After the New York Times last week, more evidence that the lifeline of online advertising is not looking as strong as it once was, with more newspaper firms saying growth is slowing
It was reported last week after the New York Times Company warned that online advertising growth this year won't be as strong as the 30% it had projected.
Since then Tribune Company, which is in the process of being sold to Chicago real estate billionaire Sam Zell in a deal worth $8.2bn has also said that the growth rate for first-quarter interactive revenue was sharply lower than a year earlier. Tribune owns the Chicago Tribune and the Los Angeles Times, which earlier in the week announced around 150 jobs at the LA Times with 70 of those in the news room. The story was posted on the newspaper's website.
Gannett, which owns Newsquest in the UK and USA Today, has also said online revenue growth slowed in the first quarter from a year earlier.The Wall Street Journal quoted the chief executive of Washington Post's online arm, Caroline Little, as saying growth was "slowing slightly across the board but is still very healthy" while Journal publisher Dow Jones reported 30% growth in online ad revenue in the first quarter, up from 26% a year earlier. However, Dow Jones website has a different model and is subscription only.The WSJ quoted analysts saying that the falls in online revenues at the NY Times and Tribune reflect a broader trend. "We absolutely see slower growth coming," says Kip Cassino, vice-president of research at Borrell Associates, a media-research firm. "Generally, newspapers tend to believe things that have been good are going to get better. And that's not always the case." It is expected that the growth rate in online ad spending in newspapers will likely fall to a percentage in the low 20s this year from 28% last year. Coupled with the decline in classified advertising, it's not good news at all. Then there is the fact that advertisers are looking elsewhere from traditional news sites, which was a trend that began with blogs. Last week, social-networking site MySpace added a news feature and is boosting its ad-sales efforts.According to Greg Smith, chief operating officer of Neo@Ogilvy: "Advertisers are getting less scared of blogs and newsgroups and now are beginning to take money away from the traditional newspapers' sites."Newspapers need to attract new advertisers and sources of income online. Part of that is coming with moves into TV and radio type production, with UK papers, The Times, Telegraph and Guardian Unlimited as active as anyone.They need more than that, however, particularly as search marketing continues to rise - but sadly for newspaper that market is owned by Google and Yahoo!. Newspapers are tying up deals with search engines, like Hearst Corp, MediaNews Group, and McClatchey signing a broad advertising deal with Yahoo!, but there is a worry that this only takes more power away from them and gives it to the search engines. The search engines already have the content (not their content of course, but it turns out that it is not content that is king, but other people's content if you are Yahoo! or Google).No wonder that Sir Martin Sorrell said on Friday that the search giant is a long term enemy.
Gordon Macmillan
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