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If newspapers are to grow, they’re going to have to leverage their local, regional and national credibility to reach into advertiser segments where they don’t have much of a presence today. This means B2B and SME.

But somewhere it is written that newspapers can’t do B2B. After flirting with job fair services (BrassRing) and vertical pubs, most newspapers have stopped looking beyond their traditional lines of business. The most they’ll consider are new slices of traditional vertical markets (“Entertainment,” “Home Improvement”).

This week we have a new case study, as The Washington Post Co. sold off its Post-Newsweek Tech Group to 1105 Media in Chatsworth, California. The division includes FOSE Government Computer News, Washington Technology, Government Leader and Defense Systems. Also included is FOSE, the annual information technology convention.

For a decade or more, the 80-person division had successfully leveraged its parent’s blue-chip status in the capital to sell ads and booth space to major contractors like Boeing and Lockheed. Until 2005, the division performed strongly, regularly surpassing earnings estimates by as much as 30 percent.

More recently, however, the division suffered high levels of staff turnover and had execution problems. Worse, it started to fall off the Jack Welch standard of being No. 1 or 2 in every marketplace (and Welch and Warren Buffett are the two business thinkers that matter most at The Post Co.).

One longtime Post Co. executive I talked with said the move didn’t surprise him at all. Despite all the noise of being ready for the Internet and Web 2.0, etc., “B2B is risk management, and newspapers don’t understand what that is all about,” he said. “B2B publications are started and closed all the time. They don’t have 100-year traditions. Basically, newspapers don’t do product development.”

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