Newspaper Ad Revenue Expected to Drop 10% This Year

A new research study that forecasts the advertising of major media shows that newspaper ad revenue will drop over 10% this year, more than that of any other major medium except “yellow pages.” This will put more pressure on papers to increase subscription revenue, both for physical papers and digital products.

Advertising research firm Kagan expects newspaper ad revenue to fall 10.2% this year. Of 16 media measured, Kagan expects that the only ones that will post gains are digital, up 10.9%, and satellite radio, up 9.5%.

The industry already was hit last year when ad revenue at many papers dropped notably. That included digital ads, which were not strong enough to offset the sharp drop in print ads. The industry’s only solution to this has been to cut costs. However, many experts believe this will need to stop unless papers want to risk destroying their products, which makes them less attractive to both existing and potential subscribers.

Most newspapers have sharply cut their print circulations and attempted to replace them with digital subscribers. Data from most publicly held companies show that while digital subscription revenue has begun to rise, it has not offset the drop in traditional subscription revenue.

One solution to the problem is that some companies are starting the equivalent of niche newspapers that operate only online. The best example of this may be The Athletic. It operates in 40 cities and states. It has hired a number of local sports journalists in most cities. It also employs nationally well-known writers. The Athletic focuses on the four major professional sports and NCAA sports. The company says it has 300 full-time writers, which means it must have one of the largest sports editorial staffs in the country.

It may be one of the few venues local newspapers have to create niche products like The Athletic to cater to interests beyond general news and sports sections wrapped into traditional papers. There do not appear to be any other solutions.