Against a backdrop of depressed b2b markets around the world, countries of Central & Eastern Europe continue to offer great opportunities for magazine publishers. European consultant, Hugo E. Martin reports...

Countries of Central Eastern Europe (CEE) represent an attractive opportunity for publishers. As most business-to-business (b2b) markets,
including the US and Western Europe, continue to experience stagnation and decline in 2002, the markets in the CEE are flourishing. Three countries which particularly stand out when examining the CEE region are the Czech Republic, Hungary and Poland.

The total population for these three countries is around 60 million people. All enjoy relatively high national income averages. Gross Domestic Product (GDP) per capita (measured in terms of Purchasing Parity Power - PPP) has reached $9,440 (US dollars) in Poland – even though Poland’s overheated economy is not expected to fully recover by 2004 – and is as high as $13,750 in the Czech Republic. Last year’s annual GDP growth rate of 3.8% in Hungary (to $12,230), represents the CEE’s highest to date – and surpasses that experienced by the US and neighbouring Western Europe (Source: Eurostat, WIIW).

A good indicator of fertile b2b publishing soil is to examine the number of trade shows a country can maintain throughout the year. A glance at this region shows that, in 2001, Poland alone organised some 150 regional and national trade shows. The Czech Republic meanwhile, plays host to some extremely popular and successful national and pan-regional trade shows in Brno, the country’s industrial hub and second largest city.

Over the years, Central and Eastern Europe has been the focus of major publishers from Germany, Austria and The Netherlands, with markets being enjoyed by the likes of Bohman, Deutscher Fachverlag, Gentner Verlag, Vogel Media and Wolters Kluver. There has also been a myriad of local publishers which have emerged to transform state-subsidised academic and scientific titles into successful, market-oriented b2b publications. However, the general growth of b2b media in the area continues to fall well below its potential.

Jeffrey Forbes, founder and managing director of Complex Communications, Czech Republic, believes general transition into the magazine
sector from established academic and scientific titles has been modest due to the priorities shared by key personnel involved in these niche markets: “For many technical titles, transfer has been slow and painful because the brains behind a publication (generally the editors) are not commercial people and do not want to be commercial” said Forbes, while noting that “publishers starting from scratch now are probably better off because there is no real equity of readership in many cases.”

Alternatively, transformation, extension and investment are cited as three considerations which should be addressed by publishers launching titles in the CEE region, according to Jerzy Karwelis, managing director of Vogel Publishing, Poland. “The b2b sector requires the transformation of internal letters and magazines from major organisations, the extension of industry titles, established by key players to promote their own products and services, into a general publication of that industry sector, and investment, done mostly by international publishers, in building titles with local publishers or acquiring them,” said Karwelis.

So what of the competition? At first glance many regional reports suggest there are hundreds of different publications that claim to belong to the b2b sector in CEE. According to some sources, there could be as many as 1,200 b2b magazines in the Czech Republic alone. However, further examination applying basic criteria, dramatically cuts the number of titles in these regions. Many publications in the current b2b arena fall short of possessing a commercially feasible strategy, or fail to have audited circulation figures which exceed 5,000. By applying rudimentary criteria to the region we are able to present a list which is far more transparent, and one which can act as a useful indicator for potential areas of growth (see table below).

A study conducted by mcc consulting in 2001, examined the potential of industry sectors after considering various factors that determine the premise for successful b2b magazines in a particular sector. The criteria included trade shows (and their attendance figures), advertising revenues, and then structures within a particular sector, including existing companies, employment figures, and revenue generated. Factors that may influence the short and long term future of these sectors were also examined, such as current and proposed legislation and trends in academic and vocational education.

Our results show a number of sectors have strong growth potential for trade magazines across all three countries; business and financial insurance, automotive, food processing, electronics, plumbing, domestic maintenance, and architecture for example. However, other industry sectors are attractive in one market but do not have favourable conditions in another – for example, titles concerned with the environment have good conditions in Poland but not in Hungary, where heating and air-conditioning sectors would have a stronger market. A full report of the attractiveness of these different sectors for b2b publishing can be supplied on request from mcc consulting or FIPP.

While investigating the current climate for b2b publishers in the region we received some telling figures. The Czech Publishers Association expects a 3% drop in the number of b2b titles to be balanced out by overall circulation growth of a formidable 30% in existing titles. An obvious consolidation is taking place in the region, and advertising is expected to be up 5% in terms of revenue and 7% in terms of ad pages by 2003.

Hungary has seen an increase in advertising budgets of around 10% last year. In real terms, this growth was just slightly above the inflation level. However, this growth is expected to intensify in 2002, reaching 3% - 4% by 2003.

The Polish Publishers Association forecasts stability in magazine numbers for both consumer and business titles, and although slight drops are expected for circulation figures and ad pages, ad revenue is expected to record a 3% growth.

According to a recent IDC study on the potential of b2b ecommerce in the CEE region, trading volume reached $1.25bn in 2001, out of which 13% originates from online marketplaces. The same study expects b2b ecommerce to reach the $23bn mark by 2006, with marketplace revenues accounting for 31%.

All three countries are expected to join the European Union in 2004. Their integration with EU structures will enhance trade, production and
consumption which, again, are prerequisites for a high b2b publishing potential. Jerzy Karwelis views the EU proposition as “a suitable transformation period for the industry to create a lot of communication and information needs”, and recognises the “large, inherent potential of the Polish economy”. Jeffrey Forbes is more cautious about the Czech Republic, saying that although conditions are good and improving, “only brave foreign b2b publishers should move into the market, because it is small and still conservative in outlook.”

It becomes obvious that despite regional market tremors, the Czech Republic, Hungary and Poland are an attractive proposition to publishers in the know, with strong growth prospects for b2b magazines. They represent one of the few spots on the b2b map that are thriving, and should continue to do so for the next few years at least. So take another look at these markets, aren’t they appealing?

For more information & support on b2b publishing in CEE...

Contact Hugo Martin:
mailto:hemartin@emartin.net

Get a free trial subscription to mcc consulting’s weekly newsletter on publishing, marketing and ad sales at http://www.eMartin.net

Register for the FIPP International B2B Conference for magazine publishers in Munich, Germany, 5 and 6 Sept 2002
visit http://www.vdz.de

Hugo E. Martin, mcc consulting