Friday, August 07, 2009

Modest newspaper sales bounce predicted

Newspaper advertising sales are likely to bottom out after four straight years of decline in 2009, but they aren’t headed back to where they used to be, according to a new projection from Borrell Associates.

In what passes nowadays for an upbeat take on the newspaper industry from an independent observer, the Virginia-based market research firm boldly predicts that print advertising sales for the nation’s 15,000 daily and weekly papers will bottom out at $35.9 billion in 2009 after peaking at $57.3 billion as recently as 2005.

Borrell forecasts a 2.4% sales rebound in 2010 to $36.8 billion and modest annual gains to take sales to $39.0 billion by 2014. With the over-all size of the national advertising pie likely to shrink in the next five years, Borrell believes newspapers could regain a 15.9% share of the advertising market in 2014 vs. 14.4% in 2009.

As detailed in the chart below, newspaper advertising demand from national advertisers will remain remarkably consistent – and flat – through 2014. As always, the main revenue engine for newspapers will be ads sold to local retailers and classified accounts.

The annual sales numbers used by Borrell are significantly higher than those reported by the Newspaper Association of America, which counts the sales of a more limited subset of publications produced by the publishers of daily papers.

The NAA, whose figures typically are cited in this blog, reported that the industry generated $47.4 billion in print ad sales in 2005. Earlier this year, I predicted that print sales for the papers covered by the NAA were likely to amount to about $28 billion in 2009.

There are too many unknown unkowns for me to forecast any further than that.

7 Comments:

Blogger tommy said...

Hello Allan,
Love your blog.
Interested to know if you see a future for newspapers in a more in depth analysis mode? Could newspapers come back with more content than recent history and cater to a more specific audience - namely readers with above average income?
(We met at a Focalpoint recording in SFSU.)
Tommy.

6:56 AM  
Blogger Banjo Jones said...

Alan,
This is off the topic, but I was wondering what your thoughts are regarding Cox taking its Austin, TX newspaper off the market. Have you heard anything about how far apart the prospective buyers and Cox were in the negotiations?

7:50 PM  
Blogger G said...

Not sure if this really pertains to the topic at hand, but should newspapers try to find a good balance between having enough advertising to bring back readers and having too much to drive them away?

I mean, getting the ad dollars is all well and good, but if you wind up overkilling the content so that the balance is is like 65/35 (like out my way in CT), then what good is the increased revenue if you don't have the readership?

5:55 AM  
Blogger Steve Ross said...

well, many people buy newspapers in part for the ads.

I'm bothered by the analysis a bit because the better measure is advertising dollars spent per subscriber or per print subscriber. By the latter measure, the revenue peak was 2007, not 2005. Tricky because there had been circulation fraud and it fully caught up with the daily newspaper business only in 2005.

I'm also bothered because newspapers CAN recapture revenue with better technology -- buying into the idea of per-click payments for certain classes of advertisers, for instance, or investing in social networking sites, especially for local advertisers that need quick turnarounds on selling propositions (restaurants, bars, entertainment venues mainly).

The analysis here represents a steady-state. It assumes that newspaper management will continue to be as clueless and venal and short-sighted as it has been. Not a bad assumption, but maybe not an assumption that can be uniform across the entire industry.

1:28 PM  
Anonymous Anonymous said...

I don't know the answer to this, but I wonder what that graf looks like if you stretch it back to 2000 instead of starting it at 2005. It has long been my thesis that the period 2002-06 were an artificial boom period, fueled by the real state and debt booms.

6:59 AM  
Anonymous Anonymous said...

You might also include revenue numbers from the Suburban Newspapers of America and possibly the National Newspaper Association (this one is the NNA vs. your NAA). Both generally represent smaller market newspapers). On a different subject - have you written about the newspaper experiment in Ann Arbor, MI yet? I don't recall seeing anything on your blog.

Bruce Wood

10:56 AM  
Anonymous Anonymous said...

Would you buy a bi-weekly newspaper on the North Shore of Boston with some $220K gross ad sales and subscriptions? It's up against a weekly owned by a chain. The price for the paper is less than half of the gross sales, ads & subs. The paper for sale has been publishing for 13 years. What do you think? Is it worth a shot?

2:51 PM  

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