Research, WEB

In scare for newspapers, digital ad growth stalls

Reuters – As more newspapers cut back on print to reduce costs and focus on their websites, a troubling trend has emerged: online advertising sales are stalling.

In the first quarter, digital advertising revenue at newspapers rose just 1 percent from a year ago, the fifth consecutive quarter that growth has declined, according to the Newspaper Association of America, a trade organization.

A flood of excess advertising space, the rise of electronic advertising exchanges that sell ads at cut-rate prices, and the weak U.S. economy are all contributing to the slowdown, publishing executives and observers say.

For an industry savaged by the erosion of print advertising dollars, significantly boosting digital revenue is necessary for survival. But the double-digit online growth rates that many newspapers used to enjoy — and on which their hopes for a prosperous future rest — could be a thing of the past.

At the New York Times Co digital ad revenue at its news sites, including and, fell 2.3 percent to $48.5 million in the first quarter from a year earlier. At the Washington Post Co, the decline was even worse, with revenue dropping 7 percent to $24.2 million, mainly at the website of its namesake newspaper and online magazine Slate.

“The online share that newspapers are getting is smaller even though it’s the greatest goldmine of advertising growth we’ve seen in a generation,” said Ken Doctor, an analyst with Outsell Research.

Last week, ratings agency Moody’s issued a report calling the U.S. newspaper industry’s outlook “negative” because of the “relentless” declines in overall revenue.

“At this point, there is no evidence digital strategies are returning most daily newspapers to positive growth,” wrote Moody’s senior credit officer John Puchalla. “It is merely a way to moderate revenue declines.”

Newspaper executives have long touted digital advertising as a bright spot in an industry plagued by declining print readership. For instance, New Orleans will become the largest U.S. city without a daily newspaper this fall, as the New Orleans Times-Picayune prepares to print just three days a week to cut distribution costs and to focus online.

Some publishing executives are still optimistic about the long-term outlook for digital, blaming the slowdown on the economy.

Scott Heekin-Canedy, president and general manager of the New York Times Co, said digital advertising is becoming just as sensitive to economic swings as print. “We actually saw a dip associated with uncertainties,” he said. “We heard it from advertisers and saw it in the spending patterns.”

The New York Times Co gets 10 percent of its revenue from digital ad sales and 35 percent from print ads. Print and digital subscriptions generate 48 percent of revenue, while miscellaneous sources account for the rest.

Steve Hills, president and general manager of Washington Post Media, labeled the falloff a “temporary slowdown” in a weak economy and a technology issue related to how content on its websites is published.

But there’s another problem that is less temporary: the rise of ad exchanges that put downward pressure on ad prices.


Advertising exchanges are electronic platforms that allow buyers to bid on and purchase advertising space at drastically reduced prices. Many websites — not just newspaper sites — rely on these exchanges to sell unclaimed advertising spots, known in industry parlance as excess inventory. The thinking is it’s better to get something than nothing at all.

But it also trains ad buyers to expect lower advertising prices. “It’s like a publisher trying to sell me an Armani suit for $3,000 but I can walk around the corner and buy it from Google for 90 percent less,” said Shawn Riegsecker, chief executive of Centro, an agency that specializes in buying and selling digital ads, and counts many newspapers as its clients.

Advertisers “are buying audience instead of context and they don’t care what sites they are on,” said Gordon McLeod, president of Krux, a company that helps websites interpret data.

News Corp’s Wall Street Journal, which does not use advertising exchanges, enjoyed double-digit growth in digital ad sales for the quarter ending March, according to Michael Rooney, chief revenue officer at Dow Jones’ Consumer Media Group. He declined to say how that compares with historical trends.

Robert Dickey, president of U.S. Community Publishing at Gannett Co Inc, the largest U.S. newspaper publisher, acknowledged there is pressure on ad prices. But he argued that advertisers want to be associated with strong news brands.

“What we show our advertisers is that our audience and our performance for them is higher than what they are going to find at other types of sites,” he said.


At Gannett, its national paper, USA Today, fared better in the first quarter than did its local properties. USA Today’s digital revenue rose 25 percent in the first quarter, with video becoming a big drawer of ad money, said newly appointed publisher Larry Kramer. That compared with 11 percent growth in Gannett’s U.S. Community Publishing division.

Overall, however, the newspaper industry’s share of online advertising dollars is shrinking. U.S. online advertising revenue is forecast by research firm eMarketer to rise 23.3 percent to $39.5 billion this year, on growth in video advertising and Web search ads.

Auto dealers, retail clothing stores and other local advertisers still use newspaper websites to reach people online, but that segment is also facing insurgent competitors such as daily deals site Groupon Inc, search giant Google Inc, and e-commerce leader Inc.

“If you look at the top 20 companies that made all the money in local Internet advertising, more than two-thirds … have nothing but advertising … It’s not about the news.” said Gordon Borrell, CEO of Borrell Associates, citing websites like Autotrader, and Groupon.

Some newspapers are trying out new formats and experimenting with different types of ads on their websites to try to goose advertising spend.

“Newspaper companies have acknowledged those trends and there is a lot more innovation on the online side that’s not immediately reflected in the numbers,” said Caroline Little, CEO of the Newspaper Association of America.

(Reporting by Jennifer Saba; Editing by Peter Lauria and Steve Orlofsky)

About Zoran Opalic

Professional in design and publishing industry. Conceptualize and orchestrate designs and redesigns that effectively reinforce and build brand images. Proven ability to drive record-high campaign in increasing publication sales and execute successful product launches...


One thought on “In scare for newspapers, digital ad growth stalls

  1. You made some decent points there. I checked on the net for more information about the issue and found most people will go along with your views on
    this web site.

    Posted by | October 15, 2012, 12:22 pm

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Aston Martin DB10

Production will be strictly limited to 10 of the bespoke sports cars, developed and built by the designers, engineers and highly skilled craftspeople at Aston Martin’s Gaydon headquarters.

Architect Oscar Niemeyer

"My work is not about form follows function, but form follows beauty or, even better, form follows feminine."

BACK to BASICS: Portraits

Portraits of people are one of the first elements of the photography used in newspapers.

Typography: x-heigh

In typography, x-heigh refers to the heigh of lower case letters without upper or lower parts when compared to capital letters...

Designer George Lois

“I always knew I was the most talented kid in the school, ” says George Lois of his time at Music and Art. “I was lucky to be exposed to the city’s best art education"...


Newspaper typefaces require a higher legibility then typefaces used for other printed products. Newspaper are printed on a paper of lesser quality under high speed.

How to redesign 1

Good redesign is driven by a deep understanding of the editorial mission of the publication.

Headline on photographs

The eternal dilemma! Dilemma of all editors on the planet Earth – to put or not put the headline or any kind of type in the photo.

Design Facts

Three elements that will greatly help you to understand how readers are observing you.

Typeface: NY Times Magazine

Sunday Magazine is an expansive family of fonts for information in tiny spaces and headlines at large sizes.


When, why and whether to use infographic. The basic fact is that infographic refresh the publication, and it contributes to originality of your product.

A well-designed publication

Everything that a well-designed publication must have...



%d bloggers like this: