Analyst: Newspapers' Loss Could Be Online's Gain

Imran Khan of JP MorganDespite the "really dire shape" of the global economy, online media and marketers have good reason to be optimistic about the future -- "except the newspaper industry," according to Imran Khan, J.P. Morgan managing director and Web analyst.

"Advertisers realized that the newspaper model was flawed," Khan said during a presentation organized by lead-generation company Pontiflex on Thursday. "They didn't change their business model to adapt to the new reality."

That new reality, Khan explained, is made up of several trends all working against the newspaper business, from dramatic audience fragmentation to consumers relying less and less on print resources for breaking news.

Yet, according to Khan, newspapers' loss is potentially the industry's gain. "It's a $40 billion ad market, and that should move somewhere," he said.

Giving Web professionals still more hope, Khan noted that broadband penetration and e-commerce continues to increase, and grab market-share both domestically and abroad.

Indeed, in the U.S., ecommerce represented a mere 3.9% of all commerce last year -- a percentage that will continue to grow, and, notably, give an added boost to online advertising along the way.

Additionally, Khan said that while marketer's increasing focus on performance-driven media was sound, the industry as a whole support the shift in branded ad dollars online.

"We should talk as an industry about how to bring in brand advertisers," he said.

What's ultimately going to attract big-time brand advertising? "Assurance of the quality of the content" where their ads appear, said Khan.

In a 2009 industry outlook report, which Khan released earlier this year, he predicted that while online ad spending would continue to expand, the contraction of the general economy would place even greater downward pressure on the price of both online display and search advertising.

Khan also predicted that ad models would fail for two of the Web's hottest emerging platforms -- online video and social media -- and that it would take longer than expected for a substantive mobile advertising marketplace to emerge.

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