Tuesday, 10 June 2014

U.S. newspaper ad revenue continues to decline

Last week, I ran into a former colleague at The Star whom I found to agree with me almost 100% on the fact that newspapers' online advertising revenue is still far below print ad revenue despite all the hype, hoohah, bullshit and ballyhoo about the "future" of journalism online.

Agreed, media readership is moving online in a big way, especially in developed, mostly English speaking countries like the U.S. where access to broadband Internet is pervasive, well almost everywhere.

However, the evidence from such places still shows that for every one dollar advertising revenue growth from online editions of publications, there's a $10 decline in its print advertising revenue.

Whilst I'm no lover of the Neo Conservative think tank, the American Enterprise Institute, this article on its website by one of its scholars Mark J. Perry says a lot about the state of the media in the U.S., which is a harbinger of what it can be further down the road in other parts of the world, including Malaysia.

Elsewhere, there are indications reports that circulation revenue is increasing, which helps to stabilise the decline in media revenue.

However, as this is not a comprehensive analysis of the state of print media, I'll come to that in greater depth later.

Mark J. Perry's blog and eMarketer.com articles follow below.

They both blow out of the water the hype, hoohah, bullshit and ballyhoo peddled by a certain journalist whose a new media advocate and self-styled "consultant" who has been telling Malaysian media that the "future is online", whilst not telling the other side of the story that online ad revenues are not making up by far for the decline in print ad revenue.

The trends below raise serious doubts over the future of journalism as a VIABLE, PAYING career on which journalists can rely on for a living.

That's why I stated this blog IT.Scheiss, which is German for "IT.Shit", to counter the marketing and Utopian hype, hoohah, bullshit and ballyhoo of the information technology (IT) industry, especially the Internet industry.


BTW. If you have any problems viewing the embedded images in your e-mail client, please enable viewing images of visit my blog at http://itsheiss.blogspot.com

Embedded graphics courtesy of Carpe Diem Blog, eMarketer.com and Ross Dawson.


Creative destruction: Newspaper ad revenue continued its precipitous free fall in 2013, and it’s probably not over yet

For the last several years, I’ve been regularly posting charts like the one above showing the history of US newspaper advertising revenue back to 1950, based on quarterly and annual data from the Newspaper Association of America. Those charts have been noteworthy for several reasons.

First, more than any of the hundreds of charts and graphs that I’ve created and posted on Carpe Diem over the last seven years, the newspaper ad revenue charts have received the most attention by far. Those charts have been featured on so many other blogs and websites that a recent Reuters article referred to my most recent version as the “much-reproduced chart.” I hope this is a testament to how powerful and compelling the graphical representation of data can be!

Second, it’s possible that the attention the ad revenue charts were generating on the Internet may have contributed to the decision by the Newspaper Association of America (NAA) last year to suddenly stop its long-standing practice of reporting quarterly advertising revenue data and switch to releasing only annual data. In a 2013 interview, NAA CEO Caroline Little was quoted as saying that she and the organization’s board decided it was “time to stop beating themselves up four times a year with the negative numbers.”

Without access to quarterly data, I’ll now only be able to update the charts and report newspaper ad revenue once a year when annual data are released in April by the NAA, which just released its ad revenue figures for 2013. The updated chart above shows annual data from 1950 to 2013 in inflation-adjusted (2013) dollars. The blue line represents total annual print newspaper advertising revenue (for the three categories national, retail, and classified), and appear in the chart as billions of constant 2013 dollars. Newspaper print advertising revenues of just $17.3 billion in 2013 fell to the lowest level of print advertising since the NAA started tracking industry data in 1950. In constant 2013 dollars, advertising revenues last year were $2.7 billion (and 13.5%) below the $20 billion spent in 1950, 62 years ago. Print advertising last year was almost $2 billion below the level of $19.2 billion in 2012, which was the first year that print advertising revenues fell below the 1950 level.

The decline in print newspaper advertising to a 63-year low is pretty amazing by itself, but the sharp decline in recent years is stunning. Newspaper print advertising revenues decreased more than 50% in just the last five years, from $37.6 billion in 2008 to only $17.3 billion last year; and by almost 70% over the last decade, from $56.9 billion in 2003.

