Why digital ad sales are declining on newspaper websites

Reuters
Jennifer Saba poses and answers a critical new question for the newspaper industry: What ails digital ad sales? They were supposed to be the growth engine that will cover continuing print ad losses. But in the first quarter of this year, they were flat – up only 1 percent, according to the Newspaper Association of America. Several companies – The New York Times and The Washington Post – actually had declines.

There is some talk of a softening economy among newspaper company executives. But Saba suspects, as I do, that the real culprit is falling prices. For a long time, growing inventory at an array of sites has been making generic digital buys cheaper. And ad networks facilitate shopping for cut-rate space, as Saba’s story explains:

Advertising exchanges are electronic platforms that allow buyers to bid on and purchase advertising space at drastically reduced prices. Many websites — not just newspaper sites — rely on these exchanges to sell unclaimed advertising spots, known in industry parlance as excess inventory. The thinking is it’s better to get something than nothing at all.

But it also trains ad buyers to expect lower advertising prices. “It’s like a publisher trying to sell me an Armani suit for $3,000 but I can walk around the corner and buy it from Google for 90 percent less,” said Shawn Riegsecker, chief executive of Centro, an agency that specializes in buying and selling digital ads, and counts many newspapers as its clients.

Advertisers “are buying audience instead of context and they don’t care what sites they are on,” said Gordon McLeod, president of Krux, a company that helps websites interpret data.

Is there a solution? At conferences, I hear consultants urging newspaper organizations to stop selling through ad exchanges and to use better targeting and other strategies to create premium-priced ad placements. That is happening some, but as much else in the industry, slowly.

We have made it easy to comment on posts, however we require civility and encourage full names to that end (first initial, last name is OK). Please read our guidelines here before commenting.

  • http://twitter.com/mewishnia Mark Elliot Wishnia

    I would argue that Paywalls are also part of the problem. Less people have access to certain Newspaper sites because they need to pay to see the content which is creating less traffic to the site and therefore there is less advertising. 

  • http://www.facebook.com/profile.php?id=100000477893424 Guy Mathews

    Newspapers are their own worst enemy. How often have you turned on the news to see some fat idiot CEO of major newspaper criticizing their own product.

    I do not turn on the TV and listen to DiSH network saying commercial sales are down as a result of TIVO and DVR nor do you hear the radio stations talking about how Sirrius XM has cut into their marketshare.

    As a sales consultant in a small community newspaper, I can tell you our digital revenue is up and growing and my website has over a half million page views monthly and growing. We are consistently in the top Google rankings when people perform searches pertinent to stories in our market and businesses.

     My advice to the New York Times and other large papers. Lock your CEO’s in a closet. Every time they open their mouths they weaken the strength of the newspaper industry. In lay mans terms…

    Shut up Mr CEO, you are the downfall of the industry.