Newspapers: Good News Online, Bad News Overall

The Boston GlobeNewspapers' Web sites continue to grow--with the number of unique visitors increasing 12.2% in the second quarter compared to the same period last year, according to the Newspaper Association of America, which pegged it at 66.4 million people. That's over 40% of all Internet users in the United States. The problem? Newspapers can't monetize their online traffic near the level necessary to offset ongoing print losses.

There is no question that newspapers are posting some impressive gains online. In the second quarter, in addition to the growth in unique visitors, they attracted over 3 billion page views a month--a more than 10% increase over 2.7 billion views during the same period in 2007.

While their overall number of unique visitors is smaller, newspapers' 12.2% growth rate fell between Yahoo and Google in percentage terms. Over the same period, Yahoo saw unique visitors grow about 7.4% to 141.2 million, while Google jumped 17% to about 141.5 million.

advertisement

advertisement

But the increase in unique visitors is simply not translating into substantial growth in online revenues. That's partly because newspapers have failed to rebuild classified advertising as an online profit center. Most online classified revenues came from "upsells" on print classified listings. As fewer people place print classified ads, opportunities for online upsells dwindle. In addition, newspapers have only been able to monetize online display advertising at a fraction of print display rates.

Media General, one of the few publishers brave enough to provide separate figures for its interactive division, said online classified revenues actually fell 4% in the second quarter. This decline was offset by rapid growth in online display advertising, and total interactive revenues rose 13.7% to $10.6 million.

But Media General's total revenues still fell $20.9 million, or 10.2%, to $204.9 million. Thus, the loss on the print side was almost double online revenues in their entirety. Although most newspaper publishers do not give a specific breakdown of their online revenues, Media General's results are probably representative of the industry as a whole.

Similarly, McClatchy, another publisher that provides specific figures for different online categories, said its online classified revenues fell 6.5% in the second quarter to $63.9 million. In the online arena, this was offset by big gains in online display advertising--with retail up 75.2% to $21.8 million, and national up 149.6% to $7.9 million, driving an overall 11.5% increase in online revenues, to $93.7 million. But like Media General, this online growth could not offset the decline in McClatchy's total advertising revenue, down 16.1% to $810.3 million.

Next story loading loading..