How a US giant and UK minnow are shaking up B2B

For traditional media companies savaged by sharp-eyed digital natives, the problem seems to be all about new channels and low costs. But it is so much more: the technologies that have revolutionised the supply of information have also fundamentally altered the appetites and attitudes of consumers.

That explains why so many readers are now satisfied with bite-sized reading from free newspapers, Twitter feeds, Google Alerts, and online digests, where once only a single-source, long-read seemed enough.

Less is more

Less is more

This change in ‘information appetite’ is evident even in high-value reference data. Professionals in law, finance and medicine frequently settle for information that is second-best or “good enough” because it is delivered conveniently (often through Google). This emphasis on functionality and the power of online search underlines the deteriorating prospects for traditional media which fails to understand the impact of the technologies that are rattling their windows and doors.

It is easy to accept that digital media success depends on the three Cs: Content, Community and Commerce. Traditional media has customarily believed it is mostly, if not exclusively, about content. But Community and Commerce are crucial engagement with digital audiences. Then, there’s the changing nature of content itself. Traditional media struggles to accommodate one-stop aggregation – the range of non-proprietary content including ‘citizen journalism’, user generated, and content marketing that highlights the technology-driven, changing appetite of media consumers.

This shift in audience attitude is pervasive. Look at the change in business-to-business media – the publishing, online services and events for people whose profits and professional success depend on them.

Time was when B2B media companies operated in a discreet world where the ability to ‘own’ whole sectors of business news, information and targeted advertising helped to deliver the best media-industry margins. And its readers were the first to be web-connected. That made many B2B publishers a pretty complacent bunch, who contrasted their claimed “need to know” information with the “nice to know” of their more glamorous (but frequently less profitable) consumer magazine counterparts.

However, that cosy world was swept away by new competition – and by the changed appetites of readers.

Information-rich and digital-savvy companies as diverse as management consultants, market researchers, recruiters and investment banks started to see the opportunities for selling business data and reports to their clients. Many spotted the gaps for  ”must have” information ahead of the magazine-centric companies which had been lulled by the decades-long advertising boom into filling their pages with low-cost news rather than original data. Then, all but the very best B2B magazines found their revenues squeezed: the uniqueness of their narrowcast “news” content was blown away by Google and digital aggregators.B2B

Paying readers fell away as did many magazines which had once been super-profitable on the back of free ‘controlled circulation’ funded by advertising. In the UK, for example, once-bloated business weeklies were decimated by the loss of recruitment advertising. Like newspapers, whose whole profitability depended on classified advertising, B2B publishers were exposed by the swing to digital – and the changing needs of readers and advertisers.

Companies like Reed Elsevier, once the world’s leading publisher of business and professional magazines, all but abandoned print and sought refuge in online information for which readers would pay. Even then, the rising costs of building data into customers’ own workflow systems showed that engagement mattered as much as the information itself in a web world of cloned-content and fragile copyright. And, as elsewhere, the large B2B companies found their economies of scale savaged by low-cost technologies – and agile, new competitors. Again, the content itself was just not enough.

And, now, these traditional companies are losing their grip on the whole media market. Suddenly, the human face of digital – social networking – is all-important. Advertisers whose marketing was formerly built round campaigns in B2B magazines or trade exhibitions, realise now that the technology has pushed them into the media business and created the need for ‘always on’ content strategies for customers using online communities to research solutions and stay informed.

It is a mirror of the threat posed to consumer media groups by, for example, retailers which realise that they too need to be in ‘media’. Social networking and ecommerce strategies are turning the customers of traditional media into its competitors.

But that’s only a fraction of the problem.

The real 21st century media challenges are the social networks themselves. Having built powerful marketplaces for consumers and business people, Facebook and LinkedIn are now becoming major providers of content. Traditional media groups will increasingly find their power and profits squeezed by a pincer movement of their own customers (readers and advertisers) and the social networks. Nowhere is this threat clearer than in B2B media.

Now he's a publisher too

Now he’s a B2B publisher too

Ten years ago, as B2B publishers scrambled to profit from the resilience of trade exhibitions or information that really was “need to know”, few could have seen the significance of the 2003 launch of LinkedIn. Today, it has revenues of some $1.5bn (growing at 50% per year), makes 25% profit margins, and has 238 million users in 200 countries and 20 languages. It even has 3million users in China. It has a market value equivalent to Groupon, Twitter and Zynga combined – and almost one-third of the mighty Facebook. LinkedIn has grown rich from recruitment companies whose researches mostly start at its database of CVs. But now it’s much more.

Publishers everywhere covered the October 2012 launch of its “150 thought leaders and influencers”, with blogs by such luminaries as Richard Branson, Arianna Huffington, Barack Obama, Bill Gates, and Pete Cashmore. Talk of “the ability to follow thought leaders” was side-stepping the real point about that unrivalled list of contributors. In truth, it marked LinkedIn’s arrival in the mainstream content business. Arguably for the first time, it gave users: a daily reason to visit; content to share on Twitter and other networks; and differentiated, original reading matter.

