Tuesday, September 18, 2007

Advertising in print newspapers on the decline

As more people go online, and news is available for free for multiple sources, will it be a matter of time before print newspapers go the way of the dinosaur ? Will newer sources of news, including blogs, replace the online editions of traditional newspapers ?

Advertisers seem to think so.

Data available from the Newspaper Association of America (NAA) in Arlington, Virginia suggests that advertising in print is on the decline. Spending for print ads in newspapers in the second quarter of this year totaled US$10.5 billion, down 10.2 percent from the same period a year earlier, according to the NAA.

This data seems to bear out the forecasts by many pundits that as print gets less popular, advertising dollars will move away from print editions. But it hardly provides conclusive evidence that print newspapers are dying. It could be just that some advertising is moving to other newer opportunities, including online. It may be just the same as when TV advertising started cutting into newspaper advertising decades ago.

However whatever advertising is moving away from print editions of newspapers is not necessarily going to their online sites.

Advertising expenditures for newspaper Web sites increased by 19.3 percent to US$796 million in the second quarter versus the same period a year ago, according to preliminary estimates from the NAA.

This sounds great in isolation. But the newspapers that saw a decline of about US$1 billion in advertising in the second quarter, witnessed an increase of less than $200 million in advertising from its online properties.

As a result, total advertising expenditures at newspaper companies were $11.3 billion for the second quarter of 2007, an 8.6 percent decrease from the same period a year earlier, according to NAA.

The NAA puts down the reduced advertising revenue for newspapers to cyclical swings in the U.S. economy, as well as structural changes in the businesses of major advertisers, which continue to affect print advertising revenue.

NAA is a nonprofit organization representing the newspaper industry and more than 2,000 newspapers in the U.S. and Canada.

Online editions of established newspapers appear to have established their popularity, perhaps because of their strong brands as print newspapers. More than 59 million people (37.3 percent of all active Internet users) visited newspaper web sites on average during the second quarter of 2007, a record number that represents a 7.7 percent increase over the same period a year ago, according to custom analysis provided by Nielsen//NetRatings for the NAA.

As print newspaper move online, they are going to need to learn a new bag of tricks, including embedding video, and offering podcasts from their sites. These technologies would require a totally different set of skills than are what are currently found in traditional print newspapers. All of a sudden reporters, whose faces we rarely saw, and whose voices were never heard, are going to have to metamorphose into sleekly dressed and groomed TV reporters.

Already as print advertising looks shaky going forward, and reader’s preferences shift, a number of publications, including IDG’s Infoworld, have moved online.

A caveat about the NAA data. It is primarily about newspapers in North America. Print newspapers are far from declining in a number of markets, including India, where there has been a sudden rush of new print publications. Established publishing companies, and start-ups have also set up online news sites.

In India, for example, the current transformation appears to be less about the transition by users from print to online reading, and more about more readers getting into the mainstream. As long as Internet usage is limited to urban elites, and is cheaper than buying a print publication, the outlook is very positive for print, analysts say.

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