A new study from the Pew Research Center’s Project for Excellence in Journalism (PEJ) finds some bright spots in the newspaper industry. A few—but just a few—are achieving success with their cross-media revenue models.
“In general, the shift to replace losses in print ad revenue with new digital revenue is taking longer and proving more difficult than executives want,” wrote Pew authors Tom Rosenstiel and Mark Jurkowitz. They described the rate of contraction among newspapers as “alarming,” but chalk it up in part to “cultural inertia.” Most newspapers have put no significant effort into monetizing digital revenue categories.
PEJ surveyed 38 newspapers from six publishers, charting digital revenue and sales efforts. PEJ ensured that it covered papers of various sizes; because the majority of papers in the U.S. are small, PEJ included 22 papers with circulations under 25,000; seven with circulations between 25,000 and 50,000; and nine of over 50,000.
Of those 38 papers, seven reported declines in digital revenue. Among the laggards, one paper saw digital ad revenue decline by 37%, and another by 25%.
But one saw digital ad revenue gains of 63%, and print revenues by 8% over one year, while a second paper gained 50% in digital advertising. One of the top gainers chalked its success up to “smart ads” that targeted customers by online behavior—a practice that was rare among the remaining 37 papers. A second paper build a multi-million dollar advertising and marketing consulting practice. It sold not just advertisements, but ad expertise.
PEJ reported that the newspaper industry as “mature and monopolistic,” adjusting poorly to digital models. Digital is newspapers’ highest area of growth, but still provides nominal revenues. That is due in part to a lack of bandwidth in creating digital strategies. “We have all these [new] products we are working on that we believe are going to deliver results that are part of our sustainability," one executive told PEJ, "But we need to eat today."
So, companies that are struggling find themselves risk averse. "There might be a 90% chance you'll accelerate the decline if you gamble and a 10% chance you might find the new model," one respondent said. "No one is willing to take that chance."
Among other key findings:
- The papers providing detailed data took in roughly $11 in print revenue for every $1 they attracted online in the last full year for which they had data. That nowhere near made up for the 9% decline in print ads revenue.
- Only 40% of the papers say targeted advertising is a major part of their sales effort, despite the fact that targeted digital advertising is expected to dominate local digital revenue by 2014.
- The majority of papers focus their digital sales efforts on conventional display and digital classified, which are the largest categories but low-growth categories.
- Daily Deals accounted for 5% of digital ad revenue in 2011.
- Advertising on mobile devices accounted for only 1% of the digital revenue in 2011. Executives have faith in this meteorically-growing medium, but have yet to take advantage.
- Almost half (44%) are trying to develop nontraditional revenue from, for example, events; consulting; and selling new business products, but revenues are typically under $10,000 per quarter.
- Among the papers that provided data, the number of print-focused sales representatives outnumber digital-focused reps by about 3-1. This reflects the fact that print ad revenue, which is shrinking, still makes up the bulk of the overall revenue (on average 92% in our study's sample).
So as PEJ describes, newspaper execs are “still caught between the gravitational pull of the legacy tradition and the need to chart a faster digital course.”
One consideration: if digital advertising is so nominal a revenue source, advertisers may find they can negotiate for large contracts at medium-sized campaign prices. Newspapers are likely to respond positively to “walk-in business,” and willing to negotiate for the immediate cash influx.
Small and medium businesses (SMBs) are stepping up their digital ad buys, reports Media Post. But they’re largely cutting out the “middle man,” with self-serve advertising.
Over the next 12 months, SMBs will allocate 26% of their budgets to digital and online media. That according to data from BIA/Kelsey, which conducts its ongoing Local Commerce Monitor study of SMB advertising and media usage.
SMBs are particularly bullish on self-serve advertising (e.g., video, Facebook, YouTube). According to BIA/Kelsey data:
- 49% of SMBs have purchased online advertising directly from a Web site, with or without live operator assistance.
- 52% use social media to promote their businesses
- 22% plan to have a video on YouTube in the next 12 months
In addition to digital advertising, SMBs over the next five years will shift their spends to performance-based platforms (e.g., pay-per-click) and customer-retention business solutions over the next five years.
In 2011, BIA/Kelsey forecasted that SMBs will allocate just 30% of marketing budgets to traditional advertising by 2015, way down from the 52% they spent in 2010 on radio, local TV and print ads. That will leave 70% for mobile, social, online directories, digital couponing and so forth. With projected SMB spending of $40.2 billion in 2015, that digital spend will be $28.14 billion.
