• by Frank Saxe , February 6, 2003

A ticker tape of bad economic news and a sagging stock market made 2002 a tough year for business magazines. The titles seemingly mirrored the industries they covered, as the red ink that filled corporate ledgers and 401K statements spilled over toward a number of the titles, which posted year to year advertising declines. Even so, many are optimistic that 2003 will bring better results, despite much uncertainly about where the economy is heading.

“If you read the stories throughout the year, you’d think we were going out of business,” says Fortune group publisher Michael Federle, whose Time Inc. title saw a 17% decline in ad pages last year. “In the end, 2002 wasn’t as disastrous as the press said.” It is a sentiment many publishers have. They point to revenue figures, which shows their titles made money even though advertising levels declined.

“It was technology that sucked the wind out of our sails,” explains Geoff Dodge, associate publisher of McGraw-Hill’s BusinessWeek. He says all of BusinessWeek’s year-over-year loss came from just that one advertising category, as ad pages fell 12% in 2002. According to the Publishers’ Information Bureau, technology ad spending fell never $99 million last year, more than twice any other category. Yet with more than $1 billion spent from tech firms each year, the category is beginning to fuel business magazines’ economic turnaround. “I think its coming back a little bit, but it’s never going to accelerate the pace it was two years back,” says Dodge, who has been able to book buys from blue chip players like Cisco so far this year.

Time Inc.’s Business 2.0 was among the most successful in getting dollars from the technology sector in 2002. It’s increasingly tech-heavy content has pushed newsstand sales up 20% and that has led to a 20% in revenues as well. “We’ve been able to break a lot of new business this year, which is a good sign for us because it’s a very competitive arena out there,” says publisher Lisa Bentley. With new business from companies like Apple and IBM Consulting, plus blue chip advertisers like Hewlett Packard, she says there are still dollars to be had. “Even though technology has had a tough time over the last two years, it’s here to stay, and the smart companies are the ones that are putting new products and services out there and are really bullish about the future.”

Forbes publisher Jim Berrien says they have been getting “giant share” of buys from tech giants such as Cisco and IBM, while at the same time breaking new software accounts. “My feelings is that we’re going to be up in technology spending for the year,” he predicts. Forbes finished first in the business magazine race last year, despite a 6% decline in ad pages. “They say what doesn’t kill you makes you strong. It also made us a lot more resourceful,” says Barrien, explaining Forbes sold a half dozen multi-million dollar packages to clients including Nasdaq, Franklin Templeton, IBM and Sass, that ran across the magazine, its TV show, and its conferences. Says Barrien, “They really helped because they gave us exclusivity on a couple accounts and market share with a lot of others, which is what we’re currently fighting for in a down economy.”

There is a change, however, as a thin layer of some very large accounts increasingly dominate the marketplace. “What’s not there is that second level of mid-sized to large accounts that were there a couple of years ago,” says Federle. That means competition among the titles has become increasingly fierce. Most also put an increased emphasis on other advertising categories, from building an already strong automotive category to attracting luxury goods marketers. Federle says Fortune has also had some success in winning back some ad dollars from the struggling financial service firms. “A lot of them are coming back with new messages after a bad year last year.”

It remains a tough category, though. “They’re all still with us, but they’ve gone from spreads to pages,” says Forbes’ Berrien.

Coming off a January that saw BusinessWeek’s ad pages increase 10% over 2002, and a rate base increase of 20,000 to 970,000, Dodge is optimistic of where the year is going, predicting, “It’s ticking upward, but it’s at a cautious pace.”

There is caution among other publishers as well. Time Inc.’s Money magazine paced ahead 30% in January, yet publisher Michael Dukmejian still feels its going to be a tough year. “So much of our business is tied to personal finance, and the stock market, and we’ve lost a lot of volume.”

A number of others say the pace of the recovery may also be slowing as well. “It’s incredible how in the last four weeks, the activity level has slowed down,” says Federle, who is forecasting Fortune will finish the year up as much as 10%. “I think people are just withholding decisions until the war issue and the economy becomes a little clearer.”

Dukmejian agrees. “The second quarter looks to be a little softer at the moment. I don’t think it will end up quite as robust as the first quarter but we should be okay. I’m getting a sense that there was some real momentum started, but maybe the war might suggest that some people have tailed off a little bit.”

BusinessWeek’s Dodge says it is not just the possibility of war that is impacting the sector. “RFP activity is healthy, but actual release of budgets is at a slower pace. Companies want to see if the revenue needle is ticking in their own businesses.”