Study: Newspapers losing $7 in print ad revenue for every $1 earned online
by Andrew Moran (Guest contributor/Digital Journalist)
According to a new study by the Pew Research Center’s Project for Excellence in Journalism, newspapers in the United States lose $7 in print revenue for every dollar earned in digital revenue. Will a new business model appear?
Many newspapers in the United States and Canada are starting to adapt to the digital age – some may be faster than others. Some publications have attempted the paywall structure, while others publish their news online for free. But are these business models working?
By analyzing financial data of 38 American newspapers and conducting interviews with senior executives from more than a dozen companies that own 330 dailies with circulations between 25,000 and 100,000, Pew Research Center’s Project for Excellence in Journalism has published a new study that finds some very interesting figures for the newspaper industry.
The most important statistic to report on is the fact that newspapers lose $7 in print advertising for every $1 earned in digital revenue. The research found that digital advertising revenues rose on average 19 percent, but suffered from nine percent losses in print advertising.
“Only 40 percent of the papers that provided data say targeted advertising is a major part of their sales effort,” the report stated. “Even though many newspapers are not focusing on it, smart or targeted digital advertising—in which ads are customized based on consumer online behavior—is expected to dominate local digital revenue by 2014.”
Newspaper executives admitted in their interviews with the institute that cultural difficulties are making it harder to transition from print to digital. One challenge that newspapers face is that their employees are too keen on their “old ways.”
Another trouble newspapers face is that even though they may be attempting to shift towards digital revenue, they are having a tough time trying to convince digital salespersons to the newspaper sector.
Upon further analysis, Pew found that the daily deals offerings (e.g. Groupon, DealChicken, etc.) accounts for only five percent of digital revenue. Meanwhile, mobile device advertising only tallies one percent in digital revenue.
The future seems desolate, according to some of the interviewed executives, who maintain a morose outlook. They believe that many newspapers will shrink, shut down and only provide print editions that would be delivered a few times per week.
“The study suggests that the future of newspapers, rather than being determined entirely by sweeping external trends, can be substantially affected by company culture and management, even at papers of quite different sizes,” said Tom Rosenstiel, PEJ director, in a press release.
Canada’s Media
Although the study primarily focused on U.S. publications, Canadian news outlets face the same issues.It was announced that Torstar Corp., owners of the Toronto Star, Workopolis, TheStar.com and others, reported better-than-expected profits in the fourth quarter. Although executives say advertisers are remaining cautious, digital revenues were up 22.8 percent year over year – digital revenue maintains 10.6 percent of its total revenues.
More than one-third of PostMedia’s revenue comes from online operations. It does not, however, publish its financial data.
This article was previously published in Digital Journal [Link]
How media companies are harnessing the mobile space
By David Silverberg
In a panel discussion at NextMedia Toronto 2010, prominent decision-makers at some of Canada’s leading digital companies spoke on the various benefits of bringing their content to the mobile market.
Toronto’s Design Exchange was the site for a discussion on the various platforms available to media companies who want to bring their content to tech-savvy customers. Moderating the panel was Sara Diamond, president of the Ontario College of Art & Design. The speakers included: Candice Faktor, Vice President, Strategy and New Ventures, at Torstar Digital; Angus Frame, Vice President, Digital Media at The Globe and Mail; Marina Glogovac, Chief Marketing Officer, for Kobo eReader; and Matthieu Houle, Director, Mobile & Platforms for Yellow Pages Group.
The session began with Glogovac citing Verizon as a business role model, saying she admired how it transformed from “a sleepy carrier into a 3G powerhouse, unafraid to cannibalize its own business.” Torstar Digital’s Faktor then pointed out how businesses should realize there isn’t one centralized approach to mobile. “Each brand and business should look at the market to see how it’ll define their business,” she said.
Faktor hinted Torstar will soon be offering daily deals for mobile users, a connection that makes sense considering Torstar’s acquisition of group-buying company WagJag. A mobile push requires a multi-pronged approach, she said. “Torstar’s mobile experience is a collaborative effort between the content management system, the content producers and the ventures group making everything work. There are many challenges when you have a big organization such as ours.”
The Globe & Mail‘s Angus Frame said the past two years were “intense with lots of experimentation in the digital space.” The Globe and Mail views mobile as a “catchpoint” for its customers: users accessed their mobile apps when print readers usually put the paper down, such as in the evening and on the way to work. “It’s not a black and white transition, to engage with customers on different platforms,” Frame noted. He added its apps, such as the iPad app, also attracted traditional national advertisers as well as new Globe readers.
Houle stressed Yellow Pages Group is focused on local search, and they view the smartphone as the ultimate tool for search. “We don’t view phones as a major change to our business model but an extension and acceleration.”
At Kobo, an eReader company, Glogovac found male customers use their apps differently than women: men tend to graze, looking for how-to books. Women prefer longer-form content, such as novels. She also noticed baby boomers are still willing to pay for content, while younger users are more accepting of advertising but not keen on paying for content.
Houle’s free app, Urbanizer, was introduced to the NextMedia crowd: he said the app allows users to search for services nearby based on “mood”, such as looking for “trendy restaurants” or “intimate coffee shops.” He said Urbanizer “satisfies a customer’s basic need to search socially for bars and restaurants that might fit their needs.”
The panel was then asked about the skill sets their companies look for in new hires. Frame said The Globe and Mail has overhauled its “internal communications skills” and has focused on analyzing metrics to help the team better understand its digital potential. “Also, design is no longer a flat experience; we are designing so people can interact with our content and seamlessly move across different platforms.”
The single biggest change in this area is how publishers are talking to customers directly, Glogovac said. She said, as a marketer, she prefers avoiding traditional PR routes and instead would hire journalists and writers “who know how to talk to people directly.”
Houle ended the discussion by pointing out companies should be in control of the conversation between themselves and customers. That idea led Frame to mention how Facebook is both competition and complementary to The Globe and Mail‘s interests.
Faktor said media firms should find out where users gather. “Consumers are promiscuous and it is up to us to be there in different media platforms.”