May 12th, 2008

The Challenge Of Non-Local Newspaper Advertising


Newspaper brands like the NEW YORK Times, WASHINGTON Post, BOSTON Globe, etc. face a unique challenge in the online media age — how to value non-local readers.

I received this offer in the snail mail this week from the New York Times:

New York Times Circulation Marketing

As I observed previously with my critique of the Washington Post’s circulation marketing, this marketing piece gives me, an avid reader of, no explanation whatsoever as to the value of also receiving the New York Times in print (with the exception of receiving free access to some premium online services, which has nothing to do with the value of the print edition itself).

It appears the objective of this marketing pieces is strictly to convert people who already read the New York Times print edition or who are predisposed to read newspapers in print — and we all know this group of people is shrinking. For the six-month period ending March 31, 2008:

The New York Times lost more than 150,000 copies on Sunday. Circulation on that day fell a whopping 9.2% to 1,476,400. The paper’s daily circulation declined 3.8% to 1,077,256.

The New York Times is clear trying to bolster this declining print circulation by marketing to prospective non-local subscribers like me. The problem is that as a reader, I have little or no value to local New York City advertisers, especially classified advertisers.

This presents a quandary for “national” newspapers like the New York Times, particularly in light of the online readership of

According to Nielsen Online, had 18,869,000 unique visitors in March 2008, up from 17,502,000 in October 2007, a 7.8% increase.

Nielsen’s numbers are estimates, but assuming they are directionally correct, think about the orders of magnitude we’re talking about here: 1 million vs. 18 million

You would think a media property with an audience of 18 million would be worth more than a media property with an audience of 1 million.

And yet it’s not. This is the ten percent problem.

I’m still more valuable to the New York Times as a print subscriber than and as an online reader because my advertising value is still so much higher in print — despite my not living in New York City.

Here’s the economic reality for national newspaper brands: Print readers are scarce. Online readers are a commodity.

Just look at the numbers: Washington Post Sunday print: 890,163; monthly online: 8,929,000 (almost exactly 10x); Boston Globe Sunday print: 525,959; online ( 4,184,000

But why aren’t these newspapers’ online businesses 10x larger than the print businesses instead of 10x smaller?

Here’s the bottom line business model problem: Unlike in print, newspapers create no unique value for advertisers online.

Newspapers had a monopoly over print advertising in a defined geographic area, which provided a lot pricing power for ads that were uniquely local and uniquely suited to print, e.g. classifieds.

Look carefully at the online advertising formats of most newspaper websites, and you’ll notice two things:

  • Most are direct analogues of print advertising formats
  • Most are the same as ad formats on thousands of other content sites

Take a look at the New York Times online ad formats. It seems like an impressive product list at first, but what it boils down to is a fancy list of display ad offerings.

And how many other places can you buy display ads on the web?

Just look at the name of their large rectangle display ad unit: Big Ad — you know, like that full page ad in the paper — you see it and think, wow, that’s a big ad. Problem is the BIG ad on the web site is a whole heck of a lot smaller than the big ad in the paper, despite being a whole heck of a lot more interactive and measurable.

Which gets to the problem of non-local readers.

In the market for local advertising on the web, newspapers are competing with other traditional local media companies, e.g. TV station, as well as with new web-native local publishers, and with search engines — this is a newly leveled and expanded competitive landscape, but still limited.

For non-local readers, on the other hand, newspapers are competing with hundreds, even thousands of other content sites.

That’s why the NYT’s 1 million print readers are more valuable than their 18 million online readers.

For example, here are the NYT print rates for the Technology category:

If you do the math, the cost of 1 page, or 126 column inches at the National Weekday rate of $1,233 is $155,358, to reach 1,077,256 weekday subscribers. That works out to a cost per thousand (CPM) of $144.

Compare that to the $15-40 CPMs that TechCrunch gets for displays. Imagine what TechCrunch’s business would look like if it could command $144 CPMs.

So given that the New York Times can charge 3-4 times as much to show me a technology-related ad in print than TechCrunch can charge online, is it any wonder that they are trying to convert me to a print subscriber?

The issue is even more acute because at least TechCrunch can prove that the ad was displayed, even if I didn’t pay attention to it. NYT can’t even prove that I didn’t throw the paper straight into the recycling bin.

It would seem this is a market anomaly that can’t last.

So what should newspapers with a national audience online do?

Well, one obvious choice is to stop trying to be both a local and national (and even global) media company. The problem is that for companies like the New York Times, the local newspaper supports the global news enterprise — but that state of affairs is in rapid decline.

Another choice is to produce a local print product that MORE people want to read, not fewer — the perceived infallibility of the current declining print product is a subject for another day.

There’s one other choice that you don’t often hear discussed: Find new ways to create value for advertisers online.

That’s what Google did. The value proposition of search advertising has no analogue in print or anywhere offline. That’s where the pricing power comes in.

Creating unique value for advertisers online could also help newspapers better compete for and better price local online advertising as well.

So how can newspapers and other news brands create unique value for advertisers on the web?

I’ll have to get back to you on that one.

Comments (9 Responses so far)

  1. [...] The Challenge Of Non-Local Newspaper Advertising Newspaper brands like the NEW YORK Times, WASHINGTON Post, BOSTON Globe, etc. face a unique challenge in the online media age — how to value non-local readers. [...]

  2. [...] Scott Karp’s analysis of non-local advertising for newspapers interests me from two [...]

  3. Can’t agree 100%, although you make some strong points.

    First, you discount the strength of newspaper websites to deliver local markets. Local/online is a growing trend, and comScore is working on breaking out local NP websites as a separate category.

    Second, you compare newspapers that are already national in readership (NYT, WaPo). They are miles down the online (ad selling) road compared with many others. Couple years ago Houston Chron made a big push to SEO their site and ranked consistently high on Google News. So they grew a national audience. And to your point, yes, that audience still gets served local dealership ads.

    But that’s really more a function of ad inventory. And that’s the real problem for everybody on the web. Who doesn’t have unsold inventory? Hence the relatively low CPMs. ( is also in the range w/ TechCrunch. Interesting you didn’t mention NYT’s online costs.)

    If a publisher had a good mix of local, regional and national ads sitting in their DART for Publishers account, they’d have a much better opportunity to target ads to users. That scenario presumes that publishers would invest increasing ad revenues back into the product in the form of active publisher side ad management. That would add value.

    As it is, any ad they get goes wherever they can put it. Often, they’d rather run value-add freebies for rate card adverts than put up those stupid dancing sheep at $2/m.

    Ultimately, the most value is added when you can factor in the relevance of an ad to the content on the page. With GOOG now in charge of DoubleClick, it’s only a matter of time before they figure out how to apply search-type relevance to display ads. Oh, yeah, and please GOOG should fix the atrocious interface in across the suite of DC tools.

    So you don’t think me a NP apologist, I leave you with this tidbit indicating the cluelessness of some NPs. Belo don’t add their blog stats in with the papers. That is, DMN and Projo ‘roll down’ into their own comScore entities, but the blogs for all the papers – because they share the domain – are held in this ultimately useless entity. I’m in market for Projo, and I rarely go to, but am regularly on the blog.


  4. Very thorough. I’ve always thought newspapers needed nothing but local ads, but I never thought about those who are read by the entire country. It’s definitely a complex problem.

  5. [...] discussion of the difference between print CPMs and online CPMs, kicked off by Scott Karp’s essay on why he thinks print readers are more valuable (to the NYT, at least) than online [...]

  6. Looking forward to read “So how can newspapers and other news brands create unique value for advertisers on the web?” I can learn use it for my “local” Pune real estate market news blog.

  7. It’s a well known fact that direct advertising sales generate more ad income than adwords, tradedoubler, etc. So it’s just amazing to me how so many sites dont have any kind of ad rate card, ad pricing or even a advertising link for potential advertisers to contact.

    Also if we think about print publications, they may have rate cards but only PDF – even still today! when web is going from 2.0 to 3.0, print advertising sales are still back in 80’s

    Still – blogs and small print publications have very good and high quality reader and pin point target groups…

  8. Interesting points. I would add only that the Times and other major metros that dominate their metro markets have actually decreased readership by pricing out much advertising. Classified ads (in the old days) built community as much as did stories about the local zoning board. But if it costs $100 to advertise your $4,000 used Jeep, you won’t do it. And those looking for $4,000 used jeeps won’t buy the paper. When the Philadelphia Bulletin folded, the Inquirer (a great newspaper then) jacked its ad rates by 25 percent, thinking it had monopolistic pricing power. Long before the web, direct marketers shredded that ad base, as did outlying weekly suburban newspapers. What would have happened if the rates had remained flat or were raised a modest percent? My guess is sustained ad bases and circulation. As it played out, the economics of monopolistic pricing pushed readers and advertisers into the arms of alternate media. It’s not necessarily new media that is killing newspapers. It’s old habits. And bad economics.

  9. [...] A way to solve this problem: [...]

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