Ad buyers and planners can expect more precise circulation figures, beginning in 2012. Folio reports that media auditor BPA Worldwide has approved several new and amended rules, some aimed at better segmenting print and digital readerships. All were member-requested changes.
Old rules assigned three categories of readership, “print,” “digital” and “both,” for a total of 100%; someone who read “both” was not counted as a print or digital reader. New measures will roll “both” readers into the “print” and “digital” categories, for higher figures.
The BPA board approved “downloaded apps” by month as a measure in a BPA Brand Report, versus a standard BPA report; but the measure must include verbiage “disclosing the limitations of the figures,” says Folio. App copies cannot be reported as qualified circulation, as are downloaded issues, or email deliveries.
Also true, subscriber access to digital copies will be used as a measure of renewals in some cases, such as when 1) a weekly is accessed nine times in six months; 2) a monthly is been accessed twice in six months; and 3) a quarterly publication is accessed every six months.
MediaPost has found some “eyeopeners” regarding online advertising, after a survey of .5 million unique domains. Among their findings:
- About 10% of domains selling ad impressions in scale-buying environments (networks, SSPs and exchanges) are non-English language sites. There is always chaff among the wheat in scale buying (e.g., porn sites, sites with hate speech), but non-English sites topped that chaff by percentage.
- About 21% of the sites MediaPost surveyed in late 2010 no longer exist, but, are still on whitelists; media buyers are paying for exposure on non-existent venues.
- “There’s a serious quality issue out there, folks,” MediaPost’s Andrew Lerner observed, which is a challenge to brands and marketers. About 58% available in real-time bidding (RTB) and large networks are what Lerner called “sub-standard environments for advertisers,” which use sub-standard publishing or editorial principles. Thus, nearly six of 10 domains are ones an ad buyer might actually choose to avoid.
Despite those findings, MediaPost observes that the higher-quality sites are more likely to deliver click-throughs, CPA and brand metrics. And while MediaPost did not reveal the names of any of the hate speech or substandard properties, a quick check of several “White Pride” sites (including kkk.com) revealed no advertisements.
IPG's Magna predicts that global media spending will hit $427 billion in 2012, up 4.7 percent from estimated 2011 mediaspend. That is a 0.5 percent decrease from the firm's previous 2012 estimates.
US media forecasts are slightly less rosy, at 3.7 percent growth to $153 billion. Interestingly, China may pop up to the second largest ad market in 2012, partly due to its own organic growth, and partly due to unexpected adspend declines in tsunami-hit Japan.
Two other ad giants published 2012 forecasts that were equally or slightly more optimistic than Magna's newest prediction. Zenith Optimedia predicts 4.7 percent growth. GroupM predicts that the Olympics will add still more momentum, driving world spend to $522 billion, a 6.4 percent increase over 2011.
About this chart: Source: ZenithOptimedia, "Global Ad Expenditure to Return to Pre-recession Peak Level," July 2011. ZenithOptimedia is a global media services agencies with 218 offices in 72 countries. ZenithOptimedia is part of Publicis Groupe the world’s third largest communications group, the world’s second largest media counsel and buying group, and a global leader in digital and healthcare communications. Advertising Expenditure Forecasts are published quarterly.
Radio listeners, aged 18 and older are most often reading People, Time and Sports Illustrated, according to analysis by Radio Business Report. RBR's "Magazine Scene: What Radio Consumers are Reading" compiles data from BIGresearch to find which magazine titles, including both printed and digital edition, most interested radio listeners, and then separated these by music genre.
The listings provide a good mechanism for radio stations to learn about their audience and remain in tune with its biggest fans. The analysis lists the radio program type, and any magazine that gets a 1.5% share from that audience, and with the sheer volume of different magazines out there, RBR points out that most percentages are fairly small.
About this chart: Source: Kantar Media. Kantar Media analyzes print, radio, TV, internet, cinema, mobile, social media, and outdoor worldwide, and tracks more than 3 million brands.
About this chart: Source: The Nielsen Company, June 2011. "State of the Media: Trends in Advertising Spend and Effectiveness."
About this chart: Source: Kantar Media. Kantar Media analyzes print, radio, TV, internet, cinema, mobile, social media, and outdoor worldwide, and tracks more than 3 million brands. The ten largest magazine advertisers invested a total of $834.5 million in the medium, up 3.4 percent. They accounted for a 17.5 percent share of all magazine ad dollars. CPG marketers claimed five of the ten spots on this list.