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.)

Comments (41 Responses so far)

  1. They could be publishing online before the end of the day using a blog or other simple platform. And the audience and advertising would follow within the month.

  2. Scott–
    Excellent point, and indeed overlooked. I’d amplify your final point–that the costs of producing news would plunge not only because expensive paper, ink, presses, trucks, gas, plastic bags and personnel would be off the books. They’d also drop because a lot of newspaper newsroom functions–including page layout, cutting-to-fit around ad configurations, and IT services that support the paper alone and not the website–would disappear as well.

    I’m guessing publishers who dare to take out that pencil will find the math much more intriguing–certainly less calamitous–than they’d expect.

  3. The revenue issue for newspapers is something that I podcast about recently… and the chart is almost priceless…
    http://members.whattheythink.com/erc/charts080908.cfm

    There is an opportunity for commercial printers to partner with newspapers and get their printing fixed costs out from under them. They don’t have to shut down their print product, but it’s clear that the internal production economics are playing out badly as circulations contract and ad revenues decline. Transcontinental Printing has been active in this area, and we anxiously await the results of their venture in San Francisco. In the meantime, there are commercial nonheatset web offset printers who work with nondailies and specialty newspapers on a regular basis. The nondailies business seems healthier in many situations than the dailies. I expect many dailies to alter their publication schedules, possibly stopping Monday and Saturday editions (where Friday becomes the “weekend” paper), or any schedules that make sense for their areas.

  4. Yeah, and watch your market share plummet along with the advertising dollars. For all the gee whiz the web is such a wonderful place, a lot of people still prefer the paper over the web to browse news.

    Any guesses how long it will be before the Freep and News start thinking about paid online content? I know its a ghastly thought, but I bet they will consider it.

  5. As someone who was just laid off from a job in copy editing and layout for a printed newspaper, perhaps I am somewhat qualified to answer the question of where advertising dollars will go when a printed product shuts down. The hope is that the advertising dollars will follow the product online. The trouble is that the clunky websites that many newspapers have are not going to be adequate for the online world. Thus, before shutting the print product down, publishers will have to look at revamping their websites to make them more user-friendly, add more blogs, add more user-driven content, add more user profiles, add more online classifieds, add more online event calendars and develop more real journalistic content with depth as well as immediacy online. That is not going to happen overnight, and they will need people like me who are looking at the future of journalism and seeing it as an online world. Journalism is content-driven, no matter what the medium. Marshall McLuan was only partly right when he said, “The medium is the message.” The content is also the message.

  6. Imagine a grizzled print executive. They spent 20+ years in print media, they grew up on selling print ads and memorized the rates and numbers for print ads for the last decade.

    They see that the ad revenue on their websites are not nearly as good as their print ad revenue. And the ad rates are even worse!

    They think of their paper as an institution and they want to protect and grow it. They do web because they feel like it’s expected of them.

    Organizations are run on emotion and good execs spent a lot of time nourishing it. Personal contacts, trust, informal processes, non-transitive knowledge are as much part of the organizational infrastructure as printing presses.

    Yet the numbers speak clearly. Mel Taylor just published slides about his newspaper web revenue strategies 2009 presentation and he has good data to prove that advertisers are shifting towards online ads.

    The exec knows they have to change, or they will sink. But how to make it happen?

    Online news is done differently from print news. The print organization will have to retool their entire operation to be successful, and people can’t be “retooled” easily.

    What plausible story can a print exec tell the printers, the editors, the oldtimers, so they will believe that they, the people, the organization, the institution stays, only the direction changes?

  7. A clearer way to look at this is to start with the ideal online-only newsroom budget and figure out how much ad revenue you need to support that and the overhead cost of selling the ads.

    The whole bit about The New York Times needing X-times page views to match print revenue is a red herring. It’s all about covering the newsroom budget.

    That budget should be reconfigured to eliminate coverage and editing of content better served elsewhere on the Web. When you’re done refocusing the mission to core competencies, you will have a leaner, more impactful newsroom and a less expensive news operation. And I bet you’re damned close to covering that with existing online revenue.

    Why not start from scratch with a new brand? Because the existing brand and Web traffic is a huge head start.

    Mr. Webb is absolutely right: Newspapers have under-invested in technology all along, and in terms of the platform, they do need to start from scratch. The Web platforms in use today, with a few exceptions, are a mess.

  8. Very interresting article(s)! But: When newspapers stop publishing in print, who pays the journalists who make the news? (Here in germany publishers are far away from admitting that they have to change or die. But we have the discussion that without newspapers there is no dpa, no ap, no reuters and so no news for the internet).

