• by Michael Shields , October 20, 2004

Independent publishers are the backbone of the business-to-business publishing industry, but that backbone is being threatened by an anemic advertising marketplace and the growing prominence of Internet advertising in the category.

For these independent publishers to survive, they must embrace change and seek out new revenue streams beyond advertising. That's the thesis propagated in a new article from media-focused investment banker Jordan Edmiston Group Inc.

The article, "The Future of Entrepreneurial B2B Publishing Companies," authored by managing director Richard Mead, credits smaller- to mid-sized entrepreneurs (SMEs) with competing successfully against larger publishers over the years by innovating and taking risks.

That entrepreneurial spirit will be crucial for their long term survival in a marketplace that has not seen a strong recovery in ad spending, as many dollars have been siphoned online. The typical SME has long relied on advertising dollars for the vast majority of its revenue.

According the report, SMEs account for 54 percent of all business-to-business magazines in the United States (Excluding the non-scientific, technical, and medical categories), while maintaining strong market positions in categories such as agribusiness (73 percent of all titles in that sector); transportation and security (60 percent of titles); manufacturing (58 percent); and construction and real estate (52 percent).

"SMEs have been around for a long time and have served their industries well," said Mead. "They know their industries well and have great circulation lists."

However going forward, these titles must diversify their revenue streams, while leveraging their expertise in the markets they cover, said Mead. The approximate 5,000 business-to-business titles generate over $10 billion in advertising and ancillary revenue, with advertising accounting for around 75 percent, as estimated by American Business Media.

"The traditional business model is going to change, that is very clear," said Mead. "Any SME which resists is going to face a very challenging time."

To avoid such a challenging time, these publishers need to act more like business partners with advertisers facilitating customer relationships rather than just delivering targeted audiences.

The key, said Mead, is "getting much closer to their markets [Publishers] have these great relationships. You need to connect the maker of widgets with the buyer of widgets. It's about bringing buyers and sellers together."

One arena that independent publishers can challenge the Web head on is in the paid search arena. Mead cites a number of vertical search engines, which have emerged to deliver well-targeted industry-specific results that general market search engines like Google cannot match.

Among other recommended tactics listed in Mead's article are:

- "As an SME owner, you need to review and refine your corporate and personal objectives. This involves setting achievable financial targets over a specified timeframe, and thinking about your exit strategy - succession or sale."

- "Challenge every aspect of your organization to redefine itself in light of the changing business environment - both yours and your customers, so that your business becomes more forward thinking than ever before."