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Newspaper Publishing: WSJ and Others Plan for Change to Salvage Revenues

Spending on print ads to decline 8.7%, and the majors in newspaper publishing are planning for the future

A decade or two ago in newspaper publishing, it wasn’t easy to get ad space in The Wall Street Journal. There was limited space and they were almost always sold out. However, over the last decade, magazines and especially newspapers have had trouble filling those ad slots as advertisers sought other platforms to express their brands. “Advertisers aggressively are pushing into online video, and marketers in sectors such as retail, financial services and telecommunications are reducing print spending,” wrote Suzanne Vranica and Jack Marshall in the WSJ.

However, they also report that multiplatform advertising is making a difference. “To help bolster digital dollars, many publishers slowly are abandoning low-rent display ads and pushing into potentially more lucrative ad offerings such as native ads, video ads and virtual reality.”

In the same article, Vranica and Marshall report,”Global spending on newspaper print ads is expected to decline 8.7% to $52.6 billion in 2016, according to estimates from GroupM, the ad-buying firm owned by WPP PLC. That would be the biggest drop since the recession, when world-wide spending plummeted 13.7% in 2009.” John Janedis, a Jeffries analyst, predicts a 17% drop in print-ad sales, a 12.5% drop in print and digital revenues for Gannett and 7% for News Corp.

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In a memo to his employees, Gerard Baker, editor in chief of WSJ wrote, “We operate in a time of rapidly changing market conditions, especially in the world of print advertising…These are days of accelerating change in the newspaper business.”

To do this, the WSJ “announced a coming revamp of its print editions that will include the consolidation of sections and other cost reductions, moves designed to make the print newspaper more sustainable for the long haul and help accelerate the newsroom’s digital transformation.”

The New York Times “has been working on a strategy to significantly boost digital revenue by 2020, including shifting more resources into digital initiatives and looking at ways to revamp things such as its Metro section.”

Part of the issue in newspaper publishing is ad cost, and print advertising has never been known for its frugality. WSJ reports:

“The average CPM, which is the cost for reaching a thousand people, for a full-page ad in a national newspaper is roughly $100. Meanwhile, the average CPM for a broadcast TV ad in prime time that reaches 25- to 54-year-olds is roughly $37, according to several ad buyers.

That means that when an advertiser weighs the performance of print ads against their cost, print doesn’t appear as efficient as other media when ranking return on investment, said David Murphy, chief executive officer of Novus Media, an ad-buying firm owned by ad giant Omnicom Group Inc.”

However, as advertising revenues decline, newspapers are seeing print circulation numbers drop too and there’s certainly a correlation.

At WSJ, they’re offsetting the losses with growth in digital subscriptions, which are growing at a “moderate” rate and close to surpassing print numbers. Back in August, WSJ reported “circulation revenue rose 5% on the year,” and “digital subscribers rose to 948,000 from 893,000 at the end of the prior quarter.”

It certainly looks like it would be time in newspaper publishing to put the readers first, again. Without an audience, there are no sponsors. And all this is happening as we’re seeing end-users become more and more willing to pay for high-quality content in any number of digital delivery formats. Changing economic models is a very hard thing for any management team to accept and deal with, but the time is now.

 

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