Is There A Correlation Between Internet Advertising Increasing 22% in 2005 While National Newspaper Advertising Dropped 4.7%, And That Some 50 Million Americans Now Turn to the Internet For Their Daily News Fix?

The new research from the Pew Internet and American Life Project can be summed up thus – the more homes that install Internet broadband then the less homes that will rely on traditional media for their news needs. Those homes still with dial-up still prefer their local media outlets.

But with broadband installations in the US growing from 20 million people (10% of the adult population) in 2002 to 74 million (37%) in 2005, the trend is clear. Which is why the multi-platform projects being undertaken by most traditional media are looking more and more like the change or die proposition.

And it is not just in the US that Internet revenues are on the rise while growth for traditional media remains in single percentage digits. In the UK, for instance, where broadband penetration is close to 60%, every sector of traditional media ranging from outdoors to cinema to newspapers and television registered either losses or single digit increases in 2005, but the Internet scored a whopping 73% increase in ad spend.

And to put those UK numbers into more perspective, the total UK advertising spend only increased by 2.1% for the year.

In the US, traditional media is suffering from the continuing trend of advertisers to focus ever more spend on the ever-increasing broadband market. Advertisers are taking a strong view of aiming zat narrow niche audiences rather than making a spend on a medium that may hit a lot more people, but not necessarily the right people.

“For broadband internet users, online news is a more regular part of the daily news diet than is the local newspaper; it is nearly as much of a daily habit as is getting news from national TV newscast and radio.

“Approximately 25% of the growth of daily online news consumption since 2002 is attributable to the increase in home broadband adoption.

“Almost half of broadband users under age 36 get news online on the average day. Among those Internet users aged 36 through 50, 40% get news online and among Internet users over age 50, 43% get news online on the average day.”

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The 2006 Advertising Forecasts Are In – The Internet Continues Huge Growth At the Expense of Newspapers and Televsion, and the US and European Percentage Growth Will Lag Far Behind Such Growing Markets As Brazil, Russia, India, Indonesia and China
As the major advertising forecasters lower their projected 2005 results and cut back on their predictions for 2006 growth, their common thread is that European and the US traditional media, particularly television, are going to see their existing advertising monies flow ever more to the Internet, especially to broadband.

Internet Advertising Soars to New Records on Both Sides of the Atlantic and a European Survey Shows Big Companies See Online Advertising As Critical to Their Campaigns
The percentage figures for online advertising increases this year are truly staggering: Yahoo reports a 46% increase in advertising from last year; The UK, Europe’s largest online market, reports 62% growth; in Poland it is 50% and it’s 35% in Belgium, The Netherlands, and Germany; Italy is expected to grow 18% and the list goes on.

Overall Global Advertising In 2005 Is Forecast Lower, But the Internet Spend Keeps Going Up With Television Feeling the Worst Pinch of Ad Placements Going Elsewhere
The television share of global advertising appears to have peaked at 38% and is now on the way down, led by two of the world’s leading television markets – The US and Japan – according to new report issued by the ZenithOptimedia Group.

As If Metro Was Not Already Giving Publishers Heartburn by Taking Their Younger Readers
Now It Is Going For the Jugular Targeting Classified Advertising Revenues By Converging With New Web Sites

With Record Internet Advertising in 2004 on Both Sides of the Atlantic Is It Any Wonder Traditional Media Invests Big-Time Buying Online Sites?
US Internet advertising grew 17% in the 2004 fourth quarter to achieve a record $9.6 billion for the year – that’s 32% more than 2003 and 19% more than in 2000 when the dot com boom was at its highest. Some European countries are reporting even higher percentage gains....

As if newspaper publishers don’t have enough to worry about that last statistic should cause the hair on the back of the neck to stand up. Everyone recognizes that the young reader is migrating to the Internet but the statistics had always shown that the older the reader the more likely to stay with traditional media. It may not be the demographic most sought after by advertisers but at least they were still there. This research indicates that even the older reader is finding his/her way on the Internet – will they continue with their local newspaper, too?

Good news, however, for those news organizations investing strongly in their digital strategies. More than half of all broadband users go to the sites of national TV organizations, 44% go to portals such as Yahoo or Google, 36% go to their local newspaper, 33% to their local TV station, and 24% to a national daily newspaper. Only 15% say they go to international news sites such as the BBC.

But the one problem about news on the Internet is that most users are not willing to pay for it. They’ll register, but not pay. 54% said they have registered at a news site, but only 6% said they have paid for new content.

“More US households now have Internet access than purchase daily newspapers,” according to Vin Crosbie’s presentation to the World Association of Newspapers recently in Paris. And he warned, “The number who read a newspaper online (53.8 million) is now equal to the number of people who read a weekday edition in print (54.6 million).”

Crosbie, a consultant and senior associate at Borrell associates, made the basic point that the industry must not only recognize that readers are flocking to the Internet, but it must do all in its power to increase Internet advertising revenues to replace those revenues that will be lost to print.

“As more and more people shift their news reading from print to online, the newspaper industry must dramatically increase its online advertising revenues or die. This trend is happening in North America, and please don’t think it won’t happen elsewhere. It’s happening in Scandinavia, and The Netherlands. It will happen soon in the rest of Western Europe. And it will happen during our career lifetimes elsewhere in the world.

“We must make the revenues we earn from online readers equal or more than what we once earned from the people who no longer read us in print.”

And considering, according to Crosbie, that print earns nearly 20 to 100 times more per consumer than a newspaper’s web site it means that as circulation continues to decline even a loss of 2% translates into needing a gain of 40% more website users just to stay even.

Most newspapers have gotten the message they need a hefty Internet presence in their local markets. And many can point to large double-digit percentage advertising increases every year. But in truth those advertising revenues should really be far higher than they actually are. Too many newspapers concentrate on classified advertising for their web sites whereas much of that business is going elsewhere, and they need to concentrate more effort in capturing the local traditional display advertiser.

The problem for many newspapers is that even with increased Internet revenues, they still represent a pittance of the revenue still earned from print. McClatchy’s digital operations saw a 38% revenue increase in 2005. Knight-Ridder, the newspaper group McClatchy is buying, saw a 55% increase in digital revenues. Yet those numbers represent only about 5% of each company’s total revenues.

What do those kind of figures mean for the future? Perhaps Gary Pruitt, ceo of McClatchy, summed it up best, “We’re going to be a strong newspaper company and a strong Internet company.”