Print ad sales hit 10-year low
Print revenues in the first six months of this year totaled $20.3 billion, the lowest since the $19.7 billion in sales recorded in the first half of 1997. Print ad sales in the first half of this year were 8.3% below the depressed level recorded in the same period in 2006. (UPDATE 9/3/07: Based on the sales shortfall, I predict here that print ad sales this year will be $3.5 billion lower than the depressed 2006 level level.)
Although the NAA touted a 19% increase in online ad sales to $796 million in the second quarter of the year in a spin-rich press release on the eve of the Labor Day weekend, print ad sales represented a bit more than 93% of the industry’s total volume of $22.49 billion in the first half of the year.
So, let's get one thing straight: Improving online sales, while a good thing, won’t help an industry whose primary revenue base has been eroding at an ever-quickening rate for six straight quarters.
The sales plunge in the first six months of the year, which occurred despite a robust economy, was paced by a 14.8% collapse in revenues from the three principal classified advertising categories – auto, real estate and recruitment. Sales of the Big Three classified categories were $6.8 billion in the first half of this year vs. just shy of $8 billion in the prior year.
The extent of the classified sales debacle is illustrated in the graph below. What the graph doesn’t show is that auto classifieds have not shown positive sales growth since the first quarter of 2004.
Help-wanted advertising last gained sales in the first quarter of 2006, but here's the back-story: Recruitment advertising, which hit an all-time record of $8.7 billion in the final year of the dot-bomb era, amounted to only $4.7 billion at yearend 2006. Thus, $4 billion in revenues have vaporized in this single category in half a dozen years.
Real estate, which had been the one bright spot in classified advertising while the housing bubble inflated, has deteriorated with a vengeance since the start of this year. Remember that the sub-prime mortgage meltdown occurred after the period covered by these numbers. With the real estate market all but paralyzed, the year-to-date declines are almost certain to be equaled – or surpassed – for the balance of 2007, if not beyond.
With consumers worried about the level of their household debt and the declining value of their homes, it stands to reason that advertisers will be more conservative about their spending in the second half of the year than they were in the first six months.
Ergo, no relief in sight.