December 17th, 2008

When A Newspaper Stops Publishing In Print, What Happens To The Print Advertising Dollars?

by

With all the debate over the future of newspapers, here’s a question I haven’t heard anybody ask (much less answer): If a metropolitan newspaper suddenly ceased to publish, leaving the city with no newspaper, what would happen to all of that newspaper’s ad dollars?

Most newspaper companies’ strategy right now is based on the assumption that you can’t shut down the print newspaper because it brings in 90% of the revenue, and you couldn’t possibly support the same news gathering operation with the 10% revenue slice that goes to the website. (The 10% problem)

There’s just one problem with this assumption. All of the ad dollars that the print newspaper gets are, by definition, ad dollars that the newspaper’s website does NOT get.

Think about that for a second. Newspapers know that they are competing with their websites for ad dollars. But newspapers are also essentially competing with their websites for survival.

So what WOULD happen to those millions of dollars in advertising if there were no longer a print newspaper to collect them? 

Some of it would simply vaporize due to one of the following factors: 

  • Craigslist, Kijiji, or other free classified websites
  • Businesses stop advertising altogether (never saw ROI)
  • Businesses shut down entirely (e.g. retailers)
  • Prolonged cyclical downturn (e.g. real estate)

But what would happen to the rest of it, to the ad dollars that businesses still want to spend?

Who would compete for those ad dollars? How much pricing power would they have with the old monopoly gone?  How would the value propositions and ROI (perceived or real) differ from that of newspaper advertising (e.g. search advertising vs. display advertising vs. new ad models). How would advertisers perceive these alternatives to print advertising?

Most importantly for newspapers, what share of these suddenly liberated ad dollars could their news brand (which used to be the name on the advertisers’ checks) capture with an online-only reincarnation, now that the brand was no longer competing with itself? (I’m following ASNE’s lead in calling it a news brand instead of a newspaper brand.) What kind of newsroom and journalism could those “reclaimed” ad dollars support?

If I were a newspaper executive, I would cancel all meetings, clear off my desk, get out a really sharp pencil, and start trying to answer these questions. You can be sure that many other companies are already working on figuring out the answers.

To be clear, I’m not saying that newspapers should shut down the print product. I’m saying that newspapers should make sure they think through what would actually happen to all that advertising revenue if they were forced to stop publishing in print (which increasingly looks like a real possibility for some newspapers). Figuring this out could, in some cases, make the difference between surviving in some form (or even thriving) and ceasing to exist.

P.S. Regarding circulation revenue, those dollars will likely vaporize if the newspaper stops publishing in print. Why pay for distribution when its free? (Yeah, newspaper subscriptions were mostly for the distribution, not for the content. Everyone understands printing the newspaper and delivering it to your door is costly. And everyone knows it’s not the case with bits. Which is not to say readers don’t value the content, but there’s a big difference between paying for news and paying for the delivered bundle of news and information that is a newspaper.)

  • I think you are possibly overlooking all the other types of 'newspapers' that have a significant chunk of the market. Newspapers are not necessarily 'newsy' - for example the weekly or monthly publications that report on events etc past and upcoming in the cycle.
    Our publication is written entirely by its readers and if anything, press releases come in a very low last on the rankings of likelihood to make it to press. Why? Because as you say, people want their news now, via internet, radio, rss etc. The print world must come to terms with its new, 'slower' cycle. It is still just as valuable if harnessed, but has been relegated for the moment to second fiddle only for its speed to deliver news - so deliver something different! In depth analysis, thoughts, opinions, events etc.

  • stevem

    The biggest problem with most newspaper websites is that they are HORRIBLE. Ugly, clunky, and disorganized because they are trying to cram an entire day's paper worth of stories and links on one home page.

    Check out www.lasvegassun.com for an example. Would YOU want to advertise on that page?

    Newspaper need to use their WEB sites for NEWS, and only NEWS. They have to stop putting fashion stories, and recipes, and a shopping page, and blah and blah and blah blah on their sites.

    Use the web for time sensitive stuff like breaking news, international news, sports scores, etc.

    And make classifieds FREE on the site. I can't believe newspapers are still charging for classifieds. Look, it's over, move on and use those free classifieds on the website to bring eyeballs to the site.

    THEN take their printing presses and each day of the week put out a tabloid with a different focus each day. It would let the reporters go really deep into investigative stories, real estate stories, sports stories, etc.

    Make Monday the Business and Tech day, Tuesday the Sports day, Wednesday the Food and Recipe day, Thursday is Fashion day, etc.

    That's the only way newspapers are going to make it. They are too arrogant to realize technology has made a "newspaper" an oxymoron so many of them are going to fail.

  • ahoving

    bravo, simon, welcome to the 21st century!

  • Paper is dead. Ok, dying. Gray on gray type that gets all over the readers' fingers is a bad way to deliver the product. Newspaper print ads mainly get thrown away. Why ad buyers don't know this is beyond me. What they can tell is that they don't get enough click-throughs on line (because everyone in this age of media hype is well-practiced at ignoring ads).

    How to make the transition work? It may be more important to focus on the ad buyers than on the sellers. It may also require new media start-ups to suffocate the old dinosaurs, and there would be a lot of losses in that - personal, social, and political.

  • Simon Barber

    I have spent my life in newspapers. I have to have a newspaper with breakfast or I get withdrawal symptoms. But I gave up smoking and I can give up newspapers, too. I'm finding out how. Got a smartphone for Xmas. Now I've gone through the WaPo, WSJ and NYT before I'm even out of bed. This morning I read Joe Nocera's great NYT mag piece on risk on my phone. Would prefer a slightly larger screen that I could prop up against the cornflakes box, but with Kindle-like devices, that's coming. The era of newsprint and presses and fleets of delivery vehicles and all the other wasteful infrastructure is over. Advertisers have no choice but to migrate or find other channels. And I, for one, will be willing to pay for quality, properly edited, trustworthy content. Not the price I'm now having to pay now for the print versions of the NYT, WSJ and WaPo, but maybe the 25 bucks a month I spend on an online subscription to the FT. I'll miss the serendipity of newspapers -- having one's eye unexpectedly caught by something one might otherwise have missed or ignored -- but I'll get over it. What I won't miss are the trips to the recycler and the mornings when the papers isn't delivered or doesn't quite make it to the porch and its raining. Oh, and as I journalist, I won't miss the iron deadlines, or not being able to update and correct instantly. And I do relish the idea of developing new skills to tell stories in many different media.

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