  9. Absolutely genius point, and one that I’ve never heard before.

    Of course not all print ad money will shift immediately to the web. A lot will get siphoned off by TV, etc., but there will still be plenty there to support a news business. Said business will just have to have lower overhead than your current news brand.

  10. [...] When A Newspaper Stops Publishing In Print, What Happens To The Print Advertising Dollars? [...]

  11. As usual Scott, this is a challenging and proactive post. Thanks!

    May be hose dollars will likely vaporize in such a scenario, but also the real question should be “why should they vaporize?”.
    I’m sure you can figure out that the ROI constraints would be a short answer.
    May I be somehow cynical, let me try to picture this.

    1/ To my view, the following factors you describe seem to be purely conjonctural.
    Craigslist, Kijiji, or other free classified websites do not hava a long term sustainable revenue generation model.

    2/ Businesses stop advertising altogether (never saw ROI) is not likely to happen and may be the ROI is really there but inflated by side costs and expenses that must be isolated, quarantained and outsourced (why not in ad’hoc entities ventured with printers and sectors involved in the process from
    subscriptions were mostly for the distribution)

    3/ Businesses shuting down entirely (e.g. retailers)
    and even a prolonged cyclical downturn (e.g. real estate) also would be short answers, while we all know that things will start going again, despite a tremendously darkened world in a prospect of a global collapse THAT WILL NOT HAPPEN).
    Why? For the single reason that till now (despite political gesticulations, scandals and so on) the whole system is rootly sticked to the way things are going.

    4/ The most challenging to get a broader view of the picture is to lay it out taking into consideration the readers trends, and may be the counter effects of blogging, social networks and affiliate systems.

    @Dr Joe Webb
    Good points
    “…The nondailies business seems healthier in many situations than the dailies.I expect many dailies to alter their publication schedules, possibly stopping Monday and Saturday editions (where Friday becomes the “weekend” paper), or any schedules that make sense for their areas”

    “…The hope is that the advertising dollars will follow the product online. The trouble is that the clunky websites that many newspapers have are not going to be adequate for the online world.”

    “…publishers will have to look at revamping their websites to make them more user-friendly…”

    @Imre Fitos
    Thruth!
    “…Online news is done differently from print news…”

    @Patrick
    “…For all the gee whiz the web is such a wonderful place, a lot of people still prefer the paper over the web to browse news.”

    May be, but new technologies and forms of deliverabilty, provided they could fit and match readers’ groups (sociotypes), could change things.

    @Chuck Taylor
    Definitely!
    “…That budget should be reconfigured to eliminate coverage and editing of content better served elsewhere on the Web. When you’re done refocusing the mission to core competencies, you will have a leaner, more impactful newsroom and a less expensive news operation. And I bet you’re damned close to covering that with existing online revenue…”

    @Jim Meiers
    As a matter of facts, this is damn truth!!!
    “…without newspapers there is no dpa, no ap, no reuters and so no news for the internet…”

  12. I believe Scott is correct and as enough newspapers reduce or eliminate their print versions those executives with sharp pencils will find the 10% problem is more like a 50% problem. Also, newspapers should not overlook a highly effective way to reclaim some of those dollars – users print from websites. In fact half of the average user’s printing is from the web. The issues are that the print activity is not tracked, the output is unpredictable, and advertisers cannot even be sure their ad will reach the printout intact. So called “printer friendly” pages fail to address the problem as only a minority of users print using that button (majority print from the browser), and the output is not a paginated medium (you cannot for instance put an ad in the lower right hand corner of each page). Format Dynamics has solved these problems and can offer publishers high-quality print output regardless of how users print, and advertisers can still buy print ads. Yes, this represents fewer ads than in the print versions now being reduced or eliminated, but now these are digitally targeted ads served only to an engaged user who has chosen to print, so CPMs are much higher.

  13. Did anyone consider that when a large daily stops delivering print products that a nearby suburban daily or non-daily might see an opportunity to step in and fill the needs of those many readers who still prefer a print product, providing such at costs well below the large metro, and financed by a chunk of the advertising dollars that are left unwanted by the diminished paper?

  14. Yes, there are a bunch of small/medium size newspapers out there that are doing quite well with their printed newspapers, while aggressively providing news/information on whatever devices that are currently in use. Of course, we seldom read/hear of such.

  15. I raised this issue a couple of months ago in a long phone conversation with the strategic-initiatives director of one of the country’s largest newspaper chains.

    My idea: Take one of your smaller papers and have it announce: “One year from today we’re going to print our last issue.” Then spend that year building a web presence that can tell stories better and connect with readers in more relevant ways. Educate readers and advertisers about why this is going to be a better, more effective product. If nothing else, I said, it would attract a lot of attention.

