PEJ: Newspapers are losing $7 in print revenue for every $1 in digital gained

PEJ
Revenue is just one of the problems facing American newspapers, says a new Project for Excellence in Journalism study. The culture at newspapers, and not just on the editorial side, is as much an impediment to publications finding their way out of the mess they’re in.

The study, called “The Search for a New Business Model,” looked at “highly granular” data from 38 newspapers of various sizes. The data was verified through site visits and interviews, then anonymized and shared with executives at seven more companies. The frankness of the newspaper executives is striking.

On revenue:

Digital revenue continues to stymie executives. The papers brought in about $1 in digital advertising for every $11 in print. To get to the mythical “crossover point,” at which digital dollars would overtake print, one executive said “was reducing the annual print losses to somewhere between 6% and 8% and growing the digital revenue at a minimum of 30% annually. Another said he thought the rate of digital growth would need to be close to 50%.” One executive fretted about how much time they spent on digital versus what it brought in: “We spend 90% of our time talking about 10% of our revenue,” he told PEJ.

>>Daily deal sites like Groupon accounted for about 5 percent of digital revenue at the papers studied. Mobile brought in .9 percent. That’s POINT nine.

>>Only 40 percent of all papers are pursuing targeted advertising. Most effort is going to display and classified. 92 percent of papers “said display was a major focus of their sales effort.” Video advertising? “Right now, video seems to be more of a goal than a reality. Less than half (44%) of the papers said they were currently selling video advertising. Those tended to be the larger papers (circulation of 50,000 and over).”

On culture:

Entrenched attitudes aren’t just for editorial. Executives predicted thinner papers: One predicted a future of “probably one-third original content, one-third blogger opinions and one-third community journalism [generated from] outside.” But navigating a transition to a news product like that seems like a relative breeze compared to finding someone who can sell it.

>>”One executive said the biggest difficulty facing his company is ‘execution,’ particularly by the sales staff. ‘This is where the game will be won,’ he explained, ‘in the streets with small and mid-sized businesses.’ Another executive said his sales people frankly did not know how to sell all the products they were offering.”

>>The majority of executives “indicated they had experienced difficulty recruiting digitally fluent ad sales people. One reason, they admitted, is the perception of newspapers as a deeply troubled business. A number of other executives told us they were still trying to figure out how to best integrate digital-only sales people with their traditional sales personnel.”

>>Despite training programs for digital at nearly all papers, “most of these papers are still largely print first operations, or print and digital together, when it comes to the composition of their sales staffs. Sales people concentrating largely on digital are a distinct minority.”

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  • Leonard Sipes

    Why do newspapers try to compete with themselves through a digital presence? I understand that it can take a day to create one article and time is of the essence “but” the digital tools are available to create a news studio complete with a virtual set for $4,000.  Turn every newspaper into a internet television (or radio) station. It requires one anchor and producer per eight hour shift and you interview your reporters. You do an hours worth of news and play it for two.  Thus you have two separate products (and income streams) that don’t compete with each other.

    Someone tell me why that won’t work? Best, Leonard Sipes, http://leonardsipes.com.  

  • http://saveondailydeals.weebly.com/daily-deals.html Daily Deals

    @DOCWEBB:disqus I agree that news paper industry’s should be selling online, but how will they get their stuff sold? They might be needing their in-house personnel to make their online campaign successful. If not, they have to get help from companies that offer daily deals, digital ads and digital marketing. Most companies that are not successful in achieving their online goal (that includes news paper industry) are the ones who resorted in dealing with third party companies.

    Take note: Most merchants that run daily deals, digital ads, digital marketing campaigns without proper planning and research will end up high in potential loss. 

  • http://twitter.com/matthewhealey Matthew Healey

    The problem is not so much that print journalism is in decline, it’s that print advertising is in decline and journalism’s business model was built upon it. Classic print advertising has been giving way to stealthier PR campaigns and to the “targeted” ad, which is cheaper and more easily measured than the broad-based print ad message. A newspaper reaches a geographically-defined audience, but not many companies try to sell by geography anymore. That’s the problem.

    People still want quality news. Before the rise of the “penny press” in the 19th century, they were accustomed to paying dearly for it. That paradigm has to be rebuilt.

  • Anonymous

    It puzzles me why it is so difficult for newspaper executives to see the
    issue. Every time a new online media focused effort appears and proposes its
    revenue stream will come from “advertising” where do you think that
    money will come from. These new online efforts create no new ad revenue, they
    only cannibalize what is there. If the loss/reward ratio is really 7 to 1 then
    the place to focus is obvious.

     

    The place to start is to quit denying on line is real. And the way to do
    that is log in and look at your online content. If it looks more like the old
    cartoon page than a news page that may be your first clue.

     

    Finally try selling on line stand alone rather than an add on or
    giveaway to get the print ad. If it takes the online to close the print ad,
    there may just be a message there.