Mobile Boosts News Audience, But Tech Cos. Grab Ad Revs

The spread of mobile technology has been a boon for news consumption, bolstering the appeal of traditional news brands and even expanding long-form journalism. More than a quarter of Americans (27%) get news on mobile devices, increasing overall news consumption, according to a new report by Pew Research Center’s Project for Excellence in Journalism.

The research firm’s annual State of the News Media study found social media has grown quickly in the last year as well, but still plays a limited role in how people get news. Regardless of platform, the report concluded that technology providers -- rather than publishers -- are collecting the lion’s share of ad revenue from the digital news boom.

“In sum, the news industry is not much closer to a new revenue model than a year earlier and has lost more ground to rivals in the technology industry,” the report stated.

The majority of Americans now get news through at least one digital, Web-based device, mainly a desktop or laptop computer. But the number who get news through multiple devices is growing, with nearly a quarter (23%) of adults doing so on at least two devices. Nearly a third (31%) of smartphone owners also own a tablet, and 13% have a computer, smartphone and tablet.

On smartphones and tablets, users are more likely to go straight to a news site or app, rather than relying on search. That works to the advantage of established news sources with familiar brands.

Based on data from mobile analytics firm Localytics, the Pew study also found people tend to spend more time with news on mobile devices than on PCs. They go to news sites more often, spend more time at a sitting and read more articles per session. Rather than cannibalizing usage, comScore research indicates that mobile devices increased traffic on major newspaper sites by an average of 9% last year.

Social media has generated as much -- if not more -- buzz than mobile gadgets in recent years, but hasn’t been as big an influence on news consumption, according to the Pew report. Less than 10% of the digital news audience follow news recommended on Facebook and Twitter “very often,” it found.

That compares to 36% who get news directly from a site or app, 32% via search, and 29% from news aggregators like Topix or Flipboard.

Still, social media is playing a growing role in news distribution. Based on an analysis of Hitwise data, Pew found 9% of traffic to news sites comes from Facebook, Twitter and other social sites -- up by more than half since 2009. Facebook users follow links from friends and family, while Twitter users follow a range of news sources. 

The growth that news publishers have enjoyed through mobile and social channels, however, hasn’t been matched by business gains. Technology intermediaries are capturing even more of the digital revenue pie. The Pew study cited an eMarketer finding that five technology companies last year generated 68% of all digital ad revenue. And roughly one of every five display ad dollars is expected to go to Facebook by 2015.

For traditional newspapers, the problem of monetizing growing online audiences is especially acute. Last year, they lost about $10 in print ad revenue for every $1 gained online. That’s worse than in 2010, when print losses to digital gains had a $7 to $1 ratio.

Up to 100 newspapers in the coming months are expected to join the 150 dailies that already have some kind of digital subscription model.

Despite a handful of exceptions, such as The Financial Times and The Boston Globe, the study faults legacy news providers for failing to adopt new approaches to boost revenue. As an example, it points to the lack of targeted or “smart” advertising in digital media to generate higher ad sales. 

A separate Pew report released last week found that two-thirds of Internet users are uneasy with targeted advertising and search engines tracking their behavior. That reflects the tensions traditional news outlets face as they seek to grow revenue, while maintaining trust with their users.

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