    His response was to that many papers, especially smaller ones, are still profitable. But he also said he thinks newspapers only have perhaps 10 more years of profitability. To me this calls for a sense of urgency.

    One week after this conversation, the Christian Science Monitor announced it was doing away with its print product. And you know what’s happened since.

    My opinion: Only when it decides to get out of the printing and delivery business — even if it’s tough, even if it’s premature — will a news organization force itself to build a new sustainable business.

  16. There are many very good websites out there. I certainly don’t mean to denigrate all sites based on the print model. The New York Times is gradually rising to the challenge, along with The Daily News and New York Post. But it is my opinion that even they have a long way to go to match the user-friendly aspects of the Huffington Post and other non-print websites.

    @tcedu: I know our last names are the same, but I am different from Dr. Joe. Give credit where it is due.

  17. Mr Ed Cohen,
    Can you tell me how Christian Science Monitor is doing then since moving to online only or have they?

    How does this affect local magazine publishers? Does anyone know. I would assume since they are chasing after the same advertising dollar and their paper quality is better than newspapers, that most advertisers who still have some funds available to advertise may take that route. This could be an excellent opportunity for the magazines if they are free and depending on distribution channels.

  18. I am curious what everyone thinks of our solution which has already been endorsed by the National Newspaper Association and can help any traditional media outlet. We are an in-text advertising platform but we do not do the pop-ups like Kontera or Vibrantmedia. We also allow the publishers to decide what their content is worth (IE and electronic rate card) and since the content is what readers love about their local, regional or national newspaper isn’t that at least a pot of gold online that they should be monetizing? Here is a link to a newspaper in the Midwest who is already using the service:

    http://www.stjoenews.net/news/2008/may/21/commerce-bank-employees-are-raising-money-less-for/

    thoughts? comments?

    Thank you

    Joshua Konowe
    Founder/CEO
    BrandClik.com

  19. [...] 19, 2008 · No Comments More musings about how news brands can turn a buck on the web. Specifically: what happens to all that ad money [...]

  20. The BARN ANIMALS at the media buyers outlet are just drinking the cool aid and raking it in. “Tell the advertiser what they want to hear and if you can’t deliver the goods … hit em harder with more money… Stupid is as stupid does.

    Poor lackeys in business suits just follow around the king with no clothes… Hey, get in line PAL. I saw the money dropping first.

    Marketing departments rejoice fifty ads in fifty days! Pennies on the dollar… so journalists of the world write yourself into a coma, scroll on big mama!

    BTW
    It is extraordinary to me, after having been involved in print media since the 70s both in magazine and huge newspapers, that the newsroom is feeding off itself.

    Is it news that a company looses dollars? Yes, but how much HYPE can people stomach before they simply throw hands into the air and take the fork in the road just because it has a direction attached to it.

    Subs are down at the majors… the circulation is down at the majors… big deal.
    Question: if subs are up at the weekly’s and small town papers why is that? Maybe because NEWS means something NEW. As in worth knowing.

    Back to basics of why NEWS services exist.
    1) To REPORT something that is NEWS that matters to your AUDIENCE. Not air heads, not chatty cathy and not gossip R us. THINKERS / READERS / KNOWLEDGE hounds.
    2) To REPORT or CHRONICLE events its subscriber base wants to know about.
    3) To REPORT or INVESTIGATE local government.
    4) To REPORT or ENLIGHTEN its readers.
    5) To offer perspective and analysis.
    6) To gather into one place all the above activities.

    STOP trying to reinvent why people READ!

    NOW how can you be all these things to the same 250,000 LOCAL people? AND have an impact. It is not by using wire stories, not by using briefs and certainly not by running rehashed PR. NEWS honest story telling and interesting in depth perspectives.

    SMELL the coffee.
    STOP asking people to PAY for it…
    HELLO TV? RADIO? INTERNET? anybody paying / subscribing to these?

    How are small papers thriving … see 1,2,3,4,5 above.

    OR how about this —

    Newspaper cannot be the cash cow it once was. The business model works for the smaller papers, but it is improbable due to the audience scale in a large metro. How do editors hold the attention of such a diverse audience… this is the question.

    How do we all realize that the big dollars once garnered are down another path. The page views and click through are bonus and TOP of MIND which is all advertising was supposed to be, will now be held to its claims. AND thus far are FAILING miserably on the internet. but hey it’s free.

  21. My biggest wonder is if a newspaper removes all the resources needed to produce a print product: Press, Pressmen, Paginators, Inserters, Paper Delivery, Paper/Ink cost etc. If they could sustain on that 10% of revenue received from print.

    Some smart and influential person needs to sit down and crunch the numbers to see if that is true. I suspect it is.

