Advertisers Reaping Benefits of Declining Ad Revenue

It goes up. It comes down. It repeats. The newspaper advertising industry’s revenue has improved and dropped and improved and dropped and improved again and dropped again. It jumped 16.3% in 1983 and then took a hit in 1991 of 6.0%. In 1997 we saw an increase of 8.5% and then just 4 years later watched newspaper ad revenue fall 9.0%. Newspaper advertising income fell 28.9% in the third quarter of 2009. Cause for concern? Probably not.The idea that “history repeats itself” doesn’t seem inappropriate perhaps just a little cliché. You get the idea. We have been here before. Newspaper advertising revenue has never experienced the amount of loss we have seen in recent years, however there are outside factors playing into this drop that are news to the industry. For example, in the past two years internet advertising has grown in popularity and can be held at least partially responsible for the third quarter of 2009 being the 8th consecutive quarter of double digit decline in newspaper ad revenue.The internet has made it easy for people to advertise to a large perceived audience. A huge number of websites out there offer some type of advertising, and the ones that don’t may have missed an opportunity. New advertising vehicles can excite the masses and create a bandwagon effect. Internet and other “interactive” advertising is no exception. The wide accessibility of internet advertising has created fierce competition (to put it mildly). Many websites you visit are covered with ads selling something, often multiple companies selling the same somethings.The growth of internet advertising has not fared well for newspapers. This situation however, has created a prosperous environment for newspaper advertisers. Less ad revenue means that fewer advertisers are spending their advertising dollars in the newspaper. Fewer advertisers in the newspaper represent less competition for those advertising. Ultimately, less competition among advertisers results in an increased return on marketing expenditures for those still advertising in newspapers.Newspaper circulation has only dropped an average of 7.41% in the past two years. Not as much as many have speculated. Especially when you consider that on a national level we are talking about circulations in the high 40 millions.Here is the point: advertisers are faced with far less competition in newspapers today than they did two years ago, while the product has remained more or less unchanged. Newspaper advertising is producing more results for people that have stuck with it.While it remains uncertain that this trend will continue, it appears increasingly likely that the newspaper industry has seen its darkest hour in advertising revenue. The first signs of the rebound are apparent. US Newspapers, a full service advertising agency that specializes in newspaper advertising, reports that they are expecting an increase in advertising revenue of 68% this quarter (compared to the first quarter of 2009). The companies’ president, Jim Trammel explains, “We have seen a large increase in new business over the past couple months. Past clients have been returning on a regular basis as well. We know that the ads are doing well, because re-orders are consistent. If this is any indication of the industry as a whole, and I believe it is, it looks as though things are looking up for newspapers.”