News Design School » newspaper profits

Online advertising looking good for newspapers

Bob — Thu, 29 Jul 2010 13:01:43 +0000

Online advertising is starting to help beleaguered newspapers a bit — surely good news for the troubled industry.

According to a story in the Wall Street Journal, newspapers’ online revenue in 2009 hit $2.7 billion. This while newspapers’ print revenue continued to fall to about $24 billion, about half what it was in 2000. So the good news is that newspapers aren’t bleeding as much.

It may not be a financial savior, but I hope it’s enough to keep newspapers alive for awhile, if only online. I still say they are our best hope for the future because their newsgathering staff, as cut back as it is, is still superior to that of broadcast stations. Let’s face it, if you want local news, you are going to get it from a newspaper web site, not a television station.

What about Sunday ad inserts?

Bob — Tue, 07 Apr 2009 02:28:14 +0000

My anorexic local paper thumped down by my front door (late, as usual) Sunday morning, but I could hardly find the actual paper among the inserts. Two complete “sections” of inserts, each three times as big as the paper itself.

It is as if the Sunday newspaper carrier is a paid deliverer of inserts, and oh yeah, here are a few pages of news.

On Monday morning when I picked up the paper, it was so thin I honestly thought the carrier had left out a few sections. Nope. Just thinner than ever.

Then I thought about those inserts the day before. ROP advertising is down, but are inserts? Doesn’t seem like it in my local paper. I understand that newspapers get about $25 per thousand for the inserts. This is considerably less than they get for ROP ads, which help increase the pages in the paper.

Clearly, advertisers still want to reach newspaper subscribers, at least on Sundays. In 2007, more than $5 billion was spent on advertising inserts, according to a knowledgeable blogger. It may be lower now, but probably not much.

If the desire to spend that much money remains strong as newspaper readers are going away, what is going to happen to those insert dollars as we move toward the web? Turn inserts into web site pop-ups? That’s not going to work, but I have an idea.

The USPS is losing money. Maybe they could get into the insert delivery business on Sundays — and deliver mail as well, taking Mondays off instead — as newspapers complete their migration to the web. People could sign up or not, saving paper and trees.

Maybe some advertisers would run more Sunday ROP ads instead. Wouldn’t it be nice to have a thick Sunday morning paper again?

I hope someone will enlighten me about the economics of Sunday inserts….

Here we go….

"The business must improve"

Bob — Mon, 08 Dec 2008 00:44:46 +0000

In a recent story in the Wall Street Journal (12/6-7, 2008), Martin Peers said that in two years the newspaper industry is going to look very different.

Not uniquely prescient, that’s surely true. But on a page filled with other tales of corporate woe (reading the WSJ nowadays is like reading a horror story), it really stuck out with its numbers. Peers reported that more than 20 percent of the newspaper industry (by circulation) is in “financial distress.”

The number that really jumped out at me was that in these parlous times, publicly traded newspaper companies reported an average profit margin of 11 percent. Now, numbers are only helpful if you compare them to other numbers, so let’s look at a few. In 2002, the average profit margin was more than 22 percent. In the first half of 2007, it was still nearly 16 percent.

Bad news, for sure. But, as I have written about before, the average profit margin of ALL companies is more like 7-8 percent. So newspapers ought to be doing well, it seems to me. Now I know nothing about making money (hey, I am a professor), but doesn’t it seem like newspapers ought to be in better shape? All those years of huge profit margins, and still above average, yet more than 20 percent of the industry is in financial distress?

I am reminded of a quote from newspaper industry analyst John Morton in an American Journalism Review last year: “…no industry can cut its way to future success. At some point, the business must improve.”

Design can be an important improvement if it is done to make the news easier to access and understand. Design won’t help if it is used as a cosmetic afterthought or as a way to plug empty space in the news pages because you have cut reporters and editors. I think most recent design changes in newspapers I am familiar with have not really been improvements. They have been fun and pretty bandages on a broken bone.

Most newspapers associations and think tanks have been useless in helping newspapers stanch the flow of red ink as well. I think that is a subject that has not been discussed enough. What are these groups really doing — besides collecting dues — to help newspapers, especially the smaller ones?

That’s what I am trying to do with News Design School.