//Kevin Anderson /September 7 / 2012
WAN-IFRA: Challenge for newspapers in digital age is income not audience
The World Association of Newspapers and News Publishers (WAN-IFRA) revealed in its World Press Trends report that only 2.2 percent of global advertising revenues came from digital platforms in 2011, not nearly enough to offset declines in print advertising revenue.
The survey found that paid-for newspaper circulation rose by 1.1 percent from 2010 to 2011. The circulation data is from 150 countries and the revenue data is from 90 countries and, of course, the newspaper market in North America and Europe looks very different from the one in emerging and rapidly developing markets. In presenting last year’s World Press Trends survey, WAN-IFRA’s then-CEO Christoph Riess, likened the pattern in newspaper circulation to the sun, declining in the West but rising in the East. This year, the declines continued in North America, Europe and even spread to Latin America, but print newspapers continued to rise in Asia and also grew in the Middle East, according to Larry Kilman, deputy CEO of WAN-IFRA. In Asia, newspaper circulation has grown by 16 percent in the last five years and now accounts for a third of global circulation.
With digital representing such a low percentage of advertising revenue, it should come as no surprise that print continues to “provide the vast majority of newspaper company revenues, with circulation alone accounting for nearly half of all revenues”, according to a press release from WAN-IFRA.
Print advertising revenue fell from $128 bn in 2007 to $76 bn in 2011, with a stunning 72 percent of that drop coming from North America. In the meantime, overall digital advertising has risen from $42 bn in 2007 to $76 bn in 2011. As we’ve noted several times here on the Knowledge Bridge, the issue isn’t that there isn’t money to be made from digital media but that newspapers simply aren’t capturing enough of the ad spend.
Newspaper advertising accounts for 20 percent of the total global advertising market, but search advertising now accounts for 13 percent of all ad spend and captures 58 percent of all digital advertising.
To capture more digital advertising, Kilman said that newspapers had the audience but not the “intensity” of engagement necessary to capture more digital revenue. Digital audiences consume more news and information than ever, but they spend less time with an individual site than they do with a print newspaper, he said. Also, newspapers must compete with new forms of digital media, such as social networks, for time and attention. A 2010 survey, found that readers spend an average of 20 minutes on the New York Times and only on average eight to 12 minutes on local newspaper websites in the US, but in June of this year Facebook users spent more than six and a half hours on the social networking site, according to web analyticsWeb AnalyticsWeb analytics is the process of measuring, collecting, analyzing and reporting…//read more company comScore.
Mike Fromowitz, focusing on the challenges of Asian media, put it this way:
The good news is that the customer can access the newspaper’s information in almost any given moment. The bad news is that at any junction, the competition is just one click away.
Promiscuous digital readers lack loyalty
Last year, WAN-IFRA’s Riess put the challenge of promiscuous audiences another way:
We are not losing readers, we are losing readership. Our industry challenge is engagement. Because someone is a subscriber does not make him a loyalist.
Kilman said that newspapers must change if they hope to carry out “their traditional role as watchdog, and as the provider of credible news and information that citizens need to make informed decisions in society”. He added:
The problem is not one of audience. We have the audience. The challenge is largely one of business, of finding successful business models for the digital age.
With audiences switching to digital media whether that is online or increasingly on-the-go with a range of mobile devices, the focus for news outlets has to be how to increase that intensity, that loyalty to compete more effectively for digital advertising. In the digital age, news organisations are competing not only with other news media for advertising but with entirely new digital players such as social media and search engines.
Fight for, don’t abandon, digital advertising
Raju Narisetti, the managing editor of the Wall Street Journal’s digital network, put the challenge as:
A promiscuous audience is our new reality. Are our news rooms ready to give them an experience worth coming back to, over and over again?
This is where marrying digital story-telling with social media techniques can build more loyal audiences, increase not only the frequencyFrequencyThe number of times an ad is delivered to the same browser in a single session…//read more of audience visits, but also the time they spend with content. Building these engaging, social experiences will allow newspapers to begin to compete effectively for digital advertising revenue.
In speaking with Rachel McAthy of journalism.co.uk, Narisetti said “the golden age of digital advertising lies ahead of us”.
It’s a sentiment that he has expressed before. Last year, when he was managing editor at the Washington Post, he said:
I, for one, think that the golden age of targeted digital advertising is yet to come. Do we really want to trade that larger opportunity for the much smaller and unreliable pursuit of consumer dollars? I also wonder if we aren’t better off redeploying our newsroom resources to create new revenue streams and more engaging digital platforms than trying to make the traditional Web experience better and charge for it.
Although he now works at the Wall Street Journal, which was one of the first newspapers to have a paid digital strategy, he still doubts that smaller newspapers can generate more revenue from paid content strategies than they can from advertising. He thinks that smaller newspapers won’t be able to generate enough content to convince consumers to pay.
To create those new revenue streams, he said that news organisations will need to do more to understand their audience and also how their audience interact with advertising. He said:
As an industry we know our readers very well, we know what they do what, what they read, where they come from. Why is it that we haven’t invested enough to know how they interact with advertising and taken advantage of that?
Article by Kevin Anderson