Newspaper sales slid to 1984 level in 2011

In the poorest showing since 1984, advertising revenues at newspapers last year fell 7.3% to $23.9 billion, according to figures quietly published Wednesday by the Newspaper Association of America.

Here are a few factoids to help put the industry's long-running slump in perspective:

:: The combined print and digital sales reported by the trade association for last year are less than half of the all-time sales peak of $49.4 billion achieved as recently as 2005.

:: The last time sales were this low was 1984, when they totalled $23.5 billion. Adjusted for inflation, the 1984 sum woud be worth nearly $50 billion today.

:: The combined ad sales for all the newspapers in the United States last year were equal to only two-thirds of the sales of a single digital competitor, Google, whose annual revenues were $37.9 billion.

For the sixth year in a row, sales tumbled in every print category in 2011:

∷ Retail advertising, which is the single most significant remaining business for newspapers, dropped 6.0% for the fourth quarter and 8.0% for the year to close 2011 at $11.9 billion in annual sales.

∷ National advertising dropped 9.4% in the quarter and 10.5% in the 12 months to close the year at $3.8 billion in annual sales.

∷ Despite a strong upturn in vehicle sales in 2011, the automotive classified category plunged 11.9% in the fourth quarter and 10.7% for the 12 months to end the year at $1.1 billion in annual sales.

∷ Reflecting the continued malaise in real estate, this classified category dived 19.4% in the fourth quarter and 19.8% for the 12 months to end the year at $884.8 million in annual sales.

:: Though employment advertising improved from mid-recession lows when hiring picked up in 2011, sales in the category fell 3.4% in the fourth quarter and 1.6% for the 12 months to end the year at $743.4 million in annual sales.

∷ Miscellaneous classified slid 10.9% for the last quarter and 10.0% for the 12 months to end the year at $2.3 billion in annual sales.

The newspaper industry lagged the performance of all the other traditional media in 2011. Kantar Media, an independent market research firm, reports that television ad sales last year rose 2.4%, magazine sales fell 0.4% and radio sales slipped 0.6%.

The only category where sales increased at newspapers in 2011 was digital, where revenues grew 3.1% in the fourth quarter and 6.8% for the 12 months to produce $3.2 billion in annual sales.

Though publishers say they are focused on building digital revenues to offset the steady decline that has eroded print advertising since 2005, their digital sales are dwarfed by the competition. In the third quarter alone, online advertising sales advanced 22% to $7.9 billion, according to the Internet Advertising Bureau, an industry trade organization.

Full-year Internet statistics have not been published by the IAB for 2011, but this much is known: The $26 billion in sales achieved by the online industry in 2010 surpassed total newspaper advertising revenue 12 months ago.

Digital sales at newspapers are even trailing the adolescent Facebook, which sold $3.7 billion in advertising in 2011. Imagine what our friends at the friendly friending company will be able to do after they cash in on their multibillion-dollar IPO.

Retailers are routing around the media

In a stunning reversal of fortune for newspapers, some of the biggest retailers in the nation have taken to selling advertising and featuring editorial content at their busy and heavily promoted online shopping sites.

By transforming themselves into publishers, the folks who formerly depended on newspapers to reach prospective customers are building direct, powerful and sustainable connections with consumers in a strategy that is bound to reduce demand for traditional advertising.

Unless newspapers angle their way back into the mix, it is hard to see how they can stop the slide in advertising that brought industry revenues to some $24 billion in 2011 from $49.4 billion in 2005. The total revenue production for newspapers last year, by the way, amounted to less than two-thirds of Google’s $37.9 billion in sales.

The revenue associated with selling advertising at commerce sites is a succulent attraction for a growing number of merchants, as demonstrated by Target.Com, one of the pioneers of the trend.

Whether you are shopping for watches, gardening shears or socks, you will see a slug of Google-provided ads on almost every interior page at Target.Com. The ads, amazingly, tout not only the wares of competing online merchants but also those of such bricks-and-mortar rivals as Pottery Barn and Sears. While most of the ads at the Target site are related to the merchandise on the page, the page views clearly are for sale to the highest bidder. Ads for tax-prep services, for example, were popping up all over the site as the April 15 deadline closed in.

