Red Ink: Newspaper Revs Drop 9.7%
If the first quarter brought good news for newspapers, it was only relative to previous quarters, as the industry posted yet another (but smaller) decline in overall ad revenues. Combined print and online ad revenues fell 9.7% to just under $6 billion in the first quarter of 2010, down from just over $6.6 billion in the first quarter of 2009, according to the Newspaper Association of America.
The 1Q drop was due entirely to an 11.4% decline in print ad revenues, which fell from $5.92 billion to $5.25 billion. Online ad revenues increased 4.9% from $696 million to $730 million -- a welcome contribution, but still too small to offset the overall drop on the print side.
This was the first year-over-year increase in newspapers' online ad revenues since the first quarter of 2008, following seven straight quarters of declines.
As in previous quarters, in percentage terms declines were led by classified advertising, which fell 14.4% to $1.25 billion, while national fell 8.3% to $1.04 billion and retail slid 11.2% to $2.96 billion.
Within classifieds, automotive fell 16% to $280 million, real estate tumbled 27% to $245 million, and recruitment dropped 23% to $159 million; other classified revenues edged down 3% to $569 million.
Although it's hard to put a happy face on an almost 10% drop, the first-quarter decline is significantly smaller than previous quarters, holding out hope that the precipitous drop in newspaper ad revenues is finally nearing its bottom.
Beginning in the second quarter of 2006, newspaper print ad revenues have suffered 16 sequential, year-over-year quarterly declines, including drops of 0.31%, 2.6%, and 3.7%, in 2006; 6.4%, 10.2%, 9%, and 11.6% in 2007; 14.4%, 16.1%, 19.3%, and 20.6% in 2008; and 29.7%, 30.2%, 29%, and 25.6% in 2009.
In dollar terms, the loss of $676 million in print revenues between the first quarter of 2009 and the first quarter of 2010 is the smallest loss since the first quarter of 2007, when newspaper print revenues declined $670 million.
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As a former newspaper marketer I wish the news was better but I disagree that a decline of 10% is a victory. When an industry loses 30%, 14% and 6% of its revenues over the past three years, at some point the percentage losses have to moderate.
However, the major is that unlike the last couple of years, the ad market is growing. So, newspaper declines now must be viewed in light of overall media increases of 5% reported by Kantar for the first quarter.
Most telling is the loss of 16% for newspaper automotive classified contrasted by Kantar's estimate of an almost 16% increase for overall dealer media spending. This 32 point swing suggests that local auto dealers have found a way to attract car buyers without using the local paper.
10% loss is a victory? Re: Kirby - "This 32 point swing suggests that local auto dealers have found a way to attract car buyers without using the local paper" Yes, they have. It's called Craigslist. Go to the car & truck area, do a search on a car you like, then bookmark that page on your PC or mobile device. Go hit it every ten minutes - you'll see between 3 and 20 new ads EVERY TEN MINUTES in the local space. And these aren't clunky text & a few blurry pictures kinda ads - many are sophisticated, templated and exceedingly well delivered. Delivered for free, to be sure - to an audience that the newspaper industry (in their continued arrogance) thought they could never lose.