Online sales, easing off
The online revenues of some of the major publicly held newspaper companies in the first quarter of this year grew at barely half the rate they advanced in the same period a year ago.
With print revenues down by as much as 5% for such publishers as McClatchy in the first three months of the year, the steep, unforeseen decline in interactive sales means publishers may have to cut expenses even more drastically in the months ahead than most of them probably imagined.
While new media sales advanced by healthy, double-digit percentages in the first three months of the year – most definitely a good thing – the year-over-year growth rate was down by nearly half at such bellwether publishers as Gannett (16% this year vs. 30% last year), McClatchy (17% vs. 30%) and Tribune (also 17% vs. 30%).
As you can see below, Journal Communications and Dow Jones are the only public companies reporting a gain in online revenues so far this year. Dow Jones includes the subscription revenues of the online Wall Street Journal, which makes its performance hard to compare with the ad-supported but generally free-to-view websites operated by other publishers.
Notwithstanding the weaker business experienced by the newspaper publishers, Google’s revenues, which are entirely derived from online ad sales, gained 63% in the first three months of 2007. As proof that all online behemoths are not created equal, Yahoo’s sales gained a comparatively paltry 7% in the quarter.
Why the big difference between newspaper sales and Google? The great bulk of newspaper online sales come from upsells to the web of auto, recruitment and real estate classified advertising from the print product. Those markets have been contracting in two ways:
:: First, traditional classified advertisers are migrating away from their former heavy reliance on big-ticket newspaper advertising in favor of such cost-effective and targeted digital alternatives as Monster.Com, Craig’s List, Realtors.Com or Autobytel.
:: Second, sales are weak in both the auto and real estate sectors, meaning that advertisers have less to spend – or, at least, feel that they do.
The lesson for publishers is that they must leverage their remaining content-creation skills, audience-building strength and sales capabilities to create new interactive (and print) products that don’t rely on their fast-eroding legacy lines of business to be successful.
And it should be noted, as discussed here earlier, that a partnership selling classified ads for Yahoo is no substitute for newspapers controlling their own destinies.
With print revenues down by as much as 5% for such publishers as McClatchy in the first three months of the year, the steep, unforeseen decline in interactive sales means publishers may have to cut expenses even more drastically in the months ahead than most of them probably imagined.
While new media sales advanced by healthy, double-digit percentages in the first three months of the year – most definitely a good thing – the year-over-year growth rate was down by nearly half at such bellwether publishers as Gannett (16% this year vs. 30% last year), McClatchy (17% vs. 30%) and Tribune (also 17% vs. 30%).
As you can see below, Journal Communications and Dow Jones are the only public companies reporting a gain in online revenues so far this year. Dow Jones includes the subscription revenues of the online Wall Street Journal, which makes its performance hard to compare with the ad-supported but generally free-to-view websites operated by other publishers.
Notwithstanding the weaker business experienced by the newspaper publishers, Google’s revenues, which are entirely derived from online ad sales, gained 63% in the first three months of 2007. As proof that all online behemoths are not created equal, Yahoo’s sales gained a comparatively paltry 7% in the quarter.
Why the big difference between newspaper sales and Google? The great bulk of newspaper online sales come from upsells to the web of auto, recruitment and real estate classified advertising from the print product. Those markets have been contracting in two ways:
:: First, traditional classified advertisers are migrating away from their former heavy reliance on big-ticket newspaper advertising in favor of such cost-effective and targeted digital alternatives as Monster.Com, Craig’s List, Realtors.Com or Autobytel.
:: Second, sales are weak in both the auto and real estate sectors, meaning that advertisers have less to spend – or, at least, feel that they do.
The lesson for publishers is that they must leverage their remaining content-creation skills, audience-building strength and sales capabilities to create new interactive (and print) products that don’t rely on their fast-eroding legacy lines of business to be successful.
And it should be noted, as discussed here earlier, that a partnership selling classified ads for Yahoo is no substitute for newspapers controlling their own destinies.
posted by Newsosaur at 7:41 PM
2 Comments:
A recent Deutsche Bank report pointed at another study showing newspaper websites losing local online ad market share, to 32 percent from 45 percent if I recall correctly. I imagine this is due to the dropoff in upsell you allude to -- same report noted 88% of McClatchy online ad sales came from upsell from print.
Newspapers do not have enough online only ad staff.
More importantly, newspapers do not have enough good and empowered programmers. They just don't know how to reward and nurture and even evaluate software engineers, so they all go to work at companies where they are rewarded with pay and attention and status and great working conditions, like at Google.
Actually, at Google directly, in most cases -- the company has offices in virtually every city, just Hoovering up the young programming talent.
Without programmers newspaper web sites will not come up with clever ways to make money. For example by selling keywords on their own site search engines. Nor will they be able to grow traffic with create sticky features like map mashups and review databases and online communities and user content moderation and ranking systems.
This is why they are forced into money-leaching "partnerships" with Yahoo etc even as their executives decry these same companies.
Doh, that lost comment was not by "anne" but by me, Ryan Tate, ryantate@ryantate.com. Sorry.
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