Digital advertising does pay, just not for newspapers, yet

Last week, WAN-IFRA said what many of us in digital journalism have known for a while, that we’re losing the battle for attention. They said that digital news audiences lack the same “intensity” of print audiences. Put simply, digital audiences are less loyal and spend less time with each digital news source. WAN-IFRA CEO Christoph Riess has put the problem this way:

We are not losing readers, we are losing readership. Our industry challenge is engagement. Because someone is a subscriber does not make him a loyalist.

Several people in the industry have been trying to raise the alarm for years now. Two years ago, Ken Doctor pointed out that audiences were spending 7 hours a month on Facebook versus 20 minutes a month on the New York Times or 8-12 minutes on the average US newspaper site. US digital journalism pioneer Steve Yelvington has been talking about this for years, speaking about the problem with audience frequency. As Steve said earlier this year:

Forget all the newspaper industry puffery about how we’re reaching more people than ever. Frequency and time spent are the important metrics.

And the reality is dismal.

From a business standpoint, this has meant that while digital advertising spend has increased dramatically, news organisations’ share of that digital revenue still remains piteously low. As WAN-IFRA noted:

Overall digital advertising market rose from US$ 42 billion to US$76 billion from 2007 to 2011. Only 2.2 per cent of total newspaper advertising revenues in 2011 came from digital platforms.

What you will continue to hear over and over and over, from the likes of former Guardian editor Peter Preston, is that print still pays the bills. They will tell you that you can’t make money online. Preston cherry picks figures from the recent Journal Register bankruptcy filing in the US, pointing to that fact that print revenue is down 19% but still represents 50% of the group’s revenue. However, he conveniently leaves out that digital revenue at the news group is up 235% from 2009 to 2011. Yes, they probably started from a low base, but it is pretty impressive growth. Many news groups in the US have seen their digital revenue growth slow or stall this year, and at least the Journal Register team can point to 32.5% growth this year alone.   

The reality is that you can make money online but that newspapers are not competing effectively for digital advertising. As WAN-IFRA noted, “Search advertising accounts for 58 per cent of all digital advertising and 13 per cent of all advertising expenditure”. US news analyst Alan Mutter noted in April:

The share of the U.S. digital advertising market garnered by newspapers shrank to the lowest level in history in 2011, according to newly published data.

With the growth of digital formats like highly targeted search, mobile and social advertising vastly outpacing the ability of publishers to develop competitive new products, newspapers sold only 10.3% of the $31.7 billion in digital advertising purchased in 2011.

When the Newspaper Association of America first started counting online sales in 2003, newspaper websites carried 16.7% of all the digital advertising in the United States.

There is money to be made online, but newspapers aren’t the ones making it. That’s the problem and, unless newspapers focus on creating not just large audiences but loyal audiences, that problem won’t be solved. Newspapers also need to build up knowledge about those audiences to better serve them journalistically and to provide better targeted advertising.  Those are the challenges we need to meet, and we need to ignore the voices in journalism that say we can’t make money with digital. They have ruled the debate for far too long and have delayed us from meeting the real challenges of digital. 

5 thoughts on “Digital advertising does pay, just not for newspapers, yet

  1. This is the biggest challenge facing consumer publishers funded by ads. On the print / online audience problem wait until the new NRS comes out on Wednesday, which will show hugely reduced audience numbers compared to other online metrics.

    Two other really big elephants stalking the room:

    1. Young people don’t really read print regularly – people aged 24 and under spend 4% of their weekly media consumption on print (that was Ofcom 2011 so will be lower now). Follow Moore’s Law on tablet computing and then ask what sort of media consumption habits today’s 16-year-olds will have in 2020.

    2. Online advertising is based on effectiveness – you are right that it’s working fine for some, and it’s no coincidence that the top five display advertisers are Google, Facebook, Aol, MSoft and Yahoo. Digital display is going to be worth many £billions within the next 20 years (£1 billion in UK, IAB 2012). Display is about tracking people and intent, not *buying* space on a specified ad slot as with a newspaper. TO an extent it doesn’t matter where an ad is served as long as the users are relevant to the creative. And that’s the really scary thing for publisher who still pursue a walled garden, portal-style approach to web publishing.

  2. Great points Patrick, and the print industry has already spent at least a decade dithering on facing the changes and challenge that digital advertising is a different beast from what they are used to. The number the really struck me from WAN-IFRA was that while digital has grown to $76 bn in the last five years, newspaper advertising has dropped like a rock from $128 bn to $76 bn. Now, 72% of the drop comes from North America, but what was fascinating was that the emerging market growth in newspapers is starting to stall too. India and China are driving most of the growth in Asia. Strip those two markets out of the Asian numbers, and things start to look a lot less positive.

    Schibsted is doing some stunningly bright things in terms of ad services, as per normal in terms of Schibsted doing smart things with digital. (Watch Knowledge Bridge for a piece on that.)

    The biggest question that I am trying to figure out now for my work is whether in markets outside of North America and western Europe whether news organisations can not repeat the mistake of ceding digital advertising to search and social. In Russia, I fear the question is no, but in other markets there might still be a chance.

    The other elephant in the room. One of my new colleagues said, if you’re in California (where he’s based), and you’re a star ad sales person, are you going to stick it out with a newspaper or are you going to go to Google with the possibility of a six-figure commission? No brainer unless you really, really believe in the mission of journalism.

    Regardless, newspapers have to get serious now about competing for digital ad revenue, or all the digital first editorial strategies in the world aren’t going to save anything but a skeleton crew.

  3. I believe digital advertising will continue to enjoy popularity due to –
    1. facility of placing ads in lower budgets
    2. its faster reach
    3. its interactive nature

    However, seeking audience attention is a big challenge. Online readers have lower attention span and only a great copy can appeal them and motivate them to go through the entire content.

    On the other hand, I believe there is still a loyal segment that follows print media.

    Thanks Kevin, a good read.

  4. Excellent article and comments. The data we have in Canada shows exactly what you are talking about.

    NADbank collects readership data for print and digital content for newspapers, and members are fortunate to be able to look at single source readership across platforms. The digital data is not as detailed as is available through analytics or comScore and Nielsen but users can profile readers, see how much time they spend and their preferences with regard to print and digital. Most importantly, they can see how readers migrate between print and digital content.

    For example, we know that, today, 60% of all newspaper readers read ONLY printed editions and only 8% read only at websites. There is a great deal of migration across platforms and readers of digital content are more frequent readers of printed editions than adults generally.

    Readers still love their printed newspapers and spent twice as long every week reading printed newspapers than digital content.

    The media landscape is changing and younger adults are more likely to read at websites than older adults but each source plays a role in the the newspaper reading experience. Newspapers can capitalise on how to develop and sell different content by using the research tools available to understand their readers.

  5. Wouldn’t it be great if we were having this conversation in a newspaper chatroom?

    Digital is just not the computer, it’s the entire world. We are loosing the youth not because we are putting out a bad product, we’re putting out something they don’t want because thinking is hard. Reading the news makes kids focus.
    The seven hours they put in on facebook is pure infosation. They get information from whom they want and chat/text with whom they want. If they get bored, they move on….Watching my sons, they spend 10-15 seconds on each topic that interests them and go. To read and comprehend a news article takes longer….
    My kids also read the paper…but only those things which interest them. I think that’s okay…

Comments are closed.