Robust ad recovery bypassed newspapers

Newspaper advertising revenues continued sinking in the third quarter of this year despite a robust recovery that has fueled healthy gains in all – not some, but all – of the other competing media.

While television, radio, magazine and Internet ad sales have moved into positive territory in 2010 after suffering recession-related setbacks in the last two years, newspaper revenues dropped another 5.4% in the third period, marking the 17th quarter in a row of revenue deterioration.

Total print and online sales in the three-month period ended in September were $6.1 billion, or almost half of the all-time, third-quarter high of $12 billion achieved in 2005. The Newspaper Association of America, an industry trade group, released the sales figures yesterday.

While John Sturm, the chief executive of the NAA, characterized the industry’s performance in the third quarter as “a continuing and encouraging trend toward recovery and growth for newspapers,” the objective fact is that newspaper advertising has continued to shrink at the same time sales have improved handsomely for all of the other mass media.

As illustrated in the chart immediately below – which shows ad performance in the first half of the year because third-quarter data are not yet available for the competing media – television and Internet sales advanced by double-digit levels. Radio maintained a consistent 6% growth rate and magazines moved into the black in the second period after suffering sales declines in the first three moths of the year.

But newspapers did not join the party. Although the decay in newspaper ad sales has declined in each of the three quarters of 2010, the industry is the only one of the mass media still in negative territory.

The decline in newspaper sales has persisted in every single print category since mid-2006.

The only area showing growth for newspapers this year is online advertising, which represents an average 11% of industry ad sales. While digital advertising advanced a welcome 10.7% to $689.8 million in the third quarter, the gain was hardly enough to offset the weaknesses among the other ad groups.

As shown in the graph below, the other 89% of newspaper advertising has been falling month after month since July 1, 2006. Here are the details of this year's third quarter, plus a comparison of where sales were in 2005:

:: Real estate classified fell the most, plunging 15.7% to $302 million. In the third period of 2005 (as illustrated in the chart below), this category generated $1.5 billion in sales.

:: Retail, the single largest source of advertising for newspapers, slid 9.3% to $3.1 billion vs. $5.3 billion in 2005.

:: Automotive classified tumbled 4.4% to $308 million vs. $1.1 billion in 2005.

:: National slipped 0.6% to $950.5 million vs. $1.9 billion in 2005.

On a positive note, recruitment advertising in the quarter rose 5.0% to $184.5 million, but it unfortunately is well below the $1.5 billion sold in 2005.