US Newspapers Face Slowdown in Online Ad Sales

24 April 2007

NEW YORK: US newspaper publishers, having pursued retreating classified ad revenues across the border to the worldwide web, are finding equally difficult terrain on the other side.

Hopes for growth in online ads are not living up to expectations, some major media businesses have revealed. The New York Times Company warns that growth this year will not be as strong as its predicted 30%; while Tribune reports Q1 growth as markedly lower than the comparable period last year. Gannett's online growth also slowed in Q1.

The gloom is intensified by the fall in classified revenues for the titles' print editions [WARC News: 23-Apr-07].

Although some companies have fared better during the period - notably Dow Jones which publishes the Wall Street Journal - the overall trend is slowing.

Says Kip Cassino at media researcher Borrell Associates: "Generally, newspapers tend to believe things that have been good are going to get better. And that's not always the case."

He believes the percentage adspend growth rate in online newspapers is likely to fall to the low twenties this year, from 28% in 2006.

Publishers, says Cassino, must wean themselves from dependence on the classified sector. As demand for real estate and jobs ads erodes in print, there is a knock-on effect on newspaper websites.

Adds Greg Smith, chief operating officer at interactive ad agency Neo@Ogilvy: "Advertisers are getting less scared of blogs and newsgroups and now are beginning to take money away from the traditional newspapers' sites."

In addition, say ad buyers, the traditional mainstays of newspaper advertising - automotive, entertainment and finance services - are shifting dollars into search marketing, which, they aver, is more precise in meeting customers' needs and is easier to measure.

This shift has prompted many publishers to team with Google and Yahoo in an effort to jump on the search ads bandwagon [WARC News: 18-Apr-07].

Data sourced from Wall Street Journal Online; additional content by WARC staff