Your customers are ahead of you

The Newspaper Association of America reports a surge in online traffic and audience to newspaper online sites.

On average, over 56.9 million people visited newspaper sites each month in Q3 2006, up almost 24 percent since Q3 2005. . . . The group earlier this month reported unique visitors to newspaper sites rose 31 percent during the first half of 2006 over the same period in ’05. Unique visitors to paper sites averaged more than 55.5 million per month during the first six months of ’06, up almost a third from the 42.4 million during the first half of last year. Newspaper sites generated 2.7 billion pageviews in the third quarter, and visitors spent more than 41.5 minutes each month on the sites, according to the report. During that period last year, visitors viewed around 1.9 billion paper pages, spending 40.4 minutes on the sites on average monthly.

I think this further feeds the idea that newspapers are in “free fall,” as The Times said last week: The rush online is getting faster and faster and if media execs and ad execs don’t catch up, they will be left behind… sooner than they think.

: I call out ad execs for a reason: They are holding back the progress in media. Oh, it’s the fault of media execs as well. But get a load of these stats from today’s Times:

Indeed, the Internet draws only a sliver of the total spent on advertisements. Last year, Internet ads accounted for just 4.7 percent, or $12.5 billion, of the $267 billion spent on advertising, according to the Interactive Advertising Bureau, a trade association of online publishers. And the top 50 advertisers spent just 3.8 percent of their budgets in the first half of this year on online ads, excluding search, TNS Media Intelligence data shows. For all other advertisers, the average spent online was 6.8 percent of the budget.

Procter & Gamble, the nation’s biggest advertiser last year, spent $33.5 million — less than 1 percent of its $4.6 billion ad budget — on online ads in 2005. General Motors, the second-biggest advertiser, spent $110.5 million online, or 2.5 percent of its $4.35 billion total, according to TNS, which does not include search ads in its figures.

The essential change in media is that we, the people, won’t go to where you are anymore. You have to come to us. And you’re not.

: LATER: The latest circulation stats for newspapers continue to back up the notion of free fall. Romenesko’s summary:

* Los Angeles Times daily circulation dropped 8%; down 6% on Sunday.
* San Francisco Chronicle dropped 5.3% daily; down 7.3% on Sunday.
* New York Times dropped 3.5% daily; down 3.5% on Sunday.
* Boston Globe dropped 6.7% daily; down 9.9% on Sunday.
* Washington Post dropped 3.3% daily; down 2.6% on Sunday.
* Wall Street Journal dropped 1.9% daily; WSJ Weekend Edition down 6.7%.
* Chicago Tribune dropped 1.7% daily; down 1.3% on Sunday.
* USA Today dropped 1.3%.

  • Yes, but you have to come to us on our terms, and most web advertising doesn’t quite do that yet. Yes, it is partially the reluctance of brands to move online, but also, ad networks and creative/tech folks still haven’t come up with many compelling brand engagements on the web.

    Here’s one other thing to consider… the web is so much more efficient and there’s so much more available inventory that ad spend will never match old media ad spend b/c it will be cheaper to reach the same customer with increased efficiency…

  • Jeff, you are spot-on! Ad execs are guilty of holding back progress and not simply the potential of dead tree enterprises but the whole of measured media as well. The state of ad sales, at present, is obsessed with optimization. Publishers continuing to allow ad sales to stay focused on the numerator (rather than the rich potential – and hard work – of developing a new denominator) are giving permission for needless failure and dedicating precious resources to a fool’s errand. Getting better and better at a game being played less and less is not the solution. Getting different and getting different faster is the solution. We have a serious problem of sales leadership.

  • It is not worthwhile to try to keep history from repeating itself, for man’s character will always make the preventing of the repetitions impossible.
    – Mark Twain in Eruption

    During the years 1870 to 1900, daily newspapers quadrupled in number from 489 to 1,967. Circulation (aggregated) rose from 2.6 million to 15 million copies. Weeklies grew from approximately 4,000 to 12,000 in number, mostly in rural areas.

    The US population doubled during that period. The enormous growth of publications signaled something else going on: as Arthur Schlesinger, Sr. called it “the rise of the city”. And that condition was accelerated principally due to mechanization, industrialism and a greatly expanded communications network that included:

    Widespread use of electricity fueling industry and light bulbs (helps in the convenience to read).

    Invention of the telephone by Bell (reached one phone per 100 households by 1900) and intercity lines covered the country.

    Western Union quadrupled its telegraph lines between 1880 and 1900.

    Railroads expanded its miles of track from 93,000 to 193,000 miles.

    And probably most important for publications, the federal postal service’s expansion of services combined with the Postal Act of 1885 (provided a 1-cent-a-pound rate for newspapers and magazines) paved the way for low-cost delivery of publications.

    Introduction of the typewriter and adding machine facilitated the faster pace needed to handle the complexity of correspondence and record keeping.

    The socio-economic life of the US greatly changed and thus brought incredible growth and opportunity for journalism, which was seized by the publishing world.

    As an example, Pulitzer’s New York enterprise (NY World in the mid-1890’s) showed a $10 million valuation and $1 million net profit. Translated into 2005 dollars as a percent of GDP, that’s $8.2 billion and considering that the World was just operating in the NY market, it makes Google look like retail shoe store. As the winds of change would have it, even from that lofty perch the World was defunct by the 1930’s.

    Newspaper and magazine share of market for ad dollars decreased by nearly 36% (from 1935 to 1980) after the introduction of radio and television. The fact that newspapers remained strong profit centers reflected the rapid growth in advertising expenditures that outstripped their loss of market share.

    Newspapers have been profit harvesting for the past thirty years. That practice is over and the plight of the Inquirer and Daily News as well as others is emblematic of that.

    Socio-economic change similar in scope to the latter part of the 19th century is upon us again. Print publishing is, after all, a manufacturing enterprise and prospered during the industrial evolution as a result. Anyone foolish enough to buy a newspaper today with the notion that the profit harvesting will continue or that you can tweak the product to meet the socio-economic challenges of this period will suffer great disappointment.

    The advertising market share for printed products in their current form will diminish greatly over the next decade. Again, technology merely facilitates and influences the socio-economic trends and is not the cause. Newspapers have lost touch with their readers and failed to represent the context of a complex society within which news reporting must operate. Journalists can restore it insofar as they relinquish their bias for the format and embrace the call of society for context and meaning and deliver it in the ways available to them. Ad sales executives and larger advertisers (and their agencies) will eventually go where customers are, as they have always done. They will make the transition, albeit slowly. And for newspaper organizations their sluggishness will surrender market share to others.

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