Article


Newsmedia executives cautious about 2012

by Ed Strapagiel        

2012 study finds North American newspapers pessimistic about ad revenues, looking to digital for growth.


Click the image to view a larger versionNewspapers — and many other industries — expected at least some economic recovery in 2011. This simply did not happen. Perhaps as a result, newspaper executives and managers are adopting a cautious mindset going into 2012. There is nevertheless widespread optimism in digital as a source of revenue going forward, and many newspapers are putting plans in place to improve both Web site and mobile advertising products.
 
KubasPrimedia surveyed more than 400 daily newspaper executives and managers in North America on their expectations for advertising revenues and what strategic initiatives they intend to undertake in 2012.
 
There are some differences in responses by country and newspaper size:
  • Smaller circulation U.S. newspapers (under 25,000) are less pessimistic, calling for less severe declines in the weakest areas like national display and real estate, and perhaps even a small gain in retail display.
     
  • Mid-sized U.S. newspapers are somewhat more bullish than average on their prospects in digital.
     
  • The largest U.S. newspapers (100,000+ circulation) have lower than average expectations in practically every ad revenue category.
     
  • Canadian newspapers are more positive on distribution and national display, but more negative in all classified categories compared to U.S. newspapers.
In general, digital is seen as the top growth area across the board by a large margin. There is perhaps just one other ad revenue source seen as slightly positive, offering an “outside chance” of revenue gain. This source varies by group. For large and medium U.S. newspapers, this is automotive. For small U.S. newspapers, it’s retail. For Canadian newspapers, it’s distribution (inserts, etc.). But at every type of newspaper, declines are expected in most ad revenue categories.
 
U.S. and Canadian newspapers have lowered their expectations concerning most advertising revenue sources in 2012. The one exception is digital, for which 53% foresee a large increase.
 
In 2012, about 70% of newspapers have definite plans to start or upgrade content delivery on mobile devices and to improve their Web sites for online visitors. Other popular 2012 operating initiatives include controlling or reducing both staff and non-staff costs, charging readers for digital content, and starting a new niche product.
 
In terms of advertising sales initiatives, 65% to 70% have definite plans to expand e-mail, mobile, or e-reader digital advertising to improve Web site advertising programmes and options and to upgrade digital sales capabilities. Two other areas of attention for 2012 are upgrading print sales capabilities and improving ad pricing and rate structures.
 
Just over half of newspaper executives and managers surveyed said 2011 ad revenues are coming in worse than expected. The implication is that many newspapers will not achieve their budget forecasts the year.
 
While the general lineup is about the same, operating initiatives for 2012 vary somewhat among newspapers:
  • The largest U.S. papers (100,000+ circulation) are more likely to consider paywalls, reduce peripheral publications, outsource printing or distribution, and consider format reduction.
     
  • Mid-sized U.S. newspapers (25,000 to 99,000 circulation) are slightly more interested in controlling non-staff costs.
     
  • The smallest U.S. newspapers (under 25,000 circulation) are relatively less concerned with cost control, although it’s still among their top five issues.
     
  • Canadian newspapers are more likely to start a new specialty, niche, or lifestyle product, and the least likely to reduce their existing lineup of these publications.
The conundrum for newspapers is that print still produces more than 85% of total ad revenues, and this income is needed to fund development of increasingly complex digital offerings. During the last five years, however, digital ad revenue has replaced only 24% of what has been lost in print. Growth in digital may never be enough to overcome advertising revenue declines on the print side, and newspapers will have to find a new business model to make ends meet.





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