View all newsletters
Sign up for our free email newsletters

Fighting for quality news media in the digital age.

  1. Ads & Marketing
July 9, 2008

US newspapers: The 30-year transition from print to digital

By Peter Kirwan MM blog

Robert Coen, the forecasting guru who works at Universal McCann in New York, has halved his prediction for US advertising revenue growth.

A year ago, Coen thought the US ad industry might grow by 5% during 2008. Last December, Coen was forecasting 3.7% growth. Now, he is predicting 2%.

Coen also suggests that advertising has fallen from a steady 2.25% of US GDP to around 2.02%. That’s the lowest level since 1981.

Predictably, the biggest victim in all of this will be the newspaper industry. Overall, Coen is predicting an 8% decline overall for revenues from printed newspaper ads in the US this year.

Alarmingly, Coen reckons that spending on newspaper classified ads fell by 25% during Q108. (In June, the Newspaper Association of America reported that property and job ads both declined by 35% during Q1.)

These numbers come on the heels of data from the Newspaper Association of America, which suggest — alarmingly — that advertising on newspaper-owned websites in the US is growing by a measly 7.2% YOY.

During Q1, advertisers spent $8.43bn on printed newspaper ads. They spent less than one-tenth of that amount — some $804m — on buying ads on newspaper sites.

At this rate, US newspaper sites will finally generate as much revenue as their print counterparts at some point in the early 2040s.

It’s been said before, but bears repeating, that this isn’t the kind of timetable likely to be appreciated by shareholders who interpret the expression “medium term” to mean six months’ hence.

PS/Update: It’s 3pm and Universal McCann have just sent me the slides behind Cohen’s presentation.

Actually, the bit about advertising representing a “steady 2.25% of US GDP” turns out to be rubbish. (Reporters, eh?)

In the US, advertising expenditure last hit a trough of 2.12% of GDP during the recession of 1992-1993. It then expanded gradually, toward a peak of 2.52% in 2000.

But after the dot.com bust, there was no recovery. From 2000 onward, decline has been constant — right through the Naughties.

Currently, ad spend constitutes 2.02% of US GDP — the lowest proportion for at least two decades (McCann doesn’t supply any data for pre-1987).

This underlines the fact that we’re heading into uncharted territory. Already, the combined effect of economic crisis and web-led deflationary pressure on ad budgets looks startling.

Quite what the market will look like as we emerge from this slump in two years’ time is anyone’s guess.

Also worth bearing in mind: here in the UK, digital advertising has advanced further and faster than in the US. This suggests that web-led deflation is biting UK media organisations much harder than their US counterparts.

Email pged@pressgazette.co.uk to point out mistakes, provide story tips or send in a letter for publication on our "Letters Page" blog

Select and enter your email address Weekly insight into the big strategic issues affecting the future of the news industry. Essential reading for media leaders every Thursday. Your morning brew of news about the world of news from Press Gazette and elsewhere in the media. Sent at around 10am UK time. Our weekly dose of strategic insight about the future of news media aimed at US readers. A fortnightly update from the front-line of news and advertising. Aimed at marketers and those involved in the advertising industry.
  • Business owner/co-owner
  • CEO
  • COO
  • CFO
  • CTO
  • Chairperson
  • Non-Exec Director
  • Other C-Suite
  • Managing Director
  • President/Partner
  • Senior Executive/SVP or Corporate VP or equivalent
  • Director or equivalent
  • Group or Senior Manager
  • Head of Department/Function
  • Manager
  • Non-manager
  • Retired
  • Other
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
Thank you

Thanks for subscribing.

Websites in our network