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TV, Radio and Newspaper Revenues are Down, Down, Down

Television revenues a cliff-hanger

In both an Olympic and presidential election year, U.S. television revenues are still projected to drop 7% according to BIA Advisory Services.  This represents a loss of over $3 billion. Subtract the $1 billion that NBC generated with the Olympics and the more than $2 billion spent by the political parties on TV and it all adds up to a $6 billion (-14%) shortfall when compared to 2007 revenues. 2009 looks to be even worse – cliff-hanger indeed.

Radio revenues continue to skid

U.S. radio revenues have just experienced the largest year over year drop in one month. The Radio Advertising Bureau just released the November numbers and they’re down-right scary. A 22% drop in national and local ad revenues. When you look at November over two years (2008 vs. 2006), it’s a 29% drop. Radio has not had a year over year revenue increase since April 2007, and that was only 1%.

Newspapers not delivering

According to the NAA, U.S. newspapers lost $15 billion, in the first three quarters of 2008, compared to 2007. In the third quarter, they dropped over 19%. Classifieds continue to be the hardest hit with a nearly 31% drop. The category has been hit hard for years. In 2000 Classifieds accounted for over $5 billion in revenues, this year it will barely crack $2 billion.

It’s not just the economy stupid.

Mass media advertising is heading for a world of hurt. 

What will happen to the advertising industry? I have a few thoughts, but they will make for future posts. 

As I have written before, the newspaper industry is dead. If you didn’t think so then, how do you feel about it now that the second largest newspaper company, Tribune Company, has filed for chapter 11? Add to that the fact that the New York Times (the nation’s largest metro newspaper) has been forced to put its office tower up as collateral for a $225 million loan and we have the beginning of the end.

There is no doubt that 2009 will bring a lot of change to the advertising landscape.  

We live in interesting times…

Why I Think Newspapers Will Die: Part Three - Classified Advertising

In Part Two of this series of posts, I reviewed the issues impacting editorial content in newspapers and how they’re contributing to the death of newspapers. This post is about yet another contributing factor – classified advertising – a much more direct contributor in the demise of newspapers.

For years now print classifieds have been under assault by a number of online players. Traditionally, print classifieds have accounted for about 30% of the average newspaper’s revenue (checkout how the US classified revenues are to pre 1996 levels). In recent years, Craigslist alone has displaced hundreds of millions of dollars annually from print classified revenues across North America. As online classified services continue to capture market-share, newspapers may be forced to give up the space all together. Classifieds may well be the first print section to disappear out of newspapers. Here are some of the more clear-cut reasons why this may happen very soon:

1 – Timeliness

In the world of print classifieds, you’re usually sold a package through a call-centre. A representative walks you through the ad buying process and at the end provides you with a price. The process is generally not that difficult, but it can take a bit of time, and the earliest your ad will appear in the paper is the next day – sometimes a number of days. That doesn’t seem so bad – until you consider the speed of publishing an online classified ad.

Classifies ads are the perfect product for online. Their traditional size and simplicity make them one of best candidates for the self-service model. Placing an ad and having it published instantaneously is a tremendous benefit to the advertiser. No need to talk to a representative or wait for the ad to appear. Though some newspapers now support the self-serve model, the complexity of print fee calculations based on words or print lines makes for a difficult implementation and more complexity for users.

Can you imagine classified call-centres lasting much longer?

2 – Efficiency

Newspapers have made large investments in traditional classified software, both call-centre and pre-press systems. These systems are fairly complex and difficult to implement. Because they were designed to meet the needs of the print products, their online functionality is limited or non-existent. These systems put the print classifieds at a huge disadvantage when it comes to the ability to promote products and services along with multiple pictures and lengthier descriptions.

Again, some papers have attempted to compete in the online space, but connecting print and online classifieds has proven to be more difficult then anyone expected. The outright efficiency of online classifieds is proven and unless the newspapers are willing to give up the print component, they will never be able compete. Print newspapers would need to out perform the online systems and that’s just not possible in the classified space.

How long do you think until newspapers will be forced to abandon print classifieds?

3 – Cost

Though timeliness and efficiency are very compelling reasons for the success of online classifieds and the certain death of print classifieds, it’s the cost that will really bring print classifieds to their knees. Many online services are offering classified listings for free. That’s a very difficult price point for newspapers to compete at.

Though some have tried to test the free model, the risks to their business are too great and many have pulled back. Accelerating the revenue loss is not an option for most newspaper companies, even if it could mean retaining some market share.

How long will people continue to pay for classified ads, when they can get them for free?

Stay tuned for the for more posts of “Why I think Newspapers Will Die.”:

Part Four – Display Advertising
Part Five – Distribution
Part Six – The Reader

By Jose Leal