Newspaper Advertising: Say It Ain’t So
byAs a company that represents advertisers, I did a doubletake when I saw this. It’s a story about a speech Vin Crosbie of Borrell Associates made to the World Newspaper Advertising Conference. In his speech, Crosbie was encouraging newspapers to move online faster because “online advertising revenues are rising dramatically.” However, he said it will be a challenge because online advertising revenue produces 20 to 100 times less revenue per reader than traditional newspaper advertising. Doesn’t this beg the question: “Why would any advertiser want to pay 20 to 100 times more to reach an actual physical paper reader than an online reader?”
I believe in newspapers as a consumer. I believe in newspapers as a marketing company. At home, we have a paid subscription to our local newspaper’s online addition. It is apparent the Web is changing everything from a marketing economics viewpoint. However, the figures cited in Crosbie’s speech to a world gathering of the newspaper industry illustrate the tremendous challenge traditional media is facing when transitioning to a Web delivery model. My guess is these numbers would be similar for the magazine industry.
Gavin O’Reilly, President of the World Association of Newspapers, pointed out that one billion people read a newspaper every day. That is an impressive statistic, but we also have to remember there are now one billion people on the Internet. But, if I’m an advertiser, I still have to look at Crosbie’s figures and go “hmmmm.” In marketing, what really matters is not what something costs, but rather, what is the final return on investment. If traditional newspaper readers cost 20 to 100 times what online readers cost, that is a big gap to overcome.
Comments
Just to note: Do remember the difference between just ad rates and overall organizational revenues.
The advertiser doesn’t pay 20 to 100 times more to reach a newspaper’s printed edition reader than to reach a reader of its website. What I said in my speech was that the newspaper earns 20 to 100 times as much.
Printed editions of newspapers earn two revenue streams: circulation revenues directly from subscribers and single-copy purchasers. And advertising revenues indirectly earned because readers exist.
The first is about $250 to $600 per year per consumer (depending upon the printed edition’s subscription or newsstand costs). The second adds another $200 to $400 depending upon the size of the newspaper (divide its total advertising revenues by its circulation). The combined annual total is about $450 to $1,000 per consumer.
However, most newspapers’ website aren’t able to charge for access (akin to circulation revenues) and generate only advertising revenues. Moreover, they charge only for the actual number of online ads exposed, not an entire press-run circulation regardless of actual page readership.
Nevertheless, the actual ad CPMs charged in print and online by newspapers aren’t that much different, certainly not 20 to 100 different.
The full text of the speech is at http://www.digitaldeliverance.com/MT/archives/000643.html
Vin,
Thank you for your comment and clarification. My main point is about the same issue you raised in your talk. It is difficult for traditional media economics to work when they are moved to the Web. An advertiser may not have to literally pay 20 to 100 times more per reader with traditional newspapers, but those advertisers still have to support a business model that brings in 20 to 100 times more revenue per reader. Also, according to our media buyers, traditional newspaper advertising still costs considerably more on a CPM basis than online newspaper advertising...at least 2 to 5 times as much by our calculations. Additionally, when somebody clicks on one of our advertiser’s ads in the online edition, we know it and can analyze the effectiveness of the ad and the online campaign.
Vin, as I said, we still believe in newspapers. They are a great way to get your message out to some demographic categories and to buy large reach quickly. However, the changing media landscape is not going to long support a model that has to bring in 20 to 100 times more revenue to be effective. Again, thanks for your response.
Greg
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