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| BtoB magazines: The underbelly of mass media |
| Vanita Kohli-Khandekar / New Delhi Apr 19, 2010, 00:52 IST |
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The segment needs to outgrow its poor-cousin mentality, if it wants to attract investors.
Power Line, Gujarat Infrastructure, Chemical Weekly India: If you haven’t heard of these magazines they are probably not meant for you. These are what are called business to business (BtoB) magazines. Together with events and websites, BtoB media is estimated to be about a $200-million or a Rs 1,000-crore industry in India.
It is small going by the size of the entire media and entertainment industry (M&E) — about $16 billion. However, BtoB is considered to be a stable segment (read boring underbelly) of the media business. The idea of BtoB media is to satisfy the in-depth and very specific information needs of a trade or industry. The brands are usually very tightly targeted within different industries — say food, design, retail, steel and so on. For instance, the ¤135-odd billion German BtoB major dfv has about 90 magazines and 60 websites. These are around textiles, law, bakery or even meat trade, among others.
Typically, BtoB would have a strong subscription stream. More importantly, most large BtoB players across the world have taken to the net faster than traditional BtoC media companies. For instance, in 2008, the £5.34 billion Reed Elsevier got 47 per cent of its revenue from subscription and about 50 per cent from online. Most mass media companies would get only five-10 per cent of their revenues from online business. Similarly, BtoB companies also leverage events much better, making them a revenue stream faster.
In India, the two biggest BtoB media companies — Cybermedia and Infomedia — were at Rs 121 crore and Rs 126 crore, respectively, in sales revenues in March 2009. Most of the others, Indiamart, India Infrastructure Publishing, or Images Multimedia are estimated to be in the Rs 10-25 crore bracket. Compare that to an average of about Rs 800 crore in top line for the top 20 mass media companies.
So, none of the BtoB firms are large enough for private equity investors to get interested. What makes sense is if some large investor or a holding company puts together lots of these companies and creates a BtoB behemoth of sorts. That would drive both scale and valuation. That is how some of the largest BtoB media companies were born globally.
Funnily enough, that does not seem to be happening in India. At a BtoB media conference organised by Cross Border Media in Delhi in February this year, though many of big international majors were present, there was no sign of any deals being inked soon. It is indicative of the challenges this industry faces in its quest for growth, the biggest being scale. The typical Indian BtoB media firm is simply too small. Why is that so?
Barriers to growth
Many Indian BtoB firms are run by first generation entrepreneurs who are loath to give up control. So even if they lust after the valuation, their need for an exit and therefore hectic scaling up, is not always powerful.
For the others, organic growth has several barriers.
One, because they operate on the fringes, media buyers simply don’t consider BtoB while looking for sharply-targeted audiences, largely because they are not aware or interested. Also, from a buyer/advertiser perspective, BtoB remains an inaccessible, difficult to understand area. For instance, except perhaps technology (Digit, Chip, Dataquest), or advertising& marketing (Campaign, Impact), where there are a host of popular options in BtoB, most advertisers really don’t know where they should go. A few of the buyers who do use BtoB, like Zenith Optimedia did for HP, do so because there is a demand for customised solutions from the advertiser.
The second reason BtoB doesn’t get attention is because “The media has developed, the metrics haven’t,” says Ambika Srivastava, CEO, Zenith Optimedia. Most trade brands are neither audited nor is their efficacy measured. So, even though overall magazine growth shows a slowdown, it does not reflect the fact that BtoB magazines have been launched by the dozens in the last five years, and that the market has actually expanded. Neither IRS nor NRS captures this growth in readership and that is the reason BtoB magazines don’t come to anyone’s attention. Except for a few, most BtoB websites in India do not have their numbers audited. That becomes a stumbling block, especially while selling to media planners.
The impact metrics can have on growth is very clear. For instance, when trade publishers in Australia got together to push a metric through with research agencies, it led to a rise of 20-30 per cent ad revenues, reckons Megan Clarken, managing director, Nielsen Online, Asia-Pacific. “The demand for metrics has to come from the advertisers and they are not yet asking for numbers,” says Pramath Raj Sinha, managing director, 9.9 Mediaworx. His firm owns and/or publishes a clutch of BtoB publications including Inc, Digit and CFO.
You could argue, of course, that why wait for advertisers to ask for it. Why not work towards a common currency, build up ad revenues and, therefore, scale. So, it is a bit chicken and eggish. But ultimately, if BtoB media owners want to grow and get the international guys interested, then fixing the metrics is a good beginning.
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