Monday, June 09, 2008
Think Ad Revenue Is All Going Online? Think Again.
By Melissa Campanelli and Noelle Skodzinski
Publishing Executive Magazine
The results of a new study about how the industry sees its future may surprise you. Plus: Industry revenue trends in print, webinars, events . . . and more!
While there is no denying the digital revolution, a new study by Publishing Executive, called the "2008 Publishing Advertising Trends Study," shows that online revenue is not exceeding print revenue for most publishers . . . and the majority of publishers don't expect it to-that's right, ever.
For the study, Publishing Executive worked with independent research company Readex Research to survey Publishing Executives from a variety of industry segments including business-to-business (b-to-b), consumer, association and professional publishing. More than 250 publishers participated.
What did the study's findings reveal? For starters, 89 percent of respondents said their organization's current online revenue does not exceed its print revenue. (In this case, online revenue included Web sites, e-newsletters and webinars/webcasts.) Nine percent of respondents said that their current online revenue already exceeds their print revenue.
While that may not come as a big shock (though the 9 percent whose online revenue already exceeds print may be higher than some of us would expect), this next finding might: More than two-thirds (68 percent) of respondents reported that they do not anticipate their organizations' online revenue will exceed their print revenue in the future. Twenty-eight percent said they anticipate their online revenue will surpass their print revenue.
However, as for the 28 percent of respondents who anticipate that their online revenue will exceed print, they seem to expect the change will occur fairly quickly-74 percent said they expect their organizations' online revenue to exceed their print revenue within the next five years.
The number of respondents who don't think their online revenue will exceed their print revenue may come as a surprise, especially since-at least among b-to-b publishers-magazine revenues were expected to post a 4-percent drop in 2007, while digital content revenue was slated to increase 20 percent, according to statistics from industry association American Business Media (ABM) that appeared in a February 2008 article in Publishing Executive, titled "Special Report: Your Guide to the 2008 Media 'Brandscape.' " ABM CEO Gordon Hughes also stated in that article that digital's growth rate puts it on a pace to surpass print magazines by 2011 at the latest.
Because ABM represents the interests of the business media only, and many larger publishing houses, Publishing Executive designed its "2008 Publishing Advertising Trends Study" to provide an expanded view of the industry. Publishing Executive wanted to find out: Do b-to-b, consumer, association and professional publishers share a common perspective on the future of their products in print and online? And, is the size of your organization a factor in whether you expect your online revenue to surpass your print revenue?
A Closer Look
Breaking the numbers down by type of publication, 93 percent of both b-to-b and consumer magazine publishers said their organizations' current online adverting revenues do not exceed their print revenue. Ninety-two percent of association publishers answered the same way.
What about their expectations for the future? B-to-b publishers' perspective of the future skewed slightly more heavily toward online revenues than the other industry segments. Thirty-six percent of b-to-b publishers said they anticipate that their online revenue will exceed print in the future. Twenty-four percent of consumer publishers and 27 percent of association publishers also expect their online revenue to exceed print.
Company size made a slight difference in respondents' replies, but perhaps not as you would expect. Mid-size companies (defined here as those with revenues between $1 million and $4.9 million) had the highest response rate to the question: In the future, do you anticipate your organization's online revenue will exceed its print revenue? Seventy-six percent said no. At larger companies (those with revenues of $5 million or more), 61 percent said they don't expect online to exceed print revenue. And of the smaller companies (with revenues less than $1 million), 67 percent said print will remain the larger revenue generator.
Tracking Revenue Streams
The study also asked respondents to reveal their sources of advertising revenue in 2007, including Web sites, e-newsletters, webinars or webcasts, print, event and event sponsorships, and reprint/e-print/rights sales.
According to the respondents, print advertising holds the biggest piece of the revenue pie for all types of publishers, bringing in an average of $2.78 million in revenue.
Events, touted by many companies in the industry as a significant growth area, contributed an average of $1 million.
The Web accounted for an average of $550,000 in revenue; e-newsletters, $350,000; webinars and webcasts $330,000; and reprint/e-print/rights sales, $290,000.
Keeping in mind those figures are averages across all survey respondents, the picture changes slightly when you focus in on specific magazine segments. For example, b-to-b magazine publishing respondents, when segmented out from the larger group, reported print advertising generating an average of $4.8 million in revenue in 2007, well above the total group's average. Association publishers followed with $1.8 million, and consumer magazines attributed an average of $1.7 million to print advertising revenue-both falling below the overall average of $2.78 million.
In all categories of publishing, events and event sponsorships followed print as the second-largest revenue source, making the biggest splash in b-to-b, with an average of $2.1 million in revenue being drawn from events and sponsorships-again above the overall group's average of $1 million. Consumer magazines generated an average of $180,000; and association publishers, an average of $560,000.
