11/09/99

Decreases in advertising on the part of health care and computers and a sudden halt in corporate profit growth adversely affected the business magazine industry in 1998. After expanding at or near double-digit rates for five years, corporate profits were flat in 1998. Corporate profits have been a principal factor driving spending in both business magazines and the slowdown curtailed spending in 1998 and will continue to depress the market in 1999. The trade show market was less affected by the profit slowdown than were business magazines in part because the planning horizon for trade shows is generally longer and the cost of not participating in trade shows can be substantial. Additionally, trade shows have become more profitable, a factor leading to the introduction of new shows and a boost in spending.

We believe that corporate profits will recover from 1998 since the source of the slow down was principally related to external events such as the Asian financial crisis and not to weakness in the U.S. economy. As profits climb, advertising in business magazines should improve. Fewer new trade show launches, slower attendance growth, and a moderation in price increases for exhibit space will offset a recovery in corporate profits and lead to slower growth in trade show spending. The demand for exhibit space, however, will continue to expand.

We project total spending on business-to-business communications to rise at a 6.2 percent compound annual rate over the 1998-2003 period, down from the 8.8 percent annual gain of the last five years. By 2003, spending will total an estimated $26.4 billion, up from $19.5 billion in 1998. Business magazine spending will grow from $11.7 billion to $15.1 billion, a 5.3 percent compound annual increase, and spending on trade show exhibition space will rise from $7.9 billion to $11.3 billion, climbing at a 7.6 percent rate compounded annually.
Source: Veronis Suhler Communications Industry Forecast

1/04/99