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Friday, August 04, 2006

E3 2.0's Winners and Losers 

The 'Death' of E3: Winners and Losers

GameDailyBiz weighs in with a look at who might benefit and who might not from the downsizing and repositioning of gaming megashow E3.

Surprisingly, in GameDailyBiz's view, print pubs should benefit, and online sites should have some trouble, in covering the show next year.

But suffering the most will be the lower rungs of the editorial ladder:

Biggest Losers: Junior Staffers

Are they still going to even get to go to the new, more intimate show?

Are they still going to get to have once-a-year conversations with scantily clad women?

Are they still going to see the good E3 games?

Are they still going to get a share of that sweet, sweet per-diem?

Are they still going to get that chance show floor encounter with cast member of Good Times?

Are they still going to get their one-bed share of an LA hotel for three days?

Are they still going to be able to scoop up copious amount of freebies to sell on Ebay?

The answer, I'm afraid, may be no.

Why doesn't anyone ever think about the junior staffers?

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Thursday, August 03, 2006

18 Months in VNU Time 

New VNU owners mulling European B2B sale-sources

Reuters reports that "five people familiar with the situation" say that VNU is considering the sale of its European b2b magazines and trade shows.

Grab:

The sale option follows a pledge Valcon made to shareholders as part of the buyout to keep VNU "substantially together as an integrated company" for 18 months after some investors had demanded that management try to raise more money by selling VNU in parts rather than as a whole.

Maybe Valcon meant 18 months in Internet time, or Web 2.0 time. Or maybe the five people are wrong.

The Euro b2b operations account for about 6% of VNU's total revenues.

Via IWantMedia.

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Advanstar's Q2 

Advanstar has released its 2nd quarter results.

Income was up 6% to $59.2 million, and EBITDA jumped 47% to $9.2 million. For the first six months, income was up 13% (to $165.8 million) and EBITDA was up 28% (to $48.4 million.)

Details can be found here.

UPDATE: Some details from the conference call with Joe Loggia, CEO, and David Montgomery, CFO, discussing Q2 results.

1) The Fall MAGIC event, which accounts for a chunk of coming revenue, is "tracking well, ahead of last year in square footage and revenues," according to Loggia. "You never know until you hold the show, but we're pretty confident."

2) The company has "a very active pipeline of potential acquisitions, and we're looking at several in each of our segments--Life Sciences, Fashion and Powersports," said Loggia. These acquisitions could be smaller "tuck ins" to current marketplaces, or larger acquisitions. "What we're currently looking at falls primarily in our three market segments," said Loggia. "But we're not limiting ourselves there. If we find a large acquisition in another business area, as long as it fits our acquisition criteria, we would pursue it."

3) Advanstar is in a "good position to maintain our positive momentum through the end of the year," according to Loggia.

4) The company will redeem just under $10 million in floating rate notes on August 15, which will leave $461.9 million in indebtedness at the operating company level, and $171 million in debt at the holding company level, according to Montgomery. Cash and liquidity are "in excellent shape," with a balance of $51.8 million in cash, and no draws on the company's revolver. There are no plans to undertake a major refinancing of debt ("it doesn't make sense now", but the company has the flexibility to do so if it chooses.

5) No breakdown of online revenue results or growth was discussed.

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Tuesday, August 01, 2006

E-Paper--Getting Closer 

Hitachi showing off color version of Albirey e-paper

Check out this color e-paper from Hitachi. It's pretty low res, but the size is good, and starting to look closer to what we'd need for magazine/newspaper usage.

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Well, Duh... 

"Duh" was my first reaction to this piece from AdWeek, which discusses a study that finds "users exposed to search and display advertising convert 22 percent more than those who only see search ads."

But then, our human tendency is to rank things, and focus on what's hot. Search is hot, so therefore, display advertising must be less so. Perhaps more studies like this can help our advertisers understand that they need campaigns which integrate all the tools they have at their disposal. (And we media folks need to offer those tools, and be able to effectively communicate the relative values of each element of an integrated media buy).

