October 2005
B2B Media Trends & Forecast
VSS predicts that trade show spending will increase 6.1 percent to $9.71 billion in 2005
By Heather Kirkwood



Total business-to-business spending, including spending on magazines, electronic media and trade shows, grew for the third consecutive year in 2004 as spending in all three areas increased. Overall, business-to-business spending grew 5.2 percent to $20.91 billion in 2004, according to the Veronis Suhler Stevenson (VSS) Communications Industry Forecast 2005-2009.

Trade show expenditures contributed to the overall growth of the sector, increasing 5.8 percent to $9.15 billion in 2004. Magazine spending on advertising and circulation, however, grew only 2.2 percent to $10.29 billion in 2004. For the first time, the forecast tracked e-media spending. While e-media was the smallest subsegment of the business-to-business media category, it’s growing rapidly — 25.9 percent to $1.47 billion in 2004.

Looking back, total business-to-business media spending was essentially flat on a compounded annual basis from 1999 to 2004, mostly because of massive hits the industry took from the economic recession of 2001. The business-to-business sector continued to decline in 2002 and grew only slightly in 2003. In contrast, e-media spending grew at a compounded annual growth rate of 40 percent from 1999 to 2004. 
 
Exhibition forecast
The trade show and exhibition market continued its recovery in 2004 and is showing signs of expansion, according to the report. Across the board spending by exhibitors and attendees resulted in a 5.8 percent increase in overall spending to $9.15 billion in 2004 — a rate not seen since 2000. That follows a 1.5 percent spending growth rate in 2003, and a decline of 1.2 percent in 2002.

The forecast attributes the growth in part to attendance gains by healthcare-related shows, the recovery of tech events, and a 15.7 percent increase in corporate America’s profits in 2004, which led to increases in corporate marketing and travel budgets.

During the first half of 2005, many corporations reported increasing funding for business-related travel, which is expected to drive trade show expenditures up 6.1 percent to $9.71 billion by the end of the year.

The increased flow of money allowed event organizers to raise exhibit space prices substantially for the first time in years without a revolt from exhibitors. The average price per square foot rose 4 percent in 2004 to $19.15, compared with 2003 when rates increased 2 percent, and 2002 when average rates only increased 1 percent. The increased prices resulted in a 5.6 percent increase in total exhibit space spending to $7.11 billion.

VSS reports that although shows are becoming more expensive for exhibitors, the expense will be offset by the upswing in integrated marketing packages that offer a combination of media buys at a premium price. The additional exposure, VSS says, will increase the overall ROI for exhibitors.

The forecast expects spending on exhibit space will grow 5.9 percent to $7.53 billion, and exhibit space sold will increase 1.8 percent to 378.2 million square feet in 2005. The growth is expected to be fueled by exhibit hall expansions, the continued growth of invitation-only events that allow exhibitors to get closer to attendees, and the increasing number of audited shows that help prove ROI to exhibitors.

Increases in attendance are also expected to allow show organizers to increase fees, sponsorships and advertising 7 percent to generate $2.18 billion in 2005. 

Overall, spending on exhibitions and trade shows is expected to rise 5.8 percent on a compounded annual basis from 2004 to 2009, driven by a 6.8 percent gain in total exhibit space spending. Overall, spending on trade shows and exhibitions will reach $12.10 billion by 2009.

E-media forecast
E-media is clearly becoming more than an afterthought in the business-to-business marketing world. The original model for e-media in the ’90s, according to VSS, was focused mostly on generating advertising. But as e-media has matured, the model has become more comprehensive, including content and databases that serve as directories, as well as advertising in the form of banner ads, search ads and classifieds. 

During the first half of 2005, e-media was the fastest-growing part of many media businesses — representing 7 to 10 percent of total corporate revenues, compared with 3 to 5 percent a few years ago.

It’s a trend VSS predicts will continue as more companies add paid online services to the media mix rather than simply maintaining an advertising-based model. Marketers are expected to respond more positively to e-media as the level of ROI measurement continues to improve.

Spending on e-media is forecast to grow at a compound annual rate of 18.7 percent from 2004 to 2009, reaching $3.47 billion.

Business-to-business magazines forecast
Total spending on business-to-business magazines, including advertising and circulation, increased for the first time in four years in 2004 — growing 2.2 percent to $10.29 billion compared with a decline of 0.9 percent in 2004. Circulation spending fell in 2004 by 2.9 percent, but the losses were offset by an overall 3.4 percent gain in magazine advertising.

The strongest advertising categories in 2004 (which can often be an indicator of sales potential for exhibitions serving the same industries) include: automotive and recreational vehicles, which rose 19.8 percent; architecture, engineering and construction, which rose 8.7 percent; and health and life sciences, which rose 8 percent.

Growth of business-to-business magazine expenditures is expected to be modest in the coming years. Falling circulation will be partly offset by growing advertising. In 2005, overall spending is expected to rise 2.7 percent to $10.57 billion — the largest increase in four years.

Total magazine expenditures are expected to grow at a compounded annual growth rate of 3.3 percent from 2004 to 2009, reaching $12.12 billion in 2009. Advertising spending during this period is expected to grow at a compounded annual growth rate of 4.3 percent. Meanwhile, circulation spending is expected to fall at a compounded annual rate of 1.5 percent, which will bring circulation revenues to $1.78 billion by 2009. 

Category 2004	Forecasted Growth	Actual 2004 Growth
B-to-B Magazines	1.3%	2.2%
Advertising	1.8	3.4
Circulation Spending	-1.2	-2.9
E-media	--	25.9
Trade Shows	2.4	5.8
Total	1.7	5.2