Newspapers and digital advertising

In the week when the Times newspaper announced that it would charge £1 per day for online access I thought this chart would add some insight into the story behind this move.  Three core revenue streams for printed newspapers have always been Classified Advertising, Press Display Advertising and the printed cover price.  This chart uses data from the most recent IAB Adspend Study to show the steep decline in the last year for two of the important revenue streams for newspapers.  The credit crunch and the associated recession have caused the total advertising market to shrink by nearly 17 percent.  The only positive uplift has been a 4.6 percent increase in Internet Advertising. We are about to witness one of the great media experiments of our time as newspapers charge for online news.  We will certainly be seeing one of the greatest marketing experiments ever as over a billion people in the developed markets of the western hemisphere suddenly have to pay for online news.  These news consumers have acquired their online news habit on the basis of no payment being involved.  Now, suddenly, they will be asked to pay.  The scale of this experiment is breathtaking.  Never before has so much news been consumed, primarily because it has been totally without charge.  Suddenly the pay walls are coming down.  Will the Internet in terms of news consumption go the way of Cable TV; i.e. subscription only except for a small public service element? Having worked on a major newspaper many years ago I have followed with interest how newspapers have failed to adapt quickly to the Internet.  Part of that delay has been because a large enterprise is like an ocean liner and takes time to change course.  But a major part of the delay has also been caused by senior management insisting that they understand their readers when they clearly do not.  Having undertaken digital news research and advised on strategy to two of the major UK players, I was appalled at the arrogance of the print publisher mindset when deciding digital strategy. Digital strategy and maximising revenue is a complex topic but let me point to just one often ignored aspect.  The Internet is global.  An east coast US liberal is as likely to migrate to a free Guardian Unlimited as they are to subscribe to the New York Times.  Then, when the Guardian charges for news they are as likely to change their online news habit to visiting BBC news from the UK.  Or, for a more impartial liberal view, (and I do not say this lightly) they may possibly migrate to visiting Aljazeera.net. Aljazeera is staffed by many ex-BBC and CNN journalists and provides a first rate global online  new service.  In fact, searching Aljazeera news videos by region labels such as Europe, Africa and Asia, will provide superior results than the BBC who mix text and video stories together, even on a newly redesigned website.  There will always be good news sources across the globe that produce quality news and analysis that is either supported by a country like the UK in the case of the BBC, or Qatar in Aljazeera’s case, supplemented nearly 50 percent by advertising. A short history lesson also provides added insight into the chart data above.  Newspapers only achieved broad readership when they moved from higher priced subscriptions to a very affordable low cost price funded by advertising.  Use this link to start discovering how the “penny press” came about.  The example of The New York Sun comes to mind.  In 1834 the price was dropped from an unaffordable 6 cents to 1 cent (a penny).  Across the front page masthead of each copy for many years ran the following motto. "The object of this paper is to lay before the public, at a price within the means of every one, all the news of the day, and at the same time offer an advantageous medium for advertisements." Newspapers are dependent on scale to have audiences large enough for advertisers to be interested in advertising with them.  Even in an era of highly targeted digital advertising there has to be a large pool of behavioural data for the targeting to work effectively.  You can buy this pool of data as the Guardian Unlimited does today, but this shares the revenue stream with an audience aggregator; in their case AudienceScience.  Sharing revenue isn’t a good thing when the new digital currency is “audience data.”  In the online world whoever owns the data, controls the advertising and hence the revenue.  Just ask Google. March 2010
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2010

Newspapers and digital

advertising

In the week when the Times newspaper announced that it would charge £1 per day for online access I thought this chart would add some insight into the story behind this move.  Three core revenue streams for printed newspapers have always been Classified Advertising, Press Display Advertising and the printed cover price.  This chart uses data from the most recent IAB Adspend Study to show the steep decline in the last year for two of the important revenue streams for newspapers.  The credit crunch and the associated recession have caused the total advertising market to shrink by nearly 17 percent.  The only positive uplift has been a 4.6 percent increase in Internet Advertising. We are about to witness one of the great media experiments of our time as newspapers charge for online news.  We will certainly be seeing one of the greatest marketing experiments ever as over a billion people in the developed markets of the western hemisphere suddenly have to pay for online news.  These news consumers have acquired their online news habit on the basis of no payment being involved.  Now, suddenly, they will be asked to pay.  The scale of this experiment is breathtaking.  Never before has so much news been consumed, primarily because it has been totally without charge.  Suddenly the pay walls are coming down.  Will the Internet in terms of news consumption go the way of Cable TV; i.e. subscription only except for a small public service element? Having worked on a major newspaper many years ago I have followed with interest how newspapers have failed to adapt quickly to the Internet.  Part of that delay has been because a large enterprise is like an ocean liner and takes time to change course.  But a major part of the delay has also been caused by senior management insisting that they understand their readers when they clearly do not.  Having undertaken digital news research and advised on strategy to two of the major UK players, I was appalled at the arrogance of the print publisher mindset when deciding digital strategy. Digital strategy and maximising revenue is a complex topic but let me point to just one often ignored aspect.  The Internet is global.  An east coast US liberal is as likely to migrate to a free Guardian Unlimited as they are to subscribe to the New York Times.  Then, when the Guardian charges for news they are as likely to change their online news habit to visiting BBC news from the UK.  Or, for a more impartial liberal view, (and I do not say this lightly) they may possibly migrate to visiting Aljazeera.net. Aljazeera is staffed by many ex-BBC and CNN journalists and provides a first rate global online  new service.  In fact, searching Aljazeera news videos by region labels such as Europe, Africa and Asia, will provide superior results than the BBC who mix text and video stories together, even on a newly redesigned website.  There will always be good news sources across the globe that produce quality news and analysis that is either supported by a country like the UK in the case of the BBC, or Qatar in Aljazeera’s case, supplemented nearly 50 percent by advertising. A short history lesson also provides added insight into the chart data above.  Newspapers only achieved broad readership when they moved from higher priced subscriptions to a very affordable low cost price funded by advertising.  Use this link to start discovering how the “penny press” came about.  The example of The New York Sun comes to mind.  In 1834 the price was dropped from an unaffordable 6 cents to 1 cent (a penny).  Across the front page masthead of each copy for many years ran the following motto. "The object of this paper is to lay before the public, at a price within the means of every one, all the news of the day, and at the same time offer an advantageous medium for advertisements." Newspapers are dependent on scale to have audiences large enough for advertisers to be interested in advertising with them.  Even in an era of highly targeted digital advertising there has to be a large pool of behavioural data for the targeting to work effectively.  You can buy this pool of data as the Guardian Unlimited does today, but this shares the revenue stream with an audience aggregator; in their case AudienceScience.  Sharing revenue isn’t a good thing when the new digital currency is “audience data.”  In the online world whoever owns the data, controls the advertising and hence the revenue.  Just ask Google. March 2010
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