Study: Newspaper Sites Missing Out on Ad Dollars

Newspaper Web sites that are struggling to capture online revenue may find that it pays to adjust their online strategies through key technological investments while also focusing on new Internet-based income streams.

Based on analysis gathered from more than 250 daily newspapers, a Borrell Associates report found that newspapers can generate as much as $650 million in annual revenue by 2005 through re-organization, improved database infrastructure and a Web-focused sales team.

Peter Krasilovsky, senior partner/VP of Borrell Associates, says that the report recommends newspapers focus on implementing registration policies and software that will allow them to sell to targeted audiences, with technical implementation costs of $250,000 to $1 million amortized by many newspapers within a six-month period. He believes these implementations will position newspapers more competitively.

But even newspapers that have heavily invested in their online presence have not concentrated on acquiring a new online customer base. “We estimate that publishers are already missing nearly $300 million per year by failing to use the Internet to serve new advertisers and enter new, related fields,” notes Gordon Borrell, CEO of Borrell Associates.

The research firm estimates that print recruitment advertising revenues have declined 40 percent — $5.4 billion — since 2000, and despite a booming housing market, real estate classifieds are significantly low.

“The most disturbing thing is that newspapers now appear to be focused on replacing their high-margin business of print classifieds with the lower-margin business of online classifieds,” said Professor Clark G. Gilbert of Harvard Business School, co-author of the report. “If that’s all they’re doing with their online operations, we’d suggest that they shut them down tomorrow. The more important segment to tap is the area of new growth that the Internet has made possible, populated by new customers altogether.”

More encouraging news comes from Jupiter Research (a unit of this site’s corporate parent) in a November 2001 study that found that even though less than 20 percent of Internet users visit national newspaper sites, the firm projects 75 million U.S. adults will view online classifieds in 2002 — up from 48 million in 2001.

Nielsen//NetRatings measured traffic to online newspaper and finance sites for the week ending September 22, 2002 and found significant increases from the week prior. These findings indicate that newspaper Web sites deliver real value, and Carolyn Clark, analyst at Nielsen//NetRatings attributes breaking news, deep insight, and round-the-clock content as key factors.

Top 5 Fastest Growing Daily Newspaper and Finance News Sites
Week Ending September 22, 2002 (U.S., Work)
Brand/Channel Unique Audience
Unique Audience
Percent Growth
LA Times 451,000 616,000 37%
Chicago Tribune 435,000 561,000 29%
Wall Street Journal 370,000 477,000 29%
Forbes 367,000 467,000 27% 1,471,000 1,802,000 23%
Source: Nielsen//NetRatings
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