• by adam.m , Michael Deibert , August 23, 2005

The good news released by the newspaper industry on Monday is that advertisers increased their spending on newspapers nearly 3 percent during the second quarter of 2005. The bad news for the still mostly print medium is that most of that growth came from online newspaper advertising sales.

The estimates, which were released Monday by the Newspaper Association of America (NAA), revealed that total newspaper ad revenues - both print and online - are projected to reach $12.2 billion for the quarter, a modest growth of 2.8 percent over the figures a year before.

Of that total, spending for print ads accounted for $11.7 billion--a 1.9 percent gain from the previous year--while online ad spending continued to leapfrog, increasing by 28.6 percent from the same period a year ago to $500.7 million.

"Certainly, Internet spending is increasing," said Jim Conaghan, the NAA's vice president for business analysis and research with NAA, while noting that the overall volume of Internet-based advertising remained significantly smaller than its print rival. "It's still a growing marketplace."

A further analysis of the print category reveals that classified advertising climbed 5.3 percent to $4.1 billion in the second quarter, while retail ad spending increased 1.4 percent to 5.5 billion and national advertising fell off by 2.8 percent to $2.1 billion.

In the classified category itself, recruitment advertising saw an increase of 14.5 percent to $1.1 billion, while real estate ad spending climbed 7.2 percent to $1.2 billion.

Earlier this month, the nation's largest newspaper publisher, Gannett Co., announced a slight rise in July revenue, which it attributed to increased local advertising demand in Gannett's domestic publications.

The company's pro forma newspaper advertising revenues in July also increased 2.6 percent over the same time period in 2004, on a 2.6 percent decrease in ROP volume. Local ad revenue moved up by 4.7 percent to $176.3 million, while classified ad sales rose to $188.4 million--an increase of 1.8 percent. National ads, however, decreased 0.7 percent to $59.5 million.