  22. Here’s an English language newspaper that went online and dropped its print edition back in 2001 methinks. Not a lot of ads there, are there?

    http://mdn.mainichi.jp/

  23. Assuming that there is not another newspaper in town (i.e. The Denver Post if you are the Rocky Mountain News), all of that local ad revenue would not simply evaporate. Local businesses would still need advertising or marketing of some sort to drive local sales. They would desperately need to find other ways to fill that need.

    Think of this as a supply and demand problem for local audience. If the audience supply disappeared in print overnight, those businesses would be hard pressed to replace it all with local web traffic. In that case, I think a good deal of the print revenue would initially move to the newspaper Web site, and it would be the newspaper web site’s job to make sure those ads did their job in terms of driving sales.

    Also, don’t assume that stopping daily print delivery means stopping all printing, or all “terrestrial” or mobile distribution — which is really what print excels at. What we’re doing with Printcasting (more on my Web site in this comment, or go to printcasting dot com) is just one example. Automatic PDF generation, tie-ins with print-on-demand services (such as Magcloud), and even making content available on PDAs, iPhones and E-Ink devices like the Kindle would also play a role. As daily newspaper circulation goes away, expect to see more activity around these new types of terrestrial distribution.

  24. OMG couldn’t it just simply be put that an advertising-supported business model combined with paid circulation is like a molotov cocktail. They can clear off their desks all they want. Until they start thinking out of the box and stop hiding behind ancient guilds/unions that protect their jobs there’s a long long way to go.

  25. [...] Karp har skrivit på Publishing 2.0 om vad som händer med annonspengarna när tidningen går över från print till webb. Läs gärna hela artikeln, en teaser här: Most [...]

  26. OPA has a story today “Detroit papers cut home delivery, push people online”. I’ve got a great solution for the older folks who won’t go online: they can get the pages they want – in LARGE TYPE – via fax.

  27. I agree with aHoving. Publishers/Consumers are going to have to understand that the invention of the printing press is now over 400 years old and it might just might be time for a change.

    Problem:If I am a publisher and have 200 union people who cannot get fired, cannot get out of their own proverbial way and I am supposed to deliver a print product no one wants to pay for I might as well call it a day. “Extra, Extra – read all at about it: Newspapers trying to deliver 400 year old product with 65 year old business model…extra extra!”

    Starting point of an Answer: This is hard, but not impossible to solve. Think about the top 10 properties on line and start to list what you like about them. You know what, I will help get this started.

    List Reason I like it
    1) Google – Free email, search, cloud computing
    2) YouTube – Free video upload, free music
    3) CNN – News is Free, content is mobile

    OK, now its everyone elses turn. When the newspapers start to offer things that we all love about the best web properties they will start to own the audience again. Until that happens they will likely loose more money or die or both.

  28. [...] When A Newspaper Stops Publishing In Print, What Happens To The Print Advertising Dollars? – Publish… Important question. (tags: advertising new.media finance journalism newspaper publishing2.0) [...]

  29. That’s a great point. Surely, at least some of that money would shift to the web. The newspaper has the client relationships in place to help make that happen.

  30. @David C Webb

    Sorry for the mistake, but the credit goes obviously to you. Everybody should have noticed :-)

    Merry Christmas to all

  31. It would be nice if all the print ad dollars would transfer over to the web side, but more than likely they would just move to one of the several other print options that exist in every city. Tabloid prints, magazine slicks, small weekly or monthly news tabloids. They would all get an increased piece of the pie. Some cities are actually seeing growth in some of these publications.

  32. [...] Newspaper Advertising vs. Online Advertising The Publishing 2.0 website currently has an interesting discussion taking place on the future of advertising for newspapers.  They ask the question ‘When A Newspaper Stops Publishing In Print, What Happens To The Print Advertising Dollars?“ [...]

  33. Content is king!
    One question i ponder for a long time without an answer: what is google, drudge, huffpo… without content from journalists, reporters, photographs, cameramen that are paid by news(paper) organisations? What can a news organisation do against stealing their content?

  34. [...] of what newspapers provided, reporters and editors would still have skills to meet those needs, and advertisers would still have dollars to spend on that exchange. It’s a mistake to assume that online news will never get better or [...]

  35. [...] är så rätt och så fullständigt åt he-vete fel. Visst inser du också det Björn? (Läs annars Scott Karp “All of the ad dollars that the print newspaper gets are, by definition, ad dollars that the [...]

  36. 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.

  37. 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.

  38. bravo, simon, welcome to the 21st century!

  39. 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 http://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.

  40. 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.

  41. [...] I asked this question a few months ago in theory, but now we get to see what happens in actuality.  Logically, one or a combination of the following will happen to the newspaper’s advertising dollars: [...]

Add Your Comment

Subscribe

Receive new posts by email