Research

The Guardian: Newspapers face up to the ad crunch in print and digital

The summer of 2015 will be remembered as the moment a perfect storm hit national newspapers.

The print advertising market, which still remains the lifeblood of income for most publishers on the path to digital sustainability, has been down unprecedented levels of as much as 30% in some weeks over the past six months.

Most of the UK’s top 10 newspaper advertisers have stripped their budgets: the biggest, Sky, has cut its spend by 20% in the first nine months, according to unofficial figures. Second ranked BT has lopped 18% off its national newspaper ad budget so far, Asda is down 47% and the once ever-reliable Tesco is down 39%.

“It’s a pressure cooker for newspapers,” says the chief marketing officer of one of the UK’s biggest advertisers. “It has reached a breaking point where buying a traditional print ad is no longer the answer. It isn’t that print doesn’t work, there just has to be more focus on what spend is getting the reach, quality and audience cut-through.”

As if the scale of this threat were not enough to set off alarm bells in commercial departments across the industry, the issue has been exacerbated by an equally alarming slow-down in the rate of growth of the digital ad revenues that publishers have been relying on to replace print revenue declines.

An example is the world’s biggest newspaper website, Mail Online. With well over 200 million monthly users it should be an attractive buy for advertisers, yet it saw growth slow to single digits over the summer.

Screen Shot 2015-10-18 at 19.35.14

The snapshot provided by the publicly-listed company, which will miss its £80m digital revenue target this year and stands little chance of making the £100m goal next year, is typical of the slowdown seen across national newspapers.

David Pemsel, the chief executive of Guardian Media Group, is one of a number of senior industry executives who point the finger at Google and Facebook.

Pemsel, echoing Daily Mirror publisher Trinity Mirror, sounds a warning over the commercial outlook for this year, noting that the internet giants are hoovering up digital ad spend at a “far faster rate than previously seen”.

“There are numbers out there to say that year-on-year digital increase is around 30%, 29% of that went to the [internet] platforms, and 1% of that was shared amongst everybody else,” he says. “Facebook … has become a proxy for mobile, and at the same time slowly over time managed to sort out its video strategy as well, which in summary means you’ve got the perfect storm.”

Research by eMarketer has estimated that Google and Facebook will this year take half of the total UK digital display advertising market, well over £1bn.

Publishers have attempted to build advertising scale to help compete against the attractiveness of Facebook’s 1.4 billion mobile-led audience.

For example, the Guardian, Financial Times, CNN and Reuters recently launched an alliance to pool advertising to attract more brands using programmatic, or computerised, selling.

 

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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...

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