Inside the newspaper industry, the notion of the Web as a Hail Mary pass has never been fully embraced. But last week’s earning reports from the major newspaper chains is a bracing cup of cold water.
An article in today’s WSJ details that the newspapers’ Web efforts simply aren’t enough to save the day, given the industry’s “extenuating circumstances” (rapid circulation losses, fragmented audience share, etc.) The significantly lower revenues for Web advertising also play a part, as does some simple math. It is easy to rev 40 percent to 80 percent a year when you are starting from ground zero. Now that the Web makes up 4 percent to 8 percent of newspaper revenues, growth percentages are likely to slow to 20 percent to 40 percent.
The WSJ article blames the rise of competing Web outlets for some of the industry’s ills. “Rival media such as TV stations and magazines have beefed up their presence, adding to threats posed by Web giants such as Google and Yahoo and popular sites such as CNN.com. Even the social-networking site MySpace has added a news feature and is boosting its ad-sales efforts,” proclaims the article.
The dependence on upsells for classifieds also hurts, given that classifieds themselves have rapidly eroded. Autos alone are down 20 percent. But the article’s big conclusion is that “the newspapers strongest ad formats banner ads, pop-ups and listings are losing ground to formats such as search marketing. Ad buyers say automotive, entertainment, financial-services and travel companies all major newspaper advertisers in print and online are aggressively shifting dollars into search marketing.”
I don’t know that I agree with all this. Other news outlets and the search firms haven’t actually grabbed newspapers’ core local advertisers at this point, although readers are all over the place. In fact, no one has successfully reached the local advertisers.
For newspapers, there are no easy answers, and their best days may be behind them. The department store advertising, for instance, is probably never coming back. But I wouldn’t mind owning one or more titles. Newspapers still have the best positions for local advertising within their communities and can serve as local information hubs by verticalizing their content (and sales channels), reaching into new markets and selling across the board. Maybe.