The kind of study I'd really like to see is one that delves deep into the b2b buying process--all the elements that go into the final decision to make a purchase of a particular product or service. ABM's recent Harris study comes close, but isn't quite what I mean. The usual studies that we--and our advertisers--see rank the effectiveness of salespeople, print ads, trade shows, online, search and so on, as if each of these is independent of the others, and that some are better than others. From my own experience, that's just not the way purchase decisions are made. I think we need a study that dissects the b2b purchase process from the buyer's perspective, examining the impact of advertising and other marketing spend on each stage of that process.

Late last year, my little business embarked on a technology upgrade. We needed new computers which could handle serious graphics applications and massive multitasking. The upshot is that we ordered our new computers, monitors and other equipment online. So online must be the place to invest marketing dollars to reach a business like ours, right?

Well, wrong. The brand of computer we chose was heavily influenced by exposure to several years of print ads. The decision was honed by reading print reviews and online reviews. We used search to compare computer brands and capabilities. We checked blogs for feedback on customer service and real-world performance issues. We talked to colleagues and friends for their recommendations. There were many similar computers with the capabilities we were looking for. But we were most comfortable with a brand that had effectively used print advertising to establish its position in the market. Print advertising alone didn't make the decision, of course--the computer maker did well in reviews, customer service and word-of-mouth, as well. Without the computer maker's print ads and its long-term investment in branding, we might have selected another vendor.

The lesson is that many media elements contributed to our final purchase decision, that no single element by itself caused us to buy, and that any missing element could have cost the vendor the sale.

I doubt that my experience is unusual.

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Monday, July 31, 2006

E3: Dead? 

Rich Westerfield picks up on the blogosphere buzz about the potential demise of E3, the gigantic video gaming show. No word on the accuracy of the story--and E3 hasn't responded, which might make a good case study in dealing with the new age of media.

According to the buzz, the big exhibitors aren't coming back to E3, citing the massive costs of exhibiting. I've seen this major exhibitor exodus happen before in several industries, and the results aren't pretty.

UPDATE: The Entertainment Software Association (ESA) confirms the "evolution" of E3 for next year "into a more intimate event focused on targeted, personalized meetings and activities....While there will be opportunities for game demonstrations, E3Expo 2007 will not feature the large trade show environment of previous years."

The cost of booth space is the least of the expenses that trade show exhibitors incur--with the expense of booth construction and shipping, travel and staffing, and outside promotion adding up to far more money, a cut of which the trade show organizer doesn't see. Perhaps ESA's move will result in less expense for its members, and even more revenues for ESA.

In any case, there's an object lesson in here for all trade show companies. Shows can get too big, and too costly, to sustain themselves using the classic business model of big booths, medium booths and small booths. Large companies will always want to show off, to compete with each other for the flashiest and biggest booths--until one day they wake up and wonder what value they get when the spend $1 million to build a small city for three days. And then...poof, the show starts losing the major exhibitors, and goes the way of Comdex, which took some time to die and did so quite publicly, or E3, which looks like it's more willing to change its business approach to accommodate the realities of its exhibitors.

My former client, Richmond Events, is built on a business model where exhibitors are charged per attendee, no booths are allowed, promotional costs are minimized and the event is focused on face-to-face meetings with delegates, all arranged through a proprietary scheduling system. It sounds as if ESA is looking at something similar.

If you do big trade shows, so should you.

UPDATE TWO: Scoble's take: "So, why does anyone need to go to a big conference to hear the news again? Simple: you don’t. It’s not worth doing....I wonder how long CES will survive?"

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Ziff Davis For Sale 

BREAKING NEWS: Ziff Davis Owner Officially Seeks Sale

Folio: reports that Ziff Davis owner Willis Stein & Partners will sell the tech publisher "if it gets the price it wants." The B2B M&A space is now officially overcrowded with sellers, and is starting to look a bit like the residential home market. Can anyone say "M&A Bubble?"

According to my quick guesstimates, Ziff Davis will certainly be looking for an EBITDA multiple based on future results, since a generous 12x multiple of potential 2006 EBITDA wouldn't value the company at much more than $240 million, almost $130 million less than its debt load. (Six month EBITDA in 2006 is $8.4 million, and I could be highly underestimating EBITDA performance over the next six months, but then again, I might not be).

UPDATE: Rafat's take, here: "The play I have heard for a while is that the three main divisions within the firm might be broken up: the games books, which have seen a brutal decline on the print side are the most troubled (the online side with 1Up.com is doing well); then the enterprise division, and the consumer/small business group."

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