• by Seana Mulcahy , December 4, 2006

I remember being at traditional agencies back in the dot-com's heydays. I hated when an online person would get up and boastingly show slides that talked about media cannibalization. I think it's more like media fragmentation.

Today's media offers so many choices, I don't think you'd argue that consumers are more time-starved than ever. True, all things digital have gained in popularity, usage and fluency. So it's only natural that market share shifts. And, yes, the online environment is taking time away from other media. Which is the most vulnerable, you ask?

Newspapers seem to be. Think about it. Have you tried to read a full-size newspaper while commuting on the train to work? It is an arduous to near-impossible task. In fact, The Wall Street Journal just came out with a smaller format. Very cool. I have to admit, I like holding and reading an actual hard copy. I also have to admit, I do this far less frequently than I ever have before.

Hence the fact that newspaper circulation continues to fall. According to a recent Audit Bureau of Circulation FAS - FAX report, circulation continues to slide at a quicker pace than in years past. For the six-month period ending in March 2006, daily circ slipped 2.5% and Sunday decreased 3.1%. In March 2005, daily fell 2% and Sunday was down 2.5%.

So what's the upside? Well online newspaper usage is up. Think about it for a minute, we are a sound-byte culture. It is easy (at home or at work) to jump online, view top headlines, and quickly click on links to view snippets of info. Most people do this several times per day.Another upside is news aggregators like Yahoo and Google News. These tools make it super-easy to navigate through so much dynamic content.

However let's call a spade a spade. Circulation and advertising on offline newspapers are hemorrhaging, yet online revenues are not making up for the loss. It could take as long as 30 years for online revenue to represent at least 50% of a newspaper's top line, according to a new report issued by Merrill Lynch. "Even if the rapid [online] growth continues for the next few years, we don't see online representing over 50% of newspaper ad revenues for at least a couple of decades, suggesting that industry profit could stay flat for the foreseeable future," wrote analyst Lauren Rich Fine. The report also predicted an approximate 1.5% loss annually through 2012.

According to the Newspaper Association of America, online newspaper advertising is up about 35% to $613 million in Q1 this year. The number of users who visit online newspaper sites is up 51% this year.

The bottom line is, consumers want relevant, up-to-the-minute content. Our industry needs to take closer look at how consumers are viewing media so we can effectively capture eyeballs while creating relevant encounters.