Are Newspapers on the Verge of an Advertising Exodus?


The future of newspapers?  Get out the tissues.

The future of newspapers? Get out the tissues.

I just finished reviewing a presentation by Morgan Stanley called Tech Trends in 2009. Fascinating report released in the spring on how technology is changing the economy.  I was surprised that the report didn’t get more coverage as it was compiled by the smart folks who produced the “Did You Know?” video that was a hit on YouTube.

But one slide gave me a real pause.  It juxtaposed the amount of time the average consumer spent on a particular media activity (watching TV or reading a magazine, for example) vs. the percentage of advertising budget that marketers spent within that media (buying TV or magazine ads, for example).

The two numbers – in a perfect world – should match up.  The Morgan Stanley report’s outlook for newspaper advertising is bleak.  It’s the type of forecast that should keep newspaper publishers wake at night.

Let me explain by describing the statistics from the report.  First up, the most popular media activity consumers engaged in: watching television. The average consumer spends 32 percent of their media consumption time in front of the tube. Marketers, in return, spend 32 percent of their advertising budgets on TV ads trying to reach that audience. Those numbers match up perfectly.

Next up, the second most popular media activity: the Internet.  Yes, the web is already the second most popular media activity.  Consumers now spend 25 percent of their media consumption time surfing the Internet.  Yet marketers only spend 8 percent of their advertising dollars there. Now that’s low by two-thirds.  The reason?  The Morgan Stanley report doesn’t say, but it is likely that ad dollars simply haven’t caught up to the reality of how much time people spend on the web.  One can assume that web advertising will be growing by leaps and bounds (good news for Google and Yahoo).

This trend of higher attention/lower ad spend also hits third on the list: radio. Consumers spend 17 percent of their time listening to radio, but marketers spend only 9 percent of their buy there.  Is radio – especially talk radio – ready for a jump in ad spending?

Ditto for fourth on the list: mobile phones. Consumers yak on the phone 13 percent of the time, but the advertising spend less than 1 percent of their buy.  This is a category that will likely explode in the coming years.

So clearly marketers are not spending enough of their ad dollars on the web, radio and mobile.  So where are marketers overspending?

Newspapers.

They spend 20 percent of their ad dollars here. But guess what? The average consumer spends just 7 percent of their media time reading newspapers.  The ad spend is 3X higher than it deserves.

That’s a dire forecast for newspapers.  Apparently readership has declined so rapidly that marketers haven’t adjusted their advertising budgets downward to reflect this new reality.  How much longer will that last?  Newspaper defenders have blamed debt and the recession on the current sad state of affairs for the industry – and certainly that has been a big factor.  But – recession or no recession – newspaper advertising is on the verge of a sharp advertising exodus.

The fact is newspaper readers are a dying breed – and once marketers come to a full realization about how completely the media landscape has altered, newspapers are going to take another huge hit as more advertising dollars shift to where consumers are actually spending their media time: the web, radio and mobile devices.

The Morgan Stanley report makes you wonder if newspapers – the printed versions anyway – have any future at all (beyond niche audiences).  As the report notes: “History proves that ads follow eyeballs – it just takes time.”

And that time is now.

2 Responses to “Are Newspapers on the Verge of an Advertising Exodus?”

  1. Woops. Commented on wrong post…

  2. I hate when that happens!

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