Newspaper Ad Sales Go from Terrible to Terrifying

By Robin Wauters

Nothing like a telling graphic to illustrate what most have been expecting, albeit probably not in this order of magnitude. Veteran media exec Alan Mutter discovered some horrid statistics about the state of ad sales for American newspapers on trade organization NAA’s website, and published his view on the Q1 2009 numbers on his blog. They don’t look pretty.

The stats show that total newspaper ad sales dropped by an unprecedented 28.28% in the first quarter of 2009, a deep plunge that represents a loss of more than $2.6 billion in ad revenue compared year-over-year. Compared to 3 years ago - 2006 was a pretty good year for American newspapers - we’re looking at a drop of more than $4.5 billion in ad sales in just three years if you only take into account the first quarter.

The sharp decline is caused by the lousy state of both digital and dead tree ad sales: the stats posted on the Newspaper Association of America website show that print sales fell by 29.7% in the first three months of this year (to $5.9 billion), while online sales dropped a record 13.4% (to $696.3 million).

Classified advertising is clearly still taking major hits. Compared to the first quarter of last year, revenue from all types of classified ads fell 42,32% to less than $1.5 billion. Considering the fact that total classifieds ad sales topped $4 billion back in 2001 and were still at almost $3.4 billion in the first quarter of 2007, that has got to hurt. The biggest losers in classifieds: Recruitment (-67.39%), Real Estate (-45.55%) and Automotive (-43.42%).

Annual ad sales for American newspapers came in at a grand total of nearly $49.5 billion in 2005 and dropped to about $37.8 billion in 2008. If the decline rate keeps accelerating the way these first quarter results suggest, we could be looking at somewhere in between $26 billion and $30 billion in total ad sales revenue for this year.

And yet somehow, I fear newspapers haven’t even seen the bottom of the barrel yet.

Original post

Comments

[PastTense:]

I think you need to separate the effects of the bad economy from the effects of a switch in advertising to other media (particularly the internet). If the economy recovers then the advertising loss due to bad economy will probably recover, while the switching to other media probably won't.

Look at the 3 biggest loses you mentioned: Recruitment (-67.39%), Real Estate (-45.55%) and Automotive (-43.42%). These are heavily due to the economy as these three have been heavily mentioned: job losses, housing declines, auto sales declines.

Jun 02 12:42 PM

[Bobby Rifle:]

PastTense hit it dead on.

There is secular change going on, yes, but the bulk of newspaper troubles now are due to borrowing a ton of money right before the economy fell off a cliff.

Take a look at Gatehouse Media for example: www.boston.com/busines.../

Jun 02 04:40 PM

[FullMetalPh...:]

Without a doubt one part is the economy hitting the wall at warp speed. I do thing there are other factors causing this rapid decline. Consumer confidence, by this I mean the advertisers. Almost everyone on the street knows how bad of shape newspapers are. It is a lot like GM and Chrysler. Do you want to invest in ad campaign when the paper may be gone tomorrow?
One of the interesting side effects of the web was it showed a dirty little secret in newspaper ads effectiveness. The web ads of newspapers were not that effective on their sites. So the question is how effective are they in the paper. The realization was they are not that effective in print either.

Jun 07 04:19 AM