Although many media pundits have declared that newspapers are in a death spiral, group buying may — just may — have an antidote.
Let’s jump through the math. In 2009, the Newspaper Association of America logged roughly $25 billion in advertising revenues. Three-quarters of that was from display advertising. That’s a shocking $23 billion plunge from the 2000 bubble high of $48 billion.
But the NAA says print ad declines are now moderating, and I believe it. After all, 50% of Americans still use paper checks and are way past saturation with plastic or debit cards. Add in online newspaper ads of $2.8 billion, and you get to almost $28 billion in 2009 ad revenues — during the Great Recession. I’d expect the declines to continue, but keep in mind the newspaper business is still quite profitable in many markets.
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So, what’s needed to really turn around the segment is a new source of revenue growth. Online display ads will fill some of that need but not enough to compensate for the ongoing print declines. The disparity between CPMs in print and CPMs for display are simply too large. Yes, display ad will be a fast-growing business, in the low- to mid-double digits But not fast enough to save the newsies. So what next?
Continues at: Can Group Buying Save the Newspaper Business? – DailyFinance.
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