The New York Times (subscription req’d) ran a story that will, at the very least, hurt the morale of a competitor and more likely put it out of business. In Monday’s paper, Brad Stone wrote that falling advertising is “threatening the survival of Business 2.0” magazine. The article says Business 2.0’s paid circulation of 623,000 was roughly the same as the previous year, but that its advertising was down 38 percent through July 9, 2007. Mr. Stone quotes current and former Time Inc. employees who said the company made a mistake by combining the advertising sales teams of its major business and finance publications. “That often turned Business 2.0 into an after-thought, as Time’s sales representatives stopped pitching the distinct appeal and audience of Business 2.0.”
It’s tough to be in sales when the industry you are in is struggling, and print business and financial publications fall under that category. Since advertising sales are down at most Time business magazines, the executive in charge got the ax. He was replaced by the individual in charge of CNNMoney.com, who now has a virtually impossible job. Was it the consolidation of the sales force that caused the drop in advertising sales (and the fact that there were fewer feet on the street), or was it the drop in overall business-to-business technology advertising? The publisher of The Wall Street Journal blames the drop in ad revenues for this quarter on fewer ads from just three advertisers: Cisco, Apple and IBM. Was the Dow Jones sales force concentrating on other products? If the new Time unit executive wants to survive, he will have to make changes, which will probably mean having the sales force sell fewer products.
In a recent Kelsey Report Advisory, “Multi-Product Sales: Publishers Still Favor One-Channel Approach,” my colleague Michael Taylor wrote that in the Yellow Pages business, where sales is being asked to carry multiple products from Internet to Web sites, “training is key to multi-product selling. … Reps also need to know how to target likely advertisers for each product [and] position all the products as a complete solution.”
When I was in sales at Johnson & Johnson, my sales bag included a number of first-aid products and dental products such as Band-Aid bandages, first-aid kits, dental floss and the ill-fated Micron mouthwash. Those were volume products compared with back plasters, Red Cross cotton balls and lamb’s wool, but we were expected to meet our quota in every product. If managers wanted extra sales in, say, adhesive tape, they would give us some sort of spiff that would encourage us to sell more adhesive tape, and that product would get extra time and push. One of the great things about carrying this line of products was that they weren’t very cyclical or even secular. Growth came from population changes and price increases, brand extensions and the occasional product breakthrough. Management in packaged goods companies did not believe much in product life cycles.
I don’t know much about how Time used to sell advertising in its various business products. I also have no sense of how much money was saved by sales force consolidation or whether each of these products is profitable. But it does seem to me that a publication with a paid circulation of more than 600,000 ought to be able to make money. If Time is going to give up on its smaller business and financial products, it probably should get rid of all but one or two magazines as soon as possible and put the rest online where ads can be sold for their value to customers.
Still, it doesn’t seem right that the business section of The New York Times should place a huge cloud over the head of Business 2.0. Expect to see advertising plummet when competitors show copies of the article to potential advertisers.