7 reasons media advertising declined, 6 ways to recover

By Newsplexer Projects

Newsplexer Projects



Kicking off the final day of the 2017 INMA World Congress, Mark Ritson showed the audience what he calls the “Come to Jesus” chart, graphing the changing composition of ad spend in Australia over time.

The Morgan Stanley chart displays the significant decline of ad spend in Australian print media. “If anything’s going to get you on your knees, it’s this chart,” said Ritson, a professor at Melbourne Business School and Singapore Management University. “This is a scary chart.”

Ritson shared seven factors he believes have driven these declines forward since the beginning of 2007. It is an important exercise, he said: “It sounds negative, but I think it’s important to learn the lessons of where we went wrong if we’re going to fix things going forward.”

Mark Ritson shares his "Coming to Jesus" chart that outlines why advertising has been declining.
Mark Ritson shares his "Coming to Jesus" chart that outlines why advertising has been declining.

The factors are:

  1. A truly gigantic disruption: The size of change, the speed at which it happened, and the specific impact on news media landed a powerful punch. “I’d argue that even Google would struggle to survive such a severe disruption.”

  2. Death trope: Media’s constant conversation about the currently dying, or those expected to die in the near future. “We’re a very funereal discipline. Everyone’s dying.”

  3. Advertisers: Clients often lean on their own habits and preferences to make decisions. Clients are biased, Ritson said, which is why they will support spending decisions even if there is no data to support it — especially when it comes to fads. “Why do advertisers spend money if they don’t know something is working or not? I’ll tell you why. Because they love new shit.” (The latest trend is Real Reality, Ritson jokingly added.) 

  4. Arrogance: In a great phase in Australia called Rivers of Gold, a culture of over-confidence, poor leadership, and inefficient company structure left the industry unprepared. “We started to think we were better than we were, and that left us vulnerable to disruptors.”

  5. Editors: Editors as executives created a poor leadership structure, Ritson said. “They weren’t the chiefs that we needed at the time.”

  6. Giving stuff away for free: If he could go back in time, Ritson said he would go back to the World Editors Forum on May 14, 1994 — where they discussed for the first time the implications of digital on news media. “I’d tell them: I’ll give you two pieces of advice. Whatever you do, never give anything away for free. And always sign a contract.”

  7. Newspapers: Ritson pointed to a war between Sydney Morning Herald and The Australian that distracted the industry from the real threat. “We focused on our competitors and we missed the real competitive threat, until the duopoly was upon us.”

So what does “winning” look like in 2018? It is about admitting that it will never be 1995 again, Ritson advised. Advertising revenue can never reach what it once was, but news media can stop the advertising line on the chart from its current trajectory.

“The angle of decline is what we must work on,” Ritson said. “It’s not about winning. It's about stopping more loss.”

Ritson outlined six steps that news media can take to shift focus from advertising and reach a flatline (the goal) for 2018:

  1. Subscriptions. News media should focus on subscriptions and paywalls. “Our goal is to get everyone through a paywall,” Ritson said. “Everyone.” He also urged companies to focus on the core offering and not to fall in love with the “diversification myth.”
  2. Defending current share, not gaining it. “You can’t grow a market and defend your share at the same time if you know what you’re doing,” he said. Saving money that a company would have otherwise lost is making money for the company. By continuing to target big brands, news media companies are “wasting their bullets” trying to regain revenue that will never return. “There’s not a man or woman in this room that wouldn’t take a flat line for 2018, so keep that the goal.”
  3. Kill your mastheads. To illustrate this point, Ritson gave an example of an animal with a gruesome survival strategy: the brown rat. Infamous for running the streets of New York City, this rat practices infanticide. Over a year period, Ritson said, a mother rat will have eaten one-half of her babies in times of perceived scarcity. Media companies must do the same with struggling mastheads. “You must kill in order to be successful.”
  4. Be competitive. His advice is to go after Google and Facebook based on taxes, their ethics, and anything else you’ve got on them that you can call disgraceful. “It isn’t unfair,” he said. “It’s business.”
  5. Target the right customer. Media agencies are relatively unimportant when it comes to decision-making. Only 15% of budget decisions are made by media agencies, while advertising clients have 85% of the influence on decision-making. “That should be your target,” he said. “You must focus on the clients.”
  6. Position on the right things. The usual selling points used to persuade an ad client to spend on news are no longer working. Societal influence, the need for journalism, and fighting fake news are not good enough reasons for ad clients to put their money in news. Instead of guessing why advertisers want to partner with news, Ritson said it is important to just ask them.

In a survey about what is important to advertisers, there were certain answers that stood out. “Of all these different attributes, three of them were significantly important in driving a client’s media choice,” Ritson shared.

  • Target audience engages with ads in this media.

  • The client is confident that they are getting what they pay for.

  • The messages are trusted by the target audience.

In all of these tips, media should really focus on the importance of subscriptions in their business revenue models, and quit vying for ad dollars.

“Advertising won’t save the day,” Ritson said.

About Newsplexer Projects

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