The news about newspapers isn’t pretty.
American newspaper ad revenues have plummeted by more than US$40 billion since 2000. The Washington Post, for years considered the standard bearer in newspaper journalism, has gone from a position of immense profits that reached US$120 million annually in 1998 to annual losses of US$40 million, as reported recently in Adweek.
A failure to anticipate the digital technology revolution that would sweep the media world is partly to blame. Whatever inroads news media companies have so far been able to make with online ad revenue have not come close to offsetting the freefall of print ad revenue and have been further eroded by the proliferation of specialty media outlets.
However, it’s not too late.
Newspapers need to focus on digital, which represents the only future with possibilities. Once they do, it will become a real priority and receive the attention it needs.
Let’s look at the hard data. Worldwide newspaper ad spending continues to fall, as it has been for more than a decade. Digital ad spend surpassed print for the first time in history years ago.
Now, let’s look at the pie. Paid media spending worldwide will total US$545.23 billion in 2014, up 5.6% from ad spending levels in 2013. By 2018, advertisers will dedicate US$667.65 billion toward paid digital media advertising, fueled by increased investments in digital and mobile.
Additionally, North America continues to reign as the world’s largest traditional, digital, and mobile advertising market as advertisers in the United States allocate more toward online and mobile ad formats than anywhere else.
Hmmm, maybe newspapers should look there?
Here’s more good news for people pondering the newspaper’s future. Programmatic ad spend is predicted to increase by US$10 billion this year and double by 2016, representing an important market correction that publishers now have the opportunity to leverage intelligently.
Furthermore, sports pages still remain the No. 1 source of content for sports fans, and this is an enormous digital opportunity. News media companies simply must focus on a strong mobile video strategy and the interface view-ability of premium video content.
Fighting for quarterly numbers is the wrong approach. Instead, media companies should be running the long game on revenue and developing a strong digital presence. Thankfully publishers such as Tribune Group, Hearst, Gannett, Stephens Media, and Halifax Media Group are now starting to key in on the importance of such a long-term strategy.
The fact that Amazon founder Jeff Bezos purchased the Washington Post last fall for US$250 million is telling for a few important reasons.
First, it says that one of America’s most successful digital entrepreneurs sees a future in newspapers. Second, his decision to take it private and not be beholden to shareholders and a board of directors demanding quarterly profits means he’s free to tinker with the newspaper model and how best to bring it into the digital age.
Some pundits argue that newspapers can bolster revenues by branching out into activities like digital marketing services, sponsoring events and conferences, and in-house custom publishing.
Wrong, wrong, and wrong.
I haven’t met anyone in the business who would rely on a newspaper for these sorts of services. News media companies are facing a critical digital brand issue, but they need to shift focus away from the problem and on to the opportunity.
Did Blockbuster video focus on the right things? Was adding more point-of-sale items like peanuts, pop, and M&M’s the answer to their problems? Definitely not. Ultimately, lease commitments brought Blockbuster down, but you get the idea.
When leaders focus on problems instead of bigger picture future opportunities and possibilities, they go astray. Digital is the future, and news media companies have done a poor job of recognising and adapting to a future that is already as normal to today’s youth as are touch screens and tablets.