Advertising a Nightmare

A very interesting article on the Guardian written by Dan Kennedy:


If you had told me five years ago that newspaper circulation in 2009 would enter what may prove to be its death spiral, I'd like to think I wouldn't have been too surprised. We have finally reached a moment that's been a quarter-century in the making, going all the way back to those sniggering television newscasts about the absurdity of digital delivery.

But if you had told me that only a tiny fraction of newspaper advertising would migrate from print to the internet, I'd have broken into a cold sweat. Back then I was fairly sanguine about the future of the newspaper business, imagining that it might make a more or less seamless transition to a free, ad-supported online future. Those of us who believed that were wrong. And though the situation may improve, it now appears that online advertising is never likely to generate enough revenue to bring us back to the golden age of newspapers.

Two news stories came out on Monday that tell us much about the state of the news business. The story on newspaper circulation got most of the attention, since it was the one with the big scary numbers. But it was the story on advertising that will mean a lot more in the long run.

I'll take circulation first. According to the Audit Bureau of Circulations, the leading company for tracking such things, daily newspaper circulation dropped by 10.6% for the six-month period ending on 30 September when compared to the same period in 2008.

The news was particularly grim in Boston, where I live and work – a consequence, I suspect, of our living in an unusually wired region, combined with skyrocketing prices for the print editions of our two dailies, the broadsheet Globe and the tabloid Herald.

According to ABC, Monday-through-Saturday circulation of the Globe fell by more than 18%, to 264,000, and by nearly 17% on Sundays, to 419,000. The daily Herald was down more than 17%, to 138,000, and the Sunday Herald fell 5%, to just 96,000.

When you consider that, in their 1980s heyday, the Globe sold more than 500,000 papers on weekdays and more than 800,000 on Sundays, and that the Herald's circulation was at least double what it is today, then it's clear that their print editions are in freefall.

Which might not matter if it weren't for the other half of this ugly equation. Because, like most papers, the Globe and the Herald attract a lot of online readers. In September, according to Compete.com, the Globe's Boston.com site drew 5.2m unique visitors, while BostonHerald.com pulled in another 1.3m. A recent study shows that some 74 million people visit a newspaper website each month.

But after years of sputtering growth, online advertising may actually be moving away from newspapers at a time when publishers are catching their first tantalising glimpse that the recession may be coming to an end.

According to Stephanie Clifford of the New York Times, advertisers increasingly see newspaper websites as an overly expensive buy, suitable for certain types of high-profile product rollouts but not for regular use. Never mind that an online newspaper ad brings in pennies compared to its print counterpart. On the web, there's always something cheaper – in this case, networks that automatically place ads on a wide variety of sites.

The bottom line is that though online advertising in the US is expected to rise this year by 9.2%, to about $54bn, it's actually declining at many newspaper companies, including the Times' parent company (among whose holdings is the aforementioned Globe). "That is a sobering trend for newspaper executives, who once hoped that online revenue would make up for plummeting print revenue," Clifford writes.

Indeed, in a video interview for Technorati's just-released State of the Blogosphere 2009 report, Dan Gillmor – author of We the Media and an enthusiastic advocate of new forms of online journalism – wonders whether the advertising will ever materialise.

"Whether there's a market in the end for advertising at all is an interesting topic for one of these [reports] in a future year," Gillmor says.

It's no wonder that, these days, much of the attention on the future of journalism is focused on non-profit models. As Clay Shirky and others have argued, we may have reached the end of an era that began with the rise of the penny press in the 1830s – that is, a time when advertisers, lacking other options, showered so much money on newspaper owners that they couldn't help but spend some of it on journalism, even after they had finished lining their own pockets.

Advertisers don't need newspapers anymore, at least not nearly to the extent that they once did. Newspapers, though, need advertisers. How is that existential dilemma to be resolved?

As Gillmor says, it will make an interesting topic for a future year.