B-to-b publishers also outweighed other categories in terms of revenue from Web advertising. For b-to-b publishers, the Web accounted for an average of $1.24 million in advertising revenue in 2007-way above the overall group's $550,000 average-while it accounted for an average of only $180,000 in revenue for consumer magazines and $130,000 for association publishers.
E-newsletters were also significant revenue generators for b-to-b publishers, accounting for an average of $1 million in advertising revenue in 2007. Consumer publishers reported no revenue from e-newsletters, while association publishers reported an average of $30,000.
As for webinars/webcasts, b-to-b publishers again reported the highest figures in advertising revenue from this medium in 2007-an average of $900,000-while consumer publishers reported no revenue from webcasts, and association publishers reported an average of $30,000.
Great Expectations? Revenue Growth Predictions
The survey also asked respondents whether they expected their organizations' revenues for certain types of advertising to increase, remain the same, or decrease in 2008 compared to 2007.
Print: A Mixed Bag, but Almost Half Predict Growth. While print naysayers abound in the industry, it seems at least among respondents to this survey, many publishers anticipate print-revenue growth this year-44 percent of respondents said their print ad revenue would increase, while 30 percent said it would remain the same, and 18 percent said it would decrease. Seven percent of respondents said they don't know what to expect.
Looking at print expectations by segment: Almost half of b-to-b publishers (48 percent) said they expect their print revenue to increase, while 28 percent expect it to remain the same, and 23 percent expect it to decrease. For consumer publishers, 47 percent expect it to increase; 22 percent expect it to remain the same; and 15 percent expect print advertising revenues to decrease. For association publishers, 31 percent expect their print revenue to increase, 49 percent expect it to remain the same; and 16 percent expect it to decrease.
Web: Majority Sees Increasing Revenue. According to the study, however, more are optimistic about Web growth. Sixty percent of respondents expect advertising revenue for the Web to increase in 2008; 26 percent expect it to remain the same. No respondents said they expect Web advertising revenue to decrease, but 12 percent said they didn't know, and 2 percent gave no response.
B-to-b publishers, in general (74 percent), expect Web revenue to increase. Consumer and association publishers are slightly less optimistic, with 54 percent of consumer publishers and 49 percent of association publishers expecting an increase in Web advertising revenue this year.
E-newsletters: Predictions Say Growth or Flat, but No Decline. According to the study, more than a third (37 percent) of respondents expect their organization's revenue from e-newsletters to increase in 2008. A slightly greater number (39 percent), however, expects it to remain the same. No respondents expect advertising revenue in this area to decrease.
B-to-b publishers, in particular, expect to see growth here-60 percent of b-to-b publishers expect e-newsletters to bring in more revenue this year. Twenty-five percent of consumer publishers and 24 percent of association publishers expect an increase in e-newsletter revenue.
Events: Some Growth, a Bit of Decline, but Many Foresee a Flat Year. Twenty-seven percent of respondents indicated that they expect revenue from event/event sponsorships to increase in 2008 compared to 2007, while 41 percent expect no change, and 3 percent expect a decrease.
Broken out by category, 33 percent of respondents from b-to-b publishers said they expect advertising revenue from events to increase in 2008, while 25 percent of those from consumer magazines expect event revenue to increase, and 24 percent of association publishers expect growth in this area.
Webinars/webcasts: Not a Pot of Gold for Everyone. Perhaps surprising to some, most respondents do not expect to see increases in advertising revenue this year in webinars/webcasts (both terms were used to avoid exclusion of those who perceive a difference between the two). Just 16 percent of respondents expect to see webinar/webcast revenue grow, while nearly half (47 percent) expect a flat year. Only one respondent reported anticipated decline, but 27 percent said they didn't know what to expect from this revenue source this year, and 11 percent didn't answer the question.
While 28 percent of b-to-b publishers expect revenue in this area to increase, only 12 percent of association publishers and 3 percent of consumer magazine publishers shared this perspective.
The Acquisition Market
The study also examined publishers' immediate plans to expand by acquisition. One-third of respondents said they plan to acquire properties in either print, digital or events in 2008. Almost two-thirds (61 percent) do not have such acquisition plans.
Thirty-nine percent of b-to-b publishers plan to acquire at least one media property in 2008, while 27 percent of consumer and 14 percent of association publishers plan to do the same.
Melissa Campanelli is editor-in-chief of eMarketing + Commerce (eM+C), a Target Marketing Group publication, and a former deputy editor at DM News. She also is author of the books "Entrepreneur Magazine's Open an Online Business in 10 Days" and "Start Your Own e-Business."