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. 

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