It's a cycle that sees no end. Circulation drops, costs rise, revenues are flat and yet the business needs to maintain its 20% plus margins. Thankfully, January is coming up, so newspapers can fall
back on their usual strategy and jack up 2007 advertising rates.
But this time there's a huge problem ahead--many advertisers are playing hardball. For 2006, many U.S. newspapers that lost
circulation still asked for 6% increases. USA Today went for 8%. And with few exceptions, most metropolitan newspapers have reported their 2006 advertising numbers were less than 2005.
Given the Internet's power to entice advertisers, it's a very difficult proposition to charge more for less. Ad buyers suggest newspapers play fair.
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