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Newspapers get 3x too many ad dollars, says study

Even though newspapers have lost nearly half of their ad revenues in the last five years, some analysts believe they still are getting three times more advertising than their readership deserves.

This good news/bad news for publishers comes from eMarketer, a research firm specializing in digital marketing trends. I’ll tell you in a moment why this is both good and bad news. First, the story:

In a report released last week, eMarketer compared the amount of time consumers spend accessing various types of media with the percentage of advertising dollars spent on each format.

Television, for example, represents about 43% of the time Americans spend consuming media and broadcasters collect about 43% of the advertising dollars, according to the study. So, that sounds about right.

Newspapers, on the other hand, are pocketing three times more ad dollars than their mindshare would seem to justify. Even though consumers spend barely 5% of their time reading newspapers, eMarketer found that publishers are getting 17% of the ad spend. As you can see from the table below, the situation is the same for magazines.

Because the allocation of ad-market share is a zero-sum game, print has to be benefitting at someone’s expense. And two notable victims, in this case, are Internet and mobile advertising.

In the most egregious mismatch discovered by the study, only 0.5% of advertising goes to mobile phones even though people spend more than 8% of their media time using them. With 25% of media mindshare devoted to the Internet and barely 19% of ad dollars going to the web, it is being shortchanged, too.

This is good news for newspaper publishers because it proves that they have done an excellent job to date of convincing marketers of the value of their medium. As such, they have been able to corner a disproportionate share of advertising in comparison to other media.

It also is bad news for publishers, because it represents a formidable threat: What would happen if advertisers began to wonder why they are spending so much on newspapers when they can use cheaper and more targetable advertising to reach the growing audiences on the web, mobile and social media?

In reality, of course, the answer is known. Newspaper sales fell from $49.4 billion in 2005 to $25.8 billion in 2010. Despite a modest economic recovery that has increased ad sales for most other media, publishers anecdotally report that sales in the first quarter of this year were softer than they were a year ago.

If publishers can’t catch up to their digital competitors, the staggering erosion in newspaper advertising in the last five years could be the prelude to something worse.

Via Reflections of a Newsosaur

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