Industry sources report that a site like Target.Com is capable of generating many tens of millions of dollars in ad revenue in a year. Eyeing this potential new revenue stream, competing online retailers are hiring ad experts to monetize the white space around the merchandise. Retail analysts say it is only a matter of time until this strategy is widespread, if not commonplace.

Sites like Walmart.Com and Safeway.Com not only are selling ads but also investing in editorial content to encourage shoppers to buy more stuff – and to motivate them to return.

Walmart helpfully provides advice for all the major life cycles: How to plan a Barbie-themed birthday party, how to get along with your college roommate and how nutritional supplements can ease the creak in aging knees. Walmart recently appointed the former head of CBS Interactive to helm its digital commerce operations, suggesting that an even greater emphasis on content may be right around the corner.

Safeway publishes an extensive collection of recipes that you can sort by the ethnicity of the cuisine, the time to cook it, the size of the group you want to serve and the difficulty of preparation. The site encourages users to review and comment on each recipe, the better to build community and repeat traffic. There’s not much advertising adjacent to the content – yet – but it's not hard to see how that could change.

Like lots of other merchants, Meijer.Com, a Midwest retail chain, posts all of its newspaper ad inserts on its website, comprehensively indexing items by brand and category. In addition to carrying the usual bargains and coupons, however, the vitamin insert published in December contained full-page articles on the health benefits of fish oil and the usefulness of melatonin as a sleep aid.

Venturing well beyond selling refrigerators and televisions, BestBuy.Com has created a members-only online mall it calls the Rewards Zone, which features products from more than 400 brands ranging from Saks Fifth Avenue to iTunes to Budget Rent a Car. Members receive frequent-buyer points for anything they buy at the portal, but the points can only be redeemed at – you guessed it – BestBuy.

The program has three major benefits for the retailer: First, it generates some extra cash through commissions paid by the affiliate merchants. Second, it builds customer loyalty for Best Buy. But the best part is that it will provide the company with comprehensive information about the buying habits of each and every registered user.

In other words, BestBuy is pursuing the Holy Grail of digital marketing: Detailed and actionable information about individuals, including who they are, where they are, what they have bought in the past and what they might buy next.

The chief way newspapers can remain relevant to marketers in the future is by developing the same kind of information for as many individuals as possible in the communities they serve. To do this successfully, this means tracking customers not only on newspaper-owned media but also across the widest possible number of digital venues in the market.

Publishers who invest in this strategy will have a path forward, as advertisers increasingly de-emphasize the classic print and broadcast media in favor of efficiently targeted digital marketing.

Advertisers clearly have begun moving on. Publishers need to catch up.

© 2012, Editor & Publisher

Some papers see Q1 sales rise – first since 2006

After suffering through six straight years of steadily plunging advertising revenues, some newspaper publishers say they are on track to achieve year-to-year sales gains in the first quarter of 2012.

The last time newspaper ad sales grew in the first quarter was 2006, when combined industry revenues rose 0.35% from the prior year to $11.1 billion. In 2011, print and digital ad sales in the first three months were a bit under $5.6 billion, or fully 50% less than they were five years earlier.

With a month to go in this quarter, a number of publishers anecdotally reported last week at a convention in San Antonio that improved retail and employment advertising had put their sales ahead of those in 2011. The uptick was not universal, and, of course, could be derailed by any number of local, national or international events.

However, there was a notable sense of relief, if not to say cautious optimism, among several of the newspaper executives attending the combined confab of the Inland Press Association, the Local Media Association and the Southern Newspaper Publishers Association.

In a series of informal conversations, some publishers counted it as a victory that their numbers in the first two months of 2012 were equal to those of the prior year. Others reported that their sales met or surpassed conservative budgets that forecast single-digit declines between this year and last.

“It looks like the cycle finally has turned,” said an executive who could not discuss specifics of his company's sales because it is publicly traded. “People counting out newspapers have not taken into account the effect of the weak economy. It won’t take much of an improvement [in the economy] for us to see real increases in profitability after the cost-cutting we have be doing for the last several years.”

