U.S. newspapers must take advantage of web display ads
By Leah McBride Mensching, Tuesday 8 January 2008 at 23:27 :: Newspaper Data :: #1073 :: rss
Advertising revenue declined 8.6 percent in 2007 for U.S. newspapers, much worse than the 1.7 percent decline in 2006; and it's only going to get worse, as that decline is expected to accelerate even more in 2008, JP Morgan analyst Imran Khan predicts.
However, the declines in print mean positives for online search and display advertising, which newspaper Web sites need to take advantage of to lessen the pain from ad revenue hemorrhaging, he said, according to a Tuesday report by Follow the Media.
Horror stories of staff cuts, disappearing ad revenue and vaporizing market value abound, all of which make one thing very clear: newspapers need to increase online and mobile revenues as quickly as possible.
Khan said he thinks online display advertising rates will increase by about four percent in 2008, and CPM-based display ad revenue will increase by 20 percent in 2009, reaching some $10 billion. Currently, about 85 percent of display ad revenue is sold at less than $1/CPM. This means if a newspaper site can pull in more visitors while also upping its CPM rate, even by just a few cents, they will see a big difference in the bottom line, Follow the Media reported.
That's the silver lining. That bad news, however, is that although online is still surging, the rate of acceleration is slowing.
“We expect revenue growth to decelerate to 21.2 percent in 2008, from 25.6 percent in 2007,” Khan said, according to Follow the Media.
However, Khan added that he thinks online businesses will far exceed general stock market gains.
“We are projecting 34 percent earnings growth for our coverage universe, compared to 8 percent for the S&P 500” (an index containing the stocks of mostly American 500 Large-Cap corporations).
While print will be a mainstay for some time, the real task newspapers have ahead of them is to “fully integrate their online and print advertising platforms to offer media buyers and unbeatable combination,” Follow the Media states.
Comments
No comment.
Post comment