In short, LinkedIn has become a publisher and is achieving huge increases in usage. By June this year, the company said its home page traffic had doubled, while year-round revenues had increased by 59% and membership (subscription) revenues by 37%. Crucially, advertising which accounts for some 25% of LinkedIn’s revenue (85% of Facebook’s) jumped by 36% to $5.6m in the second quarter of 2013.

It’s a business on fire with its sights on the profits made by business and professional media across the world. LinkedIn is well armed for the war: some 50% of its members are “decision-makers”. While average users spend just 20 minutes per month on the site (compared with 7 hours on Facebook), LinkedIn generates revenue of $16.40 for every hour spent, compared with Facebook’s $0.70.

The advertising growth is expected to step-up rapidly with the start of Sponsored Updates for the 3million companies with profiles on the site. The inevitable and growing competition with Facebook, Twitter and Google+ (each are trying to grow their professional status, while LinkedIn is expanding into content and launching new social feeds) cannot disguise the way that it is transforming the B2B market.

LinkedIn may be the game changer for traditional B2B media companies that YouTube is for television broadcasters. And the new challenge of monetizing social networking audiences makes the competition equally formidable for the legacy companies.

While LinkedIn is booming, new single-sector clones like those in education (EdWeb and TES Connect), IT (Spiceworks and IT Central Station), medical (Doximity), public service (Gov Loop), regulated industries (IdeaPlane), and travel (Connecting Travel) are sprouting in the US and UK. The best of these vertical networks will be able to co-exist with the over-arching LinkedIn. But they also point the way to a new B2B media market focused on peer-to-peer relationships and companies embedded in the sectors they serve. It is easy to predict, in B2B as elsewhere in media, that the long-term winners will divide between the largest, best-resourced companies (eg LinkedIn) and also the small, ‘hyper-local’, narrow-cast specialists.

Martinez: digging deep

Martinez: Finding gold by digging deep

This is well illustrated by the success of a UK-based company which is making waves across an international market of professionals once known primarily as ‘purchasing directors’. The privately-owned  Sigaria was founded in 2004 by Alex Martinez to create the Procurement Leaders Network as “a global membership network serving major corporations and procurement, sourcing and supply chain executives.” It provides independent intelligence, professional development and peer-to-peer networking through online, events, publishing and training.

The business has an international client base of some 600 leading companies with 14,500 members and hundreds of thousands of senior executives accessing online news and services each year. It is the classic winning formula of a small company which is thinking big, because it employs just 65 people – spread across offices in the UK, US, and India – and has a turnover of under £10m.

CEO Martinez is as tightly focused as his business: ”Our model is not unique. However, it was our early decision to forgo short-term profits and, instead, look to the long-term value of positioning our audience at the centre of everything we did that gave us the strong foundation we enjoy today.  Subsequently, each of the services we launched was rigorously discussed, tested and measured with our audience to ensure they provided real value. Historically, I have been amazed at how few publishers (large and small) follow a customer-centric approach…In the search for profits, many have overlooked the value of establishing a proper position of trust and confidence, something which is fundamental in people’s willingness to commit to a long-term relationship – and pay a premium price.”

The inspired company also exploits the rising importance of procurement in international companies which have realised that

And a magazine too

An award-winning magazine

these functions can be the key to strategic supplier relationships, production security, reputation, and risk management. Procurement directors, many of whom are now to be found on the boards of major corporations, are increasingly important to product and process innovation through their detailed understanding of supplier and customer companies. So, the Network has been able to meet the growing need for information and inspiration among a group of people finding their voice, sense of identity and value in organisations across the world.

Martinez got the idea while working for a recruitment software company 15 years ago, during the crazy times of the first dot-com boom. He found himself selling to purchasing departments and realised that these executives were often the unsung heroes, seen as the difficult people who pared down budgets and struck fear into the hearts of visiting sales people. But, all their hard work found its way straight to the bottom line.

Martinez and his co-founders (none of whom had previous experience either in media or purchasing) set out to extract and centralise the knowledge from among the best minds in procurement and share the insights with a wider group via the whole range of platforms. They quickly discovered how readily even highly-competitive companies would share information in order to get something valuable (other people’s data) in return.

Today, the Procurement Leaders Network is a flourishing international business combining activities in Europe, the USA and Asia, a membership group, an on-line network, conferences, training, and an award-winning magazine. The business, 50% of whose revenue is subscriptions, is growing strongly on the back of its unique database – intellectual property provided (and constantly updated) by the community itself. And Network members, once the unsung heroes, have become its best ambassadors. They say the events make them feel like members of a club.

Alex Martinez is passionate about his members and their “mission”. Colleagues say he constantly meets customers and key prospects and is forever monitoring customer sentiment using structured surveys and feedback from all touch points. The analytics point him towards an ambitious future ever more deeply involved in the business of his members and their millions of suppliers.

2 thoughts on “How a US giant and UK minnow are shaking up B2B

  1. Susanna Kempe

    Aug 28. 2013

    Interestingly Sigaria has on its board David Gilbertson who at both Informa and Emap recognised early the threat (and the opportunity) posed by new media to traditional b2b media and consequently led the charge to combine content and community

    Reply to this comment
  2. Nils Schaffner

    Feb 24. 2014

    Very good article, thank you, this is indeed an interesting evolution of the B2B media publishing. Are you aware of companies similar to Sigaria in Europe?

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