While a turn in the economy is bound to be helpful, it must be noted that every other medium has long since rebounded from the Great Recession, which technically ended by mid-2010 (though it is of little consolation to those continuing to suffer from foreclosure, unemployment and financially challenged retirement).

In the first quarter of 2011 – that’s right, a full year ago – Internet ad sales soared 14.6%, television ad sales advanced 5.3%, magazine ad sales rose 4.5% and radio ad sales gained 1.3%, according to Kantar Media. In the same period, newspaper sales fell 7.2%, according to the Newspaper Association of America.

While publishers have been perfecting the fine art of doing more with less (or sometimes less with less), vigorous competitors like Groupon and Yelp have been filling their coffers at the IPO window to pursue ever more local ad dollars. And that’s not to mention such big kahunas as Google and Facebook, the latter of which will add tens of billions to its marketing war chest when it goes public in the very near future.

You can't begrudge beleaguered publishers for wanting to pop a cork if they happen to have a positive first quarter. In light of the gathering competitive assault, however, they would be wise to choose inexpensive vintages and put the balance of their extra profits into beefing up their digital offerings.

So long again, Chicago Daily News

On March 4, 1978, the presses fell silent for the last time at the Chicago Daily News, an iconic and crusading newspaper that was unable to adapt to changing times. The following article, which originally appeared here in 2005, is reprinted as a reminder of what happens when a paper runs out of readers, revenues and ideas at the same time.

"It's fun being the publisher when things are going well," squeaked the young man who stumbled awkwardly to the top of a battered desk in the unusually silent newsroom of the Chicago Daily News. "But it's no fun today."

Swallowing a nervous giggle, Marshall Field V cleared his throat and read the assembled staff the short, typewritten death warrant of one of the most distinguished newspapers in American history.

An agonizing month later, on March 4, 1978, the Daily News signed off with the jaunty banner, "So long, Chicago."

The line was written by the late nightside copy desk chief, Tom Gavagan, a chain-smoking, working-class Irishman who seemed to own only two shirts -- one in burnt orange, the other in avocado green. The tears in Gav's eyes weren't from the smoke.

Although it happened 27 years ago, the story is worth telling today, because many of the zany, brainy people who made that paper sing aren't here to talk about it any more. They were my mentors, comrades and friends, and I cherish their memories.

But this isn't just ancient history. It is a valuable reminder to today's media companies of what happens when you run out of readers, revenues and ideas all at the same time.

The Daily News, like most afternoon newspapers, succumbed at the age of 102 to a declining audience and rising expenses.

Its readers had moved on. On to the suburbs, where delivery trucks couldn't reach them with a paper that didn't come off the press until afternoon. On to the sofa, where they favored Three's Company on television.

There were no home computers, no Internet, no iPods and no cellphones to get between our readers and us in 1978. Still, circulation dropped. The management was changed. Circulation dropped. We redesigned the paper. Circulation dropped. We tinkered with the product. Circulation dropped.

In the end, there was nothing left to do. Some 300 people lost their jobs, and Chicago lost a great newspaper.

The Daily News, in its best days, was a cutting-edge conscience in conservative Chicago, a husky, brawling town that wasn't always ready for reform. The paper stood fast against official incompetence and government corruption and stood tall for civil rights and the little guy. For years, the Daily News stubbornly held its price to a penny, so as to be affordable to laborers heading home from work.

It was one of the first newspapers to have foreign correspondents, to print photographs or to cover that new-fangled medium, radio. Its widely syndicated coverage won 13 Pulitzer Prizes, including three for meritorious public service.

The Daily News cultivated a limitless array of talent over a century, including Eugene Field, George Ade, Ben Hecht, Finley Peter Dunne, Carl Sandburg, Peter Lisagor, M.W. Newman, Lu Palmer, Lois Wille and our latter-day franchise player, Mike Royko.

The list is too long to print here. But the Daily News, in its classy way, printed the name of everyone working on the staff on the day the paper folded.

My name was on that list. It remains one of proudest, and saddest, moments of my life.