At a few smart legacy news companies, there’s digital advertising growth and smart strategy. But most newspaper companies are finding the important numbers are still headed in the wrong direction.
As we approach the middle of the 2010s, where do newspapers fit in the battle for America’s largest ad sector — digital? And how well are all those paywalls doing?
Two reports tumbled into the public sphere within a week of each other recently, and together, they help us answer both questions.
The numbers here show that the newspaper industry overall — a relative minority of leading-edge players aside — is trending the wrong way. Both digital ad revenue and reader revenue continue to grow, but both are less positive than they were a year ago.
Let’s start with the overall digital ad market.
The Interactive Advertising Bureau’s 2013 full year report is its usual rosy self. Ten years ago, IAB had to explain what it was. Now, it tracks the country’s No. 1 ad type — digital. Digital ads passed broadcast TV for the first time, and by a healthy margin, $2.7 billion. Passing TV is another milestone, coming just a year after digital surpassed print (newspaper + magazine) spending. Now, its lead over newspapers, as seen in the IAB chart below, is more than two to one, $42.8 billion to what IAB counts as newspapers’ $18 billion.
Curiously, that last number — part of a study PwC (PricewaterhouseCoopers) did for IAB — counts $5.8 billion less in overall newspaper advertising than does the Newspaper Association of America (NAA), which released the other big summary 2013 report.
That’s a big difference — 25 percent. How come? (“It was sourced within PwC data,” offers PwC’s Steven Silber in explanation.)
Metrics are a big issue in the web world, but this ad delta — print and digital combined — is an outsized one. Whichever number you want to use — $23.8 billion or $18 billion — is highly meaningful. But your choice won’t change our tale much. The gulf between digital and newspaper advertising is now enormous, and still growing: Digital advertising grew 17 percent year over year.
The graphical time series reinforces the numbers and puts squiggly lines to the lost decade for newspaper companies:
There’s a lot more in the report than the top-line numbers, and we’ll get to some of that below. First, though, let’s compare the IAB report with that NAA report that came out at the end of last week. Let’s start with the NAA’s digital ad number. It came in at $3.42 billion, an increase of only 1.5 percent year over year, shown below in the context of other 2013 revenue categories. (Note: The direct marketing and niche publication data is all print; any digital niche revenue would be in “digital ads.”)
So, as digital advertising overall grew by $6.2 billion in a year, newspapers’ digital ad take increased by only $50 million — less than one percent of that six-billion-dollar growth.
That’s a fairly incredible number. But it’s not a surprising one.
Each newspaper company reports (and internally allocates) its digital ad revenues by its own standards, so it’s tough to get apples-to-apples comparisons about how well these publicly reported numbers differ company by company. (Not to mention the many newspapers going private and only selectively releasing any data at all.) Is McClatchy’s digital-only revenues report significantly different than Gannett’s, or A.H. Belo’s?
What we can see in this NAA assemblage of numbers is that digital advertising growth has become an increasing challenge for all newspaper companies. NAA’s compilation is a fairly comprehensive extrapolation, based on 24 newspaper media enterprises, including all the public companies and some private ones. Its aim: to “cover all regions of the country and all circulation size groups.”