Monday, October 29, 2012

Newspapers lost 31.5% of ad share in 4 years

Newspapers have lost nearly a third of their share of the advertising market in the last four years, with the dollars – no surprise here – shifting to the online and mobile media, according to a new study from eMarketer, an independent research company. 

The decline in newspaper ad share – which is far deeper than drops in the other legacy media in the same period – appears to be a direct response by marketers to an even sharper decline in the amount of time that consumers spend with print newspapers.  

The eMarketer study, which was released last week, clearly demonstrates the economic impact of the shifting preference among consumers for the individualized experience and instant gratification delivered by the digital media.  

The findings align with other industry research that has found, among other things, that:  

:: The percentage of Americans who read a print newspaper has fallen to 23% today from 41% in 2002, according to the Pew Research Center. 

:: Newspapers have been particularly unsuccessful at attracting readers under the age of 55.  As reported previously here a survey by the New York Times Co. found that 22% of 18- to 34-year-olds read print newspapers and 34% of those aged 35-54 favored print.  By contrast, 53% of the over-55 cohort still used newspapers.   

The eMarketer study adds another dimension to the discussion, showing the way ad dollars are following audiences.  

In surveying media consumption annually since 2009, eMarketer found that consumers this year are spending 3.1% of their media time with print papers, as compared with 5.1% in 2009 – a drop of 40.4% in engagement in four years.  The survey includes multiple media use when people multitask; thus, eMarketer counts the time that people spend perusing a newspaper while also listening to the radio or watching TV.  

As illustrated in the first chart below, the newspaper audience has contracted faster than those of magazines, radio and television.  The TV audience remained the most stable among the legacy media, falling 4.8% in four years, while radio slid 14.8% and print magazines dived 34.3%. At the same time engagement with the traditional media has contracted, the use of online media advanced nearly 7.8% and the use of mobile media soared (from a low starting point) by 234%. The time spent on mobile media, by the way, does not include telephone calls.  

Not surprisingly, ad dollars are following consumers. At the same time newspaper ad spending fell by 31.5% in the four-year period, online ad expenditures grew 37.5% and mobile ad outlays rocketed 433% (again, from a low base).  Among the legacy media, TV ad spending grew 6.6% since 2009, while radio fell 4.1% and print magazines slid 12.4%.

The good news for newspapers in the above data is that they have clung to far more advertising share than their share of audience would seem to warrant.  While newspapers today have only 3.1% of the media audience, they are getting 11.5% of the ad revenues.  

The bad news for publishers is that markets tend to be rational, correcting such imbalances in the fullness of time. The plunge in newspaper ad sales from $49 billion in 2005 to $24 billion in 2011 – a decline that has continued unabated all of this year indicates the market is behaving as anticipated.

With the objective evidence suggesting that the newspaper business is living on borrowed time, publishers should be using their residual economic power, brand power and marketing power to develop new digital products to protect and sustain their valuable franchises.  Or else.   


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