• by Sean Hargrave , Staff Writer, October 31, 2017

It never ceases to amaze me not only how resilient the UK advertising industry is, but how a positive spin is constantly put against how well newspapers are faring. 

Let's start with the positive. The UK's advertising spend just leapt 3.7% in the first half of the year to record the strongest first half ever, according to the latest AA/Warc report. As you can imagine, internet advertising was the main driver, with 13% growth driven by a a 36% leap in mobile advertising. In fact, digital was the star all around. Digital outdoor was up 30%, digital radio up nearly 39% and video-on-demand advertising crept up over 10% in the first half of the year compared to 2016.

The researchers go so far as to pick out the digital revenues at national and local newspapers rising nearly 8% and just over 10%, respectively. Sure, it's probably worth pointing out that national and regional newspapers are seeing digital growth, particularly as their print counterparts in magazines are seeing a 10% digital decline.

The problem is that the digital growth at national and regional news brands may be quite welcome, but it masks a far deeper problem.

Let's look at regionals first because that's where the issue is most severe. The 10% improvement in digital means about an extra GBP14m coming in over the first half of the year. Print revenue is worth around five times more than digital, and it saw a 15% loss. This equates to the sector being down around GBP120m for the first half of 2017 compared to 2016. Very roughly, that means local newspapers are losing around eight times as much revenue as they are gaining.

It's a similar story with nationals, where around GBP117m has bee been lost in print revenues between first-half 2016 and 2017. At the same time, a near 8% rise in digital revenue would have brought in around GBP18m. To round the figures down, it means that national newspapers are losing around six pounds for every new pound they make in digital.

As a journalist who cut his proverbial teeth on local and then national newspapers, it gives me no satisfaction to reveal this. Quite the opposite. However, it's no good pulling the wool over anyone's eyes -- print is leaking money. Very roughly speaking, digital revenues need to increase by around 50%, not grow by a factor of between 7% and 10%. 

News brands' fortunes are worsened by a collapse in the importance of their own front pages as a vehicle for news discovery compared to social media. This leaves the sites relying on exactly the same duopoly they accuse of unfairly hoovering up ad budget in the UK for distribution. The desperate nature of this situation leads them to use intrusive ad formats they know annoy the public in a bid to boost revenue. Instead, it has the opposite effect of driving readers to consider installing ad blockers. 

There's no sugar coating this -- news brands need digital revenues to grow around five times faster than they actually are, just to stand still against deep print losses. To see them swimming against the tide as they are is just sad -- but it serves nobody to extol the virtues of growing digital revenues and avoiding the wider ramifications of the whole picture.