By Rick Edmonds
Media Business Analyst
Advertising takes center stage in the fifth edition of the State of the News Media report, released Monday by the Project for Excellence in Journalism.
The heart of the problem, especially for newspapers, is not loss of audience but “a broken economic model — the decoupling of advertising and news,” the report finds. “Advertisers are not migrating to news Web sites with audiences, and online, news sites are already falling financially behind other kinds of Web destinations.”
A separate report on the future of advertising finds that Madison Avenue is as tradition-bound — or more so — as news outlets. Catching up might involve finding ingenious ways to advertise on news sites. But it might also accelerate the movement to freestanding advertising, friendly to search, that could dramatically reduce budgets for display advertising in traditional media.
The online report is massive — the equivalent of 700 pages of text. It covers eight media industries and offers several extra features. This year’s report draws on PEJ’s ongoing content analysis and includes a survey of journalists’ attitudes and a look at 64 citizen media Web sites in 25 communities.
As in years past, I am co-author of the newspaper chapter, and the “decoupling” theme is one PEJ director Tom Rosenstiel and I have been discussing for 18 months. The nub of the idea is that viewing ads online is more like using the Yellow Pages than seeing ads in a newspaper. People search narrowly for what they want, so accompanying news content may be beside the point — or even a distraction.
I write frequently in the Biz Blog both about the problem and proposed solutions. Some publishers are experimenting with their own search-only product sites, sometimes accompanied by user reviews. Newspaper and local television sites hope to catch the wave of local online video that analysts like Gordon Borrell predict will soon arrive.
The latest iteration of the Newspaper Next project advocates that newspaper organizations reinvent themselves as “local information and connection utilities.” And in my most recent post, veteran analyst Lauren Rich Fine suggested that newspapers could thrive even if print classified advertising went to near zero over the next five years. They would need a business model that capitalized on their news dominance, their continued strength as an outlet for retail and national advertising, and yet-to-be-invented businesses.
The new report brings fresh data and analysis to the case:
- According to TMS Media Intelligence, news sites are now clearly trailing the overall growth of Web advertising.
- “Citizen” sites and blogs do not fare better economically; for them, too, assembling an audience is hard to transfer into advertising sales.
- By most measures (though the metrics are still inexact), the audience for news is actually growing when online is included along with print circulation.
- News sites get high marks for innovation, and in 2007 they showed their willingness to connect to outside destinations rather than being “walled gardens.”
In his introductory overview, Rosenstiel also observes that the newsroom now clearly appears more innovative and risk-taking than the business side of news organizations, where some ad sales staffs are stuck on old practices and change is not going well.
Agreed. But I also think the business people have the much tougher problem, as the report demonstrates. In the newsroom, if you can stand the whirl (and the discouraging cutbacks), this is an exciting time to develop new digital formats and redefine the old print paper or daily broadcast.
The business side’s decoupling dilemma is, plain and simple, a brain buster.