Here’s another perspective: It took a half century for annual newspaper print ad revenue to gradually increase from $20 billion in 1950 (adjusted for inflation in 2013 dollars) to $65.8 billion in 2000, and then it took only 12 years to go from $65.8 billion in ad revenues back to less than $20 billion in 2012, before falling further to $17.3 billion last year.

Even when revenues from digital advertising and other categories described by the NAA as “niche publications, direct marketing and non-daily publication advertising” are added to print ad revenue (see red line in chart), the combined total revenues for print, digital and other advertising last year was still only $23.56 billion in 2013 dollars, which was the lowest amount of annual ad revenue since 1954, when $23.3 billion was spent on print advertising alone.

The introduction of digital advertising starting in 2003, and the introduction of “niche publications, direct marketing and non-daily publication advertising” in 2011, have helped to slightly increase total ad revenues (print + digital + other), and the red line in the chart shows the contribution of those other revenue sources. But those sources are relatively small in comparison to print advertising revenues, and haven’t stopped the continuing, overall decline in total ad revenues. For example, digital advertising increased only 1.5% last year, the niche/non-daily category fell by almost 6% and direct marketing increased only 2.4%. Print advertising fell last year by 8.6%, and overall total advertising revenue fell by 6.5%. Those new revenues sources are certainly helping to stop the revenue decline from being even steeper, but won’t likely ever be high enough to reverse the precipitous overall decline in ad revenues in the coming years.

Economic Lesson: The dramatic decline in newspaper ad revenues since 2000 has to be one of the most significant and profound Schumpeterian gales of creative destruction in the last decade, maybe in a generation. And it’s not even close to being over. A 2011 IBISWorld report on “Dying Industries” identified newspaper publishing as one of ten industries that may be on the verge of extinction in the United States.
HT: Sprewell



Meanwhile, mobile and Internet ad spending is growing worldwide but are newspapers benefiting from this trend or are they losing out?

Let's see what eMarketer.com has to say below.

Driven by Facebook and Google, Mobile Ad Market Soars 105% in 2013

Mobile ad spending on pace to reach $31.45 billion this year

Last year, global mobile ad spending increased 105.0% to total $17.96 billion, according to new figures from eMarketer. In 2014, mobile is on pace to rise another 75.1% to $31.45 billion, accounting for nearly one-quarter of total digital ad spending worldwide.

Facebook and Google accounted for a majority of mobile ad market growth worldwide last year. Combined, the two companies saw net mobile ad revenues increase by $6.92 billion, claiming 75.2% of the additional $9.2 billion that went toward mobile in 2013. The two companies are consolidating their places at the top of the market, accounting for more than two-thirds of mobile ad spending last year—a figure that will increase slightly this year, according to eMarketer.

Facebook in particular is gaining significant market share. In 2012, the social network accounted for just 5.4% of the global advertising market. In 2013, that share increased to 17.5%, and eMarketer predicts it will rise again this year to 21.7%. Google still owns a plurality of the mobile advertising market worldwide, taking a portion of nearly 50% in 2013, but the rapid growth of Facebook will cause the search giant’s share to drop to 46.8% in 2014, eMarketer estimates.

The rapid pace at which mobile has taken over the company’s ad revenue share indicates Facebook’s mobile future. In 2012, only 11% of Facebook’s net ad revenues worldwide came from mobile, and last year, that figure jumped to 45.1%. In 2014, eMarketer estimates that mobile will account for 63.4% of Facebook’s net digital ad revenues. Mobile accounted for 23.1% of Google’s net ad revenues worldwide in 2013, and eMarketer estimates this share will increase to 33.8% this year.

eMarketer bases all of our forecasts on a multipronged approach that focuses on both worldwide and local trends in the economy, technology and population, along with company-, product-, country- and demographic-specific trends, and trends in specific consumer behaviors. We analyze quantitative and qualitative data from a variety of research firms, government agencies, media outlets and company reports, weighting each piece of information based on methodology and soundness.

In addition, every element of each eMarketer forecast fits within the larger matrix of all our forecasts, with the same assumptions and general framework used to project figures in a wide variety of areas. Regular re-evaluation of each forecast means those assumptions and framework are constantly updated to reflect new market developments and other trends.



Below is futurist Ross Dawson's Newspaper Extinction Timeline which forecasts that print newspapers will be extinct in the United States in 2017 and in Malaysia in 2029.

By this timeline, the best places for journalists to be are India, Pakistan, Bangladesh, Indonesia, the Middle East, Africa and parts of Latin America.




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