the collapse of the national and classified categories in the last six years,
the most faithful remaining customers for newspapers today are the local retailers
who purchased fully half of the $23.9 billion in advertising sold by the
industry in 2011.
Now, there is
good reason to fear that even the last, best customers for newspaper
advertising are getting ready to take their dollars elsewhere – unless
publishers act fast to develop a product mix that meets the rapidly changing
needs of Main Street merchants.
who hasn’t been paying attention, ad sales last year came in at half the
all-time peak of $49.4 billion achieved in 2005.
One of the
principal reasons newspaper sales have contracted in the last half-decade is
that a growing number of small and medium local businesses (SMBs) are putting more of their marketing dollars than
ever into establishing direct relationships with consumers via the digital
Although roughly half of local
marketing dollars today go to newspaper and broadcast advertising, BIA/Kelsey
predicts that only 30% of an expected $151 billion in local marketing
expenditures in 2016 will be spent on the legacy media.
Before the Internet and other
digital interlopers unhinged the once comfortable franchises enjoyed by local
media, it was not uncommon for Main Street merchants to put 70% of their
marketing budgets into print or broadcast advertising. But that was then and this is now.
In a series of surveys over the
last few years, Borrell Associates found that many of the dollars formerly
spent on local advertising are going to a wide – and growing – variety of
alternative marketing venues. Key findings:
:: As of the middle of 2011, 87%
of SMBs planned to put money into upgrading their websites – or building new
:: As of mid-2011, 64% of local
businesses planned to put money into social media marketing, a sharp increase
over the 58% of merchants who were planning Facebook or Twitter blitzes at the
end of 2010.
:: At mid-year 2011, some 43% of
SMBs were planning email campaigns, 27% wanted to buy Facebook ads, 24% wanted
to produce online videos, 22% wanted to offer online coupons, 22% wanted to
advertise on mobile devices and 20% wanted to buy targeted keyword ads on
Google, Bing and similar sites.
The list goes on, but the point
is this: Newspapers generally don't
offer products or services to fulfill these needs.
The only digital marketing solution
provided by most publishers is untargeted banners on their websites and mobile
apps. Unfortunately, only a fifth of merchants told Borrell they are interested
in buying the run-of-site advertising that happens to be the only solution most
newspapers can offer.
A further alarming aspect of
the Borrell poll is that the more than 2,000 business people quizzed in each
flight of the survey were newspaper advertisers invited to participate by their
local publisher. Imagine the response if the same questions were put to people
who already have forsaken newspapers.
But, wait, things could get
With older merchants turning
over their businesses to their heirs and a growing number of under-50
entrepreneurs starting businesses of their own, the demand for local retail
advertising could decelerate even faster in the future than the nearly 50% it
tumbled in the last six traumatic years.
The reason is that there is a
sharp generational divide in newspaper readership between those over the age of
50 and those under it. In but one
example of this phenomenon, the Pew Research Center earlier this year asked
individuals where they got political news. Newspapers were cited by only 18% of
individuals between the ages of 30 and 49 and a mere 11% of adults under 29. By
contrast, 24% of respondents between 50 and 64 cited print – and 31% of those
over 65 favored newspapers.
If younger business people
don’t read newspapers themselves, it is not likely they will see them as
appealing advertising vehicles when they take over Dad’s business or start one
of their own. Thus, it seems fair to hypothesize that next-generation business leaders
will channel ever more of their marketing resources to the digital media that they,
and most of their peers, prefer.
In light of these trends,
newspaper publishers would be wise to offer their customers – and those who ought
to be their customers – the kinds of marketing solutions identified in the
Borrell survey. They had better hurry, too, because competitors ranging from
local start-ups to Groupon to Google are selling many similar solutions.
Next month, we’ll discuss the
types of products newspapers need to put in their digital-marketing portfolios. Meantime, take the next few weeks to see how
businesses in your community plan to spend their marketing dollars. You may be surprised to find they are a lot
more interested in digital marketing than you think.
© 2012, Editor & Publisher