About a decade ago, newspaper agencies began to lose sight of what advertisers were asking for, and at the same time they failed to monetize valuable online content, focusing almost wholly on one of the worst forms of online advertising: banner ads. They also ceded revenue from areas like classifieds and job postings to Internet competitors, and missed new online opportunities in areas like coupons, business directories, video infomercials, and email direct marketing.
It’s little wonder then that newspaper revenues are shrinking. The question persists, how is it that Silicon Valley 20-somethings found it so easy to eat the newspaper industry’s lunch? Why was the industry so slow to adapt?
This blog is about forward-thinking solutions, so I am not eager to dwell on what has already happened. The lunch has been eaten; it’s time to get a new one. Hindsight, as Malcolm Gladwell suggests in his essay “Connecting the Dots,” is subject to “’creeping determinism’–the sense that grows on us, in retrospect, that what has happened was actually inevitable.” (Although, dear reader, I do look forward to your comments in this regard.)
Let’s just say for now that newspapers were neither staffed nor prepared to embrace digital innovation. But that time has passed, and digital opportunity is readily available, and comparatively inexpensive, to whose who reach for it.
It’s instructive to look at the habits of advertisers, since advertising represents 50% to 75% of a newspaper’s overall revenue. While newspaper sales departments are still trying to sell print ads, local business advertisers have moved on to new and better ways to connect with their customers: Facebook business pages, YouTube branded channels, mobile business apps, email campaigns, online coupons, and much more, almost all of it online.
Advertisers are spending money; record amounts of it. In fact, online ad spending has finally surpassed print ad spending. Just not at the newspaper. This has to change. It’s not an inevitable trend, it’s a blind spot that must be addressed.
The 2012 projections are now in, following a substantial rise in 2011: “US online ad spending will post growth well above 20% again this year to reach nearly $40 billion, eMarketer estimates, as the internet continues to prove its worth to advertisers in a tough economic climate.”
And we’re not just speaking about big business and national chains: “Small businesses are clearly on board with online marketing overall, but interest in mobile is up sharply, according to Ad-ology Research. More than 20 percent of small business decision-makers say they plan to commit more resources to mobile marketing in 2012, up from the 12 percent who said the same last year.
Compared to previous years of the annual Small Business Marketing Forecast, the increased interest in mobile is striking: In 2009, just two percent of small businesses surveyed planned increased resources for mobile. Online video should also see increased usage with nearly a quarter saying they plan increased resources for online video, up from 18.4 percent in 2011.”
In response to the clear demand for online advertising solutions, newspapers are offering little more than banner ads. According to one of my favorite and oft-quoted Pew Research reports: “Display and banner online advertising, for all that it has failed to grow, is still the No. 1 area of effort and the one that news executives pin their greatest hopes on. But second is revenue from products outside of news.”
Those vague-sounding “products outside of news” are the key. Newspapers need to offer more to their advertiser base, or else they will continue to lose that base.
Clearly, newspapers are not in alignment with where their business advertisers want to go. Getting that alignment right, which also means understanding how to deliver customers using online advertising, is going to be critical to newspaper survival.