Last week, noted digital advertising analyst Gordon Borrell made a bold prediction. He said newspaper advertising would actually increase by 0.5% in 2013. But before you get too excited, Borrell did not claim all papers would see a bump. Rather, large metro dailies that face heaps of online competition would continue to see significant declines. Mid-size dailes, of less than 100,00 in circulation, would remain largely flat. Small papers, in contrast, would grow.
Predicting any growth at all in the newspaper industry is somewhat heretical. The sector as a whole has lost tens of billions of dollars in revenues over the past decade. Hundreds of papers have closed or moved to abbreviated schedules, including some papers covering major metro areas like New Orleans, Detroit and Denver. The revenue squeeze has not been confined to print pubs. Even as readership has remained strong on newspaper websites, advertising has remained challenging due to the simple laws of supply and demand.
A combination granular online advertising targeting and significantly more content inventory conspires to drop prices of most standard display ads (not to mention classifieds, which Craig’s List has long since destroyed as a revenue center). Meanwhile, as our own Tom Grubisich writes, billions of bucks have poured into local online ads but little of that has gone to news sites. Oddly enough, on the same day I happened to read an article in The Real Deal about NYC real estate bloggers, many of whom are also hyperlocal news bloggers — and I was astonished at how many of these folks had been able to “quit their day jobs.” to run a hyperlocal blog full time.
Which is why I actually think Borrell is onto something. We all know that small papers have suffered far less than major metros in the advertising bloodbath. And talk to anyone in a small town and these papers continue to have tremendous relevance. In my own small town, I read both the local papers (the weekly and the daily which has some local news) religiously. Small papers have mostly slashed extras costs, if they ever grew bloated in the first place. And today, more than ever before, the tools for easily putting a small-town paper on the Internet have become incredibly simple.
Granted, different strategies for ad sales and revenues may work for different towns. And its possible that the entire advertising strategy itself might blow up as small town papers derive money through alternative revenue streams. For example, a small town paper could also embed and appointment calendar function so that readers wishing to book with advertisers for services could do so through the paper for a small percentage fee.
While Borrell does not talk about these alternative revenue streams, I think they will quickly come to fore as we shift away from a mindset that ad-support is the only way to power media — a mindset formed during the short period of time when newspaper, television and radio had a total lock on local media, creating near monopoly conditions. Times change and so will papers. Many have already adapted to churning out high quality news with smaller staffs. The small town papers, because they have a better direct relationship with advertisers, face a more tractable option in trying to push adoption of new revenue streams. Not all of these streams will work out. But, at a minimum, the core small town advertising market will likely bottom out because, for small town businesses, no better alternative has emerged.
Alex Salkever is an executive at a cloud computing company and a former technology editor of BusinessWeek.com. The views expressed in his column are his own and not those of his employer. His Personal Fight column appears every second Wednesday on Street Fight.