For All the Bad News About Newspaper Performance These Days There Is Also Good News.
And It Will Be the Smart Newspaper That Joins Both Pieces Of That Puzzle Together

Philip M. Stone May 23, 2005

The bad news about newspaper performance continues - various studies report more people are using the web at the expense of reading a newspaper; the web will takeover some 35% of real estate advertising by 2009, and newspaper circulation is at its worst since 1996, but then there is this gem of good news – the number of people reading newspaper web sites is increasing while visits to other news and information sites is decreasing. Can you put the puzzle together?
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Hint: It will be the smart newspaper that ensures that if all that lucrative real estate advertising is going to dessert print for the web that as much of it as possible turns up on the newspaper’s own web site.

Even John Sturm, CEO of the Newspaper Association of America, sees the writing on the wall as he dissects the figures his association released on the popularity of newspaper web sites. “This data confirms that the use of newspaper web sites represents one of the largest and growing single audience collectives on the Internet, and demonstrates that newspapers continue to attract readers through online brand extensions and new products.”

The study by Nielsen/Net Ratings showed newspaper online readership increasing by 3.1% in March while other information sites saw decreases of 4%.

Compare those figures with statistics for the print editions that showed US daily newspaper circulation dropped 1.9% in the six-month period ending March 31, the largest decline since 1995-1996. The usual rate of decline has been between 0.5% and 1%, so with the graph arrows pointing downwards there is little good news for print.

Supporting those print statistics was a study by Burst! Media, an online sales house that sells advertising to more than 2,000 sites. It found that 30% of its respondents say they are spending less time reading a newspaper compared to one year ago (35% say they are watching less television). Even the young, including the 18-24-age segment that is known to spend much of its time on the Internet confirmed that they are spending more time than ever on the web.

And if that all wasn’t bad enough, now comes a study released by Borrell Associates that forecasts a 55% increase in online real estate advertising this year over 2004. Within five years online, which today has about 10% of the real estate advertising market, is projected by Borrell to jump to 35%

“The migration of dollars is away from traditional mass media and toward targeted advertising such as lead-generation programs and search engine advertising,” according to Borrell. It noted that brokerage firms and individual real estate agents are among the heaviest advertisers on Google, Yahoo and MSN search programs.

Newspapers in 2004 earned about $4.75 billion from real estate advertising as compared to $1.16 billion by online. Borrell estimates that online will take over from print as the main advertising expenditure for real estate in 2008 at about the $3 billion crossover point. Add that to what McKinsey told newspaper publishers in April that their classified advertising revenue was going to take a $4 billion hit by 2007 – that’s about 9% of the $46.7 billion that newspapers earned from 2004 advertising – and the proverbial writing is definitely on the wall!

But from all that gloom is the very positive news that newspaper web sites are increasing their popularity. A publisher doesn’t have to be too smart to figure out that if the print product is going to lose all that classified advertising revenue then it should become an immediate priority to ensure their own web sites pick up as much of that online revenue as possible. Put bluntly, if you can’t beat them, join them! It’s as good an example as any of any why newspapers can no longer afford to be just single-platform vendors

It is the smart publisher that has his marketing department looking at how to achieve exactly that. It means a dynamic web site working hand in hand with print to “own” the local market. The marketing challenge is real, and time is slipping away.

One newspaper group publishers should spend time looking at to see how its done is McClatchy, a thriving company owning 12 daily newspapers. The Wall Street Journal recently ran a fascinating interview with Gary P. Pruitt, McClatchy ceo, who noted that circulation at his newspapers “has posted 20 consecutive years of daily circulation growth, by far the best record in the industry.”

McClatchy has very successful online sites. The key to their success is registration – knowing who its readers are and what they are interested in reading.  “We deliver more than nine million requested email messages to registered users. They are requesting email alerts or newsletters on topics of importance to them…As a result we have the ability to target advertising to an audience we know is highly interested in the message, because they have requested it,” Pruitt told the Journal.

He noted that advertisers are willing to pay a premium when they know their message is going to an audience that has already said it is interested in such products or services.

And Pruitt noted McClatchy web sites are very complete.— they feature searchable classified ads, editorial utilizes full multimedia including video, blogging, grassroots journalism, and more – all of the various practices that consultants constantly preach to newspapers on how to run successful web sites.

Pruitt said that McClatchy’s largest print property, the Minneapolis Star-Tribune, is going through a redesign so that it can appeal to those readers who have just a few minutes to read each morning, and those who want in-depth. And it will be thoroughly integrated with its online site.

So for all the gloom and doom for print, there is still hope. Pruitt says he hopes the redesigned newspaper will be “a model for the 21st century newspaper.” There are many in the industries that hope he has it right!

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Online on Track to Outpace Newspapers for Real Estate Advertising - July 28, 2005

Newspapers that make their traditional bundle of money from real estate advertising are having their worst fears realized – that by 2009 online real estate advertising revenue will exceed that of newspapers, according to a new report from Borrell Associates.

This year’s total real estate advertising spend is projected at $11.4 billion, and online has already $1.8 billion of that – a 15.7% share. But Borrell says it expects current trends to continue to where by 2009 online will earn more than newspapers from real estate advertising.

Paid real estate search listings on the Internet – which didn’t exist three years ago – already account for some $500 million of advertising revenue. Competitors are starting to pay big money to lure buyers to their sites.

As Borrell concludes, the big winners will be those who get their money for performance, and that looks like 0nline, rather than newspapers whose main “sell” is that it places a listing in front of a mass audience.