalism of the sales staff, the publisher's involvement with the industry, etc. It is amazing how often these things also are declining as the audits are being cut back on.
Despite the declining condition of many B2B publications, PE firms continue to invest in B2B media firms. The reason is simple: the PE game has nothing to do with building businesses and everything to do with bring profits to investors. This article in The New Yorker by James Surowiecki gives readers a good primer on the private equity business. One thing not mentioned in the article is that while PE firms often bring in their own chief executives to manage a firm once it is invested in, at other times the existing executive might stay on. But in those cases, the CEO knows, or soon discovers, that they are no longer in charge of a business, they are in charge of an investment. That is why most chief executives that stay on after a PE gets involved, gets a piece of the pie in an eventual divestiture. That carrot is always there to remind them that the endzone is the eventual divestment by the PE, not the growth or profits of the company. PE's don't need their companies to be profitable, as the article smartly points out.
** One good reason to not audit a publication is when the reader list is made up of a targeted group of readers such as top executives. Getting these readers to complete the qualification process is next to impossible. But in that scenario, reader studies would have to support the claim that these "subscribers" are actually reading the publication.