Newspapers search for a new ad business model

Maria Molina

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The newspaper industry has struggled to find a business model to balance online and print revenue.  A 2012 study by the Pew Research Center’s Project for Excellence in Journalism shows newspaper’s digital gains in advertising revenue don’t make up for print loses.

According to the research, “for every $1 gained in digital, $7 are lost in print revenue.”

Executives involved in the study “confirmed that closing the revenue gap remains an uphill and existential struggle.”

Overall, the digital revenue grew 19 percent on average. However, the print ad sales, which accounts for 92 percent of the overall ad revenue of the papers studied, fell by an average of 9 percent.

Allison Nottingham, digital sales operation manager for the Dallas Morning News, said print is still larger and brings more revenue to her paper, but digital is starting to catch up.“Print paper is never fully going to get away,” she said. “Print is valuable, but shrinking.”

Kim Bruce, instructor at the Department of Communication at WTAMU, said the shift from traditional print left the industry unprepared, but online advertising can be effective.

“With online advertising you can actually now how many people view it, how many people clicked it… you can actually know all this numbers,” she said. “That, for newspapers, is a huge bonus in actually selling.”

In order to catch up to the online era the newspaper industry needs to stay relevant, said Bruce.

“The primary thing they need is to be missioned minded in the news [and provide] objective, well-researched news,” she said.

The news industry is now more than 15 years in the transition to digital. According to the research, one issue the industry is facing is whether it can grow different kinds of digital revenue. “Newspapers have focused on trying to sell advertising online that is similar to what they sold in print. That advertising was largely built around printed display ads and classified.”

Nottingham said social media “is the big thing” and the key is not to only advertise in the website.

“[The main technique] is constantly adding products,” she said. “ Launch an app, partner with other digital vendors for Facebook marketing, for example.”

Another platform that is growing is mobile advertising which Bruce said will grow more in the future.

“There are so many opportunities because when you think of mobile you think of the text-type advertisement, the platform where you are on an app, you have a banner ad or a bumper add,” she said.

However, the research shows mobile is currently a small part of the newspaper revenue. “In late 2011, on average, mobile accounted for only .9% [sic.] of the digital revenue stream of the papers that provided us with data-less than even video and targeted advertising. This is still a nine-fold increase from a negligible .1%[sic.] a year earlier at these papers.”

Analysts have suggested the newspaper industry must find additional revenue streams beyond advertising. About half of the papers that provided proprietary data in the research said they were trying to use non-traditional methods of revenue.

According to the research, the most common of these methods involved “digital agency,” a concept where newspaper companies act as “online marketers and consultant for local businesses—helping them with everything from search engine optimization to building websites to utilizing social media platforms.”

Bruce said newspapers that use the digital agency method need to be careful of maintaining a clear distinction between news and advertising.

“Really a digital agency is a PR job,” she said. “ There has always been a clear distinction between news and advertising. Those people that are acting in the digital agency capacity are still on the sales side and that would just have to be distinct because other ways that could sway what a newspaper covered.”

Nearly all the executives of the researched newspapers agreed that in order to transition to digital revenue their advertising sales staff needs to change. “One of the broadest findings in this research, indeed, is the degree to which all of the executives talked about the need to re-train and re-tool sales staffs that had been trained to sell print advertising.”

For the most part, these companies also said the industry wants to handle the transition internally without the help of outside companies. Eighty-four percent said there is a formal digital ad sales training program in their staff and 92 percent said their priority is to hire people with digital ad training or experience.

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Newspapers search for a new ad business model