In my conversations with my friends at our local paper, their website is doing well, WWW.FortWayne.com
Study: Newspapers Score Most Local Online Ads
In 2007, for the first time, newspaper online local ads topped more than $2 billion, per Borrell
May 29, 2008
CHICAGO Newspaper-owned Web sites are taking in the biggest -- albeit shrinking -- share of online local ad revenue that continues to grow at an astounding rate, a new study shows.
The sixth-annual survey from advertising consulting firm Borrell Associates, "What Local Media Sites Earn," finds that in 2007, for the first time, newspaper online local ads topped more than $2 billion. The 45-page study from Williamsburg, Va.-based Borrell was to be released Thursday afternoon.
The average newspaper site captures an average 11.7 percent of its local online ad spend, but in some markets newspaper share is far higher. The best performer in the top 20 DMAs (designated market area) gets 49.5 percent of local online ad dollars, while one newspaper in the 101st to 200th ranked markets draws 78 percent.
Overall, newspapers can claim a 24.6 percent share of the total local online ad market, Borrell says, adding, "not bad, but certainly a lot less than the 44.1 percent share they held just four years ago."
With the $1.1 billion in national ad sales earned in 2007, total revenue for newspaper Web sites came to $3.2 billion.
Other media are not close. Broadcast TV gets a 7 percent share of the overall ad spend, with an average of just 0.8 percent market share per station. Local radio clusters get 0.8 percent share overall, and 0.5 percent for an average station.
The lion's share of local ad dollars -- 57.3 percent -- are earned by pure-play Web sites that reach users who are not there for the news, but to research products and prices, the Borrell Associates report says.
Virtually all newspaper sites appear to be profitable, Borrell adds.
"One company in our survey, with $400 million in total revenues, was generating $11 million in online ad sales on $3.8 million in expenses, for a profit margin of 65 percent," says the report, which does not identify the 741 participating newspapers in the survey of 3,108 local media Web sites.
Top performing newspapers tend to have three things in common, Borrell says: They are less dependent on classified vertical categories, have larger dedicated online sales force, and host multiple Web sites.
And for the first time, Web sites of the biggest newspapers are now generating more than half of their revenues from non-print advertisers, Borrell found.
But newspapers continue their dangerous dependence on classified, the study found. Classified ads accounted for 6 percent of online newspaper revenue, though the reliance has declined from 71 percent in 2006 and 77 percent in 2005.
"This addiction is understandable, given the high margins associated with this type of revenue, but it is also their Achilles heel," Borrell says. "Print classifieds are notoriously vulnerable to online competition, and as that pond dries up, up-sells evaporate with it."
Among classified categories, help wanted is the biggest revenue contributor, with 42 percent of classified revenue. Automotive and real estate each contribute a little more than 10 percent.
Newspapers and other local media Web sites are fighting for a piece of a rapidly growing pie.
"Local Web sites continue to ride a wave that defies even the most optimistic forecasts," Borrell says. "Local online revenues are growing at a phenomenal rate of 50 percent this year -- even more astonishing considering that retail sales have suffered such a sharp drop."
A slowdown is inevitable, and Borrell thinks ad spend that has been growing since 2004 at a compound annual growth of 48 percent will slow to 15 percent over the next four years.
The rising tide won't lift all media boats, either, the firm says. Yellow Pages publishers in particular "have a lot to fear," Borrell says.
Posts
No comments:
Post a Comment