For Traditional Media, Digital Remains Elusive Promise

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For over a decade, traditional media companies have pointed to digital media as a promising source of revenue growth -- but as 2012 draws to an end, it’s clear that this promise is still more theoretical than real, while ad dollars continue to migrate away from traditional channels. This is particularly true for broadcast radio groups and newspaper publishers, whose 2012 results have (so far) offered little in the way of digital cheer.
 
In the first nine months of 2012, total digital advertising revenues for the radio industry came to $561 million, according to the Radio Advertising Bureau, up 7% from about $524 million in the same period of 2011. While this is not an insignificant sum, it's just 4.6% of total radio ad revenues of $12 billion. This comes as spot advertising, the mainstay of the radio business, delivers flat growth for the year-to-date.
 
Traditional radio broadcasters are also lagging behind in attracting digital audiences.

The most popular digital platform created by a traditional broadcaster is probably Clear Channel’s iHeartRadio, which has attracted around 20 million registered users, up from 10 million in May of this year. Over the same period, Pandora -- perhaps the most popular pure-play digital radio platform -- has grown from 150 million users to 175 million users.
 
Of course, in proportional terms this means that iHeartRadio is growing faster -- and Pandora has plenty of its own problems to deal with, including how to monetize its audience and digital music royalties. But in terms of sheer numbers, Pandora’s audience is almost 10 times as large as the most popular digital offering from the nation’s largest broadcast radio group.
 
Newspapers are in even worse shape. For the first three quarters of 2012, total online advertising revenues came to $2.4 billion -- up just 2.4% from $2.3 billion in the same period of 2011, according to the Newspaper Association of America. The 2012 figure is also just 14.9% of total newspaper ad revenues -- around $16 billion.
 
While that is a larger proportion than 2007, when digital contributed 7% of total revenues, much of the apparent increase (in percentage terms) is due to the steep, continuing decline in overall newspaper ad revenues, which have fallen by half over the same period. At the current rate of growth, newspapers’ digital ad revenues may come to a total $3.3 billion in 2012 -- up just 4.2% from $3.17 billion in 2007.
 
The anemic growth rate is especially noteworthy considering the strong growth in newspapers’ digital audiences over the same period. In the third quarter of 2012, newspaper Web sites attracted an average 107 million unique visitors, according to comScore -- up from around 68 million in the third quarter of 2008, the last presidential election year, per Nielsen. (The NAA cautions that these numbers are not directly comparable, because the methodology has changed.)

While newspaper’s online audiences have increased by over 50%, digital ad revenues have increased by less than 5%.

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2 comments on "For Traditional Media, Digital Remains Elusive Promise".

1. David Presher from Involution Digital
   

   commented on: January 2, 2013 at noon
   Ok Media it's time to get your act together. It's not going to be about Brand Extensions...that is a necessary part of doing business. It's creating new revenue and content channels and using your brands to grow. It's near impossible to innovate from within...read 'Innovators Dilema' by Clayton Christensen....you are a social media giant waiting to happen. There are two SAAS based solutions, when combined can generate 100 million of revenue in major markets. The smart ones are already started. David Presher President&CEO www.involutiondigital.com
2. Robin Riddle from New York
   

   commented on: January 2, 2013 at 5:08 p.m.
   When Clayton Christensen updates that book I fear the newspaper publishing industry is in danger of becoming a case study in it and not in a good way. What is encouraging is that digital audiences are continuing to increase – now it’s just a question of how better to monetize them! Robin Riddle. http://about.me/robinriddle

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