Newspaper Ad Revenues Gaining Downhill Momentum; Online Struggling Too 7 comments
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Can it get any worse for the newspaper industry? The steep decline in print advertising just keeps getting steeper and, for the first time, even online ad sales have gone down.
Total print ads in the U.S. were down 16 percent in the second quarter to $8.8 billion. That makes nine consecutive quarters in which “print revenues have declined at an almost continuously accelerating rate,” notes Alan Mutter at Reflections of a Newsosaur. He put together the chart above, which starkly illustrates the newspaper industry’s death dive.
The newspaper industry took in $1.7 billion less in print ads during the second quarter than the year before For the first half of the year, the industry is down $3.1 billion. At this rate, there won’t be an industry left by the end of next year. Of course, revenues have to stabilize at a lower level before that happens. Don’t they? Rght now, we’re at 1995 revenue levels.
Don’t look to online ad sales to save the industry. Online ads came to only $777 million in the second quarter, which was down 2.4 percent from the year before. That’s marks the first decline ever in digital revenues. The practice if bundling print and online ad sales isn’t helping in this case, either. Advertisers trained to buy bundled ads are more likely to drop the entire bundle when making budget cuts.
The advertising recession is in full swing, and no segment is safe any longer.
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This article has 7 comments:
the only spot left is the web and the recession IS the impact there.
Newspaper revenues have been self inflicted wounds. Family owned newspapers in smaller markets are in much better shape than newspapers in markets owned by corporations or large groups. Many of the problems can be repaired, or at least the declines arrested.
The main issues can be laid at the feet of top executives and publishers. Therefore, the problems can be corrected by examining them, and probably removing most of them.
The problem....lack of long term vision, and the wrong skill set to correct them. Corporate newspapers have valued only the immediate months' Operating Profit, and designed compensation programs accordingly. Corporate directors receive bonus payments based on either annual or divisional factors. This system has focused on the very short term performance financially.
Virtually no focus is placed on the fundamentals of the business. Adding to this, high level managers at the local and corporate level have changed in professional fields of expertise. Over the past 10 years, most local publishers and higher corporate types are now financial managers- accountants- not Editors, Advertising, or Circulation types. Think of that for a moment, and you can begin to see a large part of the long term problem.
Newspapers have traditionally attracted people interested in reading news that is important to them. Advertising was strong, because local advertisers could rely on both strong readership of their ads, and affordable ad rates that reflected return on investment. Both have been seriously eroded, and may be too late to correct.
Readership has been eroded, because senior management directed focus on short term bonus' for themselves. Examples...the refusal to invest resources and time for local Circulation managers to build home delivery services of newspapers. Instead, a practice of artificially "puffing" circulation is the focus. Almost all newspapers now have NIE departments (Newspaper In Education). Sounds good on the surface, however, the main reason the departments exist, and the main responsibility, is getting large bulk sales to schools paid for by businesses. That is then called "paid circulation" and reported as such to the ABC (Audit Bureau of Circulation). Another practice is to "wrap" a newspaper with a "jacket" of newsprint with ads on it. That "jacket" is paid for by advertisers, then dropped at hotels etc, perhaps at major league sporting events or concerts. Then, that entire pressrun is counted as "paid" as well. Using a newspaper to help reading programs is not really the circulation Advertisers are counting on. Nor is a free newspaper at the hotel desk. Home delivery is the most important, with paid single copy sales next.
The problem? Real newspaper circulation is far less than stated. The consequence is that ads don't reach real readers, and ads don't work as well as in the past. This "puffed" circulation is the basis that ad rates are sold to advertisers.
Why does this matter? Many publishers receive bonus based on circulation increases, not the type of circulation. Ad rates have also faced similar issues. Circulation goes down, ad rates go up, and results for those advertisers go down as well. In the online area, Publishers refuse to re think the model. Classified ad rates were raised artificially and forced online, with no infra structure to give that online ad a chance to work. It was done simply to add revenue. Results for the customer were not considered. That inflated price gave rise to Craigslist, Monster, and many others that have eroded Classified ads.
Display advertising is no different. Less real circulation, yet higher rate. What other industry does that? Give you less, but charge you more. Very poor execution of the online revenue model. Many publishers try to count online pageviews as extra circuation. Marginally true, but the print advertiser gets NO benefit of it, and the online only advertiser gets no benefit from the print. So, not completely accurate to "spin" online pageviews as circulation to advertisers
In the newsroom, the head counts have been drastically slashed. The only reason anyone even buys a newspaper is to read the news. The problem is not so much the cuts, as WHO has been cut, or quit. The more tenured and experienced the newsperson, the more likely they are to be be gone from today's newsroom.
At some point, there will be an executive in one of the companies that will state the obvious, and make some bold decisions. If the CEO does not fire them immediately, the changes needed will be done, and the newspaper industry will recover in some form. Until then, the death spiral will continue. The market will crush many of them, and only a few will survive. Local family owned newspapers have a better chance of survival, because they tend to make better long term decisions.
Think of it this way...an NFL team cuts it's best quarterback, running backs, line, and defense, but KEEPS the rookies and third stringers! Then expects the team to win the Superbowl, and expects you to pay the full ticket price to watch em! Then, the executive is surprised by an empty stadium!!
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