Online a ‘bright star’ in the ‘gloomy night’ for newspapers: study

'In some ways, the newspaper financial model is being rewritten,' states a new study of newspaper execs' outlook on strategy and ad revenue for 2008. Canadian execs and managers are bit more optimistic than those in the US.

Toronto-based Kubas Consultants has released its annual preview of ad revenue expectations and strategies among US and Canadian newspaper execs and managers. The study, conducted in late November (when 2008 plans and budgets would have been substantially decided), surveyed over 500 daily newspaper execs and managers about ad revenues and strategic initiatives for 2008. Of 508 respondents, Canada accounted for 85, while the US accounted for 423.

Canadian newspapers were noted for being much more optimistic about prospects for 2008, as well as less likely to reduce staff or format or start a new free daily or weekly publication next year. But as a whole, Canadian and US execs and managers projected decreases in five out of eight ad revenue categories. Online revenue, preprints and direct mail were seen as the most promising growth areas, while industry leaders saw a negative future in classifieds, real estate and national advertising.

Compared to 2007, newspaper execs and managers’ outlook for 2008 is ‘subdued, to say the least,’ states the study. ‘Canadian newspapers, however, may be the exception, due to their distinctly optimistic outlook on ad revenues. The economy may be better north of the border, but not that much better.’

Online is ‘clearly at the top of everybody’s list,’ states the study, which also calls online the ‘one bright star in what is otherwise a gloomy night.’ Over 60% of newspaper execs and managers plan to work on online content and advertising programs. Overall, 71% anticipate a large increase in online ad revenues next year – down from 80% in last year’s study. About 25% said they had already completed their plans for online. The study also notes that online ad revenue growth has begun to decelerate, along with overall ad growth, and that newspapers’ market share in the category ‘stands to slip.’

Other strategic initiatives marked as priorities include controlling staff and non-staff costs, improving pricing structures, upgrading ad sales technology and expanding non-core products such as niche publications. More than half of those surveyed said that adopting modular ad sizing and pricing is an initiative to be considered in the future, but the report noted this is an area that is, for most, under consideration rather than part of a definite plan. More than half said finer geographical targeting for preprint distribution is being looked at, while 20% have definite plans in that area.

Emerging trends noted by participants included a hyperlocal approach to editorial, further attention to concepts such as citizen journalism, the evolution of online ads to include more search, video and email opportunities and training that will upgrade sales forces to become ‘multimedia reps.’

Read the full Kubas Consultants report here