Newspapers lose $9.6 bln in ads

... but they gain $3.1 bln in online ads

Newspapers have been hit by a perfect storm; classified ads devastated by Monster.com and craigslist, and an economic recession that has reduced all forms of advertising. Cnet reports on a report from the Pew Internet Research Center that says newspaper classified advertising reached a peak of $19.6B in 2000, but has dropped to just under $10B in 2008, a decline of about 49%.

However, the study also reports that online advertising by newspapers has increased by $3.1B since 2002, offsetting some of the $9.6B loss in print advertising.

Trading Analog Dollars for Digital Dimes – The newspapers have complained that they can’t trade print (analog) advertising dollars for online (digital) dimes. Meaning, giving away their content online for free and trying to make up the shortfall with on line advertising just doesn’t work.

Does every online reader represent a lost print subscriber? Is the newspaper really trading print subscriptions for online ads? Perhaps in some cases, but an argument could be made that the online ad revenue is totally additive and does not cannibalize the print revenue stream.

This report shows that the industry as a whole is making the transition reasonably well, recouping about a third of the print advertising losses. Maybe the newspapers just need to do a better job of selling online ads, and use better ad targeting networks to increase the ad rates.

Newspapers are closing and going bankrupt every month. They are struggling to reduce their costs to bring them more inline with the new realities. Display ads will recover once the recession ends. Classified advertising will never return to previous levels. That business has been lost forever to craigslist, Monster.com, and other online alternatives.