March 2007 - Editor's Perspective

Newspapers Rebound Online

For the past several years, newspapers across the U.S. have taken dramatic hits to their circulation numbers-not to mention their advertising revenues. As readers continue to forego the morning ritual of stepping outside their front doors to pick up their newspapers in exchange for a more convenient online version, newspapers are forced to find other ways to capture readership and hold on to advertisers.

The possible demise of major newspapers should serve as a wake-up call not only for the print publishing industry, but also for major Internet players, as well. During a televised interview featured on the PBS show “Frontline,” Google CEO Eric Schmidt admitted that the possibility of newspapers folding would be a detriment to his company. “We’re, in fact, critically dependent upon the success of these newspapers. We don’t write the content. We’re not in the content business,” he states.

While Schmidt says that Google simply posts the content that eventually links readers to newspapers sites, he admits that it’s a double-edged sword for newspapers-especially when it comes to online advertising.

Schmidt adds, “One of the unintended negative consequences of online advertising has been the loss of value in traditional classifieds. It’s simply quicker and easier for an end user who’s online, on a broadband connection, to look things up and to figure out what they want to buy. It’s true for many companies. And it’s really affected the economics of newspapers. This was a surprise to us. We figured people would use both.”

Yet, newspapers are not just competing with the web. Print advertising has been forced to compete with the television medium for years-vying for every ad dollar. However, a recent study conducted by Borrell Associates paints a much different picture for newspapers these days. According to the report, the research firm predicts that local online video advertising, valued at $161 million in 2006, will hit the $371 million mark in 2007. Newspapers sold an estimated $81 million in local online video commercials in 2006 compared to TV broadcasters, which sold $32 million.

In the past year, locally targeted online video ads became established marketing tools in the top three markets-Chicago, New York and Los Angeles-worth more than $5 million each. What’s causing this boost in revenue? According to the report, infomercials are driving the surge in advertising, as opposed to traditional 15-second commercials.

The study also reveals that print media is utilizing the Internet to attract TV advertisers, while TV broadcasters have been using online marketing to capture traditional print advertisers. This has prompted a reversal of sorts in which most local TV websites are offering classifieds, while almost 50 percent of newspaper websites are hosting video content. Thus, online advertising is transforming the face of local advertising by increasing the number of video ads, as well as the frequency of paid search.

It’s evident that newspapers are trying to carve a place for themselves on the Internet. And as technology continues to throw curve balls at print media-with blogs, podcasting and mobile media-newspapers must take the “fight or flight” approach if they hope to survive in the long run.

Vitisia Paynich


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