1 in 4 local firms plan newspaper ad cuts: poll
Nearly one in four local businesses plan to cut back on newspaper advertising this year, according to a poll being released today.
And there is no mystery about what they are doing with the money.
At the same time those businesses trim newspaper expenditures, the survey found, many of them plan to aggressively ramp up spending on a broad array of web, social and mobile media.
Insights into the ad plans of local merchants were gained in an ambitious poll of more than 2,700 small and medium businesses in 40 states conducted over the summer by ITZBelden in conjunction with the American Press Institute. The findings are to be reported at a meeting today at the API in Reston, VA.
Ominously, the poll found that 23.0% of the advertisers who represent the single most important revenue source for most publishers intend to cut their newspaper ad budgets. By contrast, only 5.3% of the businesses said they would reduce spending on advertising in competing digital media.
Even as businesses pare back their print budgets, 23.2% of companies plan to increase their digital ad spend by 11% to 30%, the survey found. By contrast, only 9.9% of advertisers intend to boost their print expenditures by 11% to 30%.
The balance of the advertisers plan to keep expenditures in both categories about the same this year as they did in 2009.
The poll found that advertisers are spending their digital marketing dollars widely. Fully 81.8% of respondents have a website, 45.1% maintain a Facebook or MySpace page, 22.5% engage in online couponing, 13% use Craig’s List and 10% use Yelp and similar user-review sites. Only 3.4% said they planned to buy mobile ads.
When advertisers were asked where they planned to target their marketing dollars in 2010, the average allocation for newspapers was 23%. While this percentage would leave newspapers as the dominant local medium in most places, it is well below the 35%-plus market share that publishers enjoyed in the pre-Internet era.
Assuming businesses act on the intentions stated in the poll, they will put an average of 13% of their ad dollars this year into digital media. As illustrated below, this would give digital media the second-largest share of the dollars spent on advertising in a typical market, surpassing such traditional rivals as direct mail, television and the Yellow Pages.
The aggressive shift of spending to digital media identified in the poll suggests that local retail advertising may come under even more pressure than publishers have experienced to date.
Although local retail sales in the first six months of this year were 41% lower than they were in the comparable period in 2005, this category – which represents almost exactly half the industry’s ad base – has been least affected by the collapse in newspaper advertising caused by the growing preference among consumers for digitally delivered news.
As reported last week by the Pew Center for People & the Press, only 31% of Americans today get their news from the newspaper, as compared to 56% in 1991. This is exceeded by the 34% of respondents who said they get their news online and the stunning 44% of consumers who said they get their news on a mobile device.
The worst of the $23-ish billion dive in newspaper advertising since 2005 has come as the result of a decline in classified advertising. Between the end of June in 2005 and the end of June of this year, recruitment advertising has swooned 85.2%, automotive advertising has plunged 73.3% and real estate advertising has slid 72.8%. Full details previously were reported here.
What does it all mean? Simply this: Newspapers can’t afford to lose the faith – and the patronage – of retail advertisers.
One potentially powerful way for newspapers to reassert their relevance to advertisers is by establishing themselves as experts in the growing array of digital media that merchants are hoping to use to lure customers to their businesses.
Encouragingly, 71% of respondents to the ITZBelden/API survey said they are confident that newspaper ad reps could help them make the most of their marketing dollars on the web, social networks and in mobile media.
“I was blown away” by the faith they have in newspapers “to guide them though the bewildering array of new media,” said Greg Harmon, who conducted the poll.
Noting that his ongoing research into consumer behavior on newspaper websites has found that 60% of the visitors to the typical newspaper site are using Facebook or other social media, he added:
“Our audiences are there. Our advertisers are there. But where are we?”