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KubasPrimedia 2012 Newspaper Outlook on Ad Revenue Growth and Strategic Initiatives
 

KubasPrimedia 2012 Newspaper Outlook on Ad Revenue Growth and Strategic Initiatives

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    KubasPrimedia 2012 Newspaper Outlook on Ad Revenue Growth and Strategic Initiatives KubasPrimedia 2012 Newspaper Outlook on Ad Revenue Growth and Strategic Initiatives Document Transcript

    • KubasPrimediaPreview 2012Newspapers’ Outlook on Ad Revenue Growth and Strategic Initiatives By Ed Strapagiel 29 November 2011 KubasPrimedia surveyed over 400 daily newspaper executives and managers on their expectations for advertising revenues and what strategic initiatives they intend to undertake in 2012. The survey was conducted in November 2011, when plans and budgets for the coming th year would have been substantially in place. This is our 6 annual Preview study.Highlights 2011 Disappoints Just over half of newspapers may not be achieving their 2011 budgets because advertising revenues have been worse than expected. 2012 Ad Revenues: Lowered Expectations Strong growth in digital ad revenue is expected in 2012, but all other categories are projected to be flat or down. Large U.S. newspapers (100,000+ circulation) are relatively more pessimistic. 2012 Operating Initiatives: Digital is the Big Thing Strong majorities plan to start or upgrade content delivery on mobile devices and to improve their website for online visitors. Other important initiatives include controlling costs, erecting pay walls, and starting specialty products. 2012 Advertising Sales Initiatives: More Digital Majorities have definite plans to expand email, mobile or e-reader digital advertising, to improve website advertising programs and options, and to upgrade digital sales capabilities. Two other important areas of attention are upgrading print sales capabilities and improving ad pricing and rate structures. 1
    • 2011 Disappoints In the Preview 2011 study conducted 12 months ago, newspaper executives and managers expected stabilization of ad revenues this year. Out of 8 ad revenue sources, 4 were expected to increase on net, and the other 4 were projected to show smaller declines than previously. It seems things didn’t turn out that way. 2011 Ad Revenue 80% Worse than expected About as expected Better than expected 60% 40% 20% 0% All US US US US Canada Total 100K+ Circ 25-99K Circ Under 25K Circ Overall, 53% said that 2011 ad revenues are worse than expected, and only 12% claim things are turning out to be better than expected. In other words, Total 2011 ad revenues are falling significantly short of year ago expectations; About half of newspaper operations may not make their budget numbers this year. The largest (100K circulation and over) U.S. newspapers are the hardest hit, with 61% saying 2011 ad revenues are coming in worse than expected. The level of disappointment declines only slightly with circulation size. Among U.S. newspapers of under 25,000 circulation, 45% still note that current ad revenues are worse than expected. General results are similar for Canadian newspapers, except that marginally more (18%) claim that 2011 ad revenues are turning out to be better than expected.KubasPrimedia 2
    • 2012 Ad Revenues: Lowered Expectations Perhaps due to the poor experience of the current year, ad revenue expectations for 2012 have mostly taken a pessimistic turn. Change in Ad Revenue Expectations Preview 2011 Preview 2012 ++ ++ Digital Digital + + Retail Display Automotive Classified Automotive Classified Distribution Distribution Employment Classified o o Retail Display National Display Employment Classified Real Estate Classified Real Estate Classified Other Classified Other Classified National Display - - -- -- ++ Large Increase + Small Increase o About the Same - Small Decrease - - Large Decrease Only one category – digital – is expected to show significant ad revenue growth in 2012. About 53% expect a large increase and a further 39% forecast a small increase. This is essentially the same outlook for digital as in last year’s Preview study. Expectations for all other categories however are in decline for 2012 compared to last year. Ad revenue gains in automotive, distribution, and retail display should be about flat, while employment, real estate, other classified, and national display ad revenues are projected to decline on net. In the case of national display for example, 44% of newspaper executives and managers expect lower ad revenue in 2012, against just 13% who foresee an increase.KubasPrimedia 3
    • 2012 Ad Revenue Expectations ++ Large Increase + Small Increase o About the Same - Small Decrease - - Large Decrease All United States Total Canada Total ++ ++ ++ Digital Digital Digital + + + Distribution Automotive Classified Automotive Classified Retail Display Distribution Retail Display o o o Real Estate Classified Retail Display Employment Classified National Display Employment Classified Distribution Automotive Classified Real Estate Classified Other Classified Employment Classified Other Classified Real Estate Classified Other Classified National Display National Display - - - -- -- -- US 100K+ Circulation US 25K-99K Circulation US Under 25K Circulation ++ ++ ++ Digital Digital Digital + + + Automotive Classified Retail Display Automotive Classified Distribution Employment Classified o Retail Display o o Automotive Classified Retail Display Distribution Employment Classified Distribution Employment Classified Other Classified Other Classified Other Classified National Display Real Estate Classified Real Estate Classified Real Estate Classified National Display National Display - - - -- -- --KubasPrimedia 4
    • There are some differences by country and newspaper size. Smaller circulation U.S. newspapers (under 25K) appear to be not quite as pessimistic, calling for less severe declines in the weakest areas like national display and real estate, and perhaps even a small gain in retail display. Mid-sized U.S. newspapers are somewhat more bullish than average on their prospects in digital. The largest U.S. papers (100,000+ circulation) have lower than average expectations in practically every ad revenue category. Canadian newspapers are more positive on distribution and national display, but more negative in all classified categories, as compared to U.S. newspapers. In general, digital is seen as the top growth area across the board by a large margin. There is perhaps just one other ad revenue source seen as slightly positive, offering an “outside chance” of revenue gain. But at every type of newspaper, declines are expected in most ad revenue categories.2012 Operating Initiatives: Digital is the Big Thing About 70% of newspapers have definite plans to start or upgrade content delivery on mobile devices and to improve their website for online visitors. Other popular 2012 operating initiatives include controlling or reducing both staff and non-staff costs, charging readers for digital content, and starting a new niche product. 2012 Operating Initiatives Start or improve content delivery on mobile devices Improve our website for online visitors Control or reduce non-staff costs Control or reduce staff costs Charge readers for digital content Start a new specialty, niche, or lifestyle product Reduce current specialty, niche, or lifestyle products Reduce current zone, EMC or TMC products Start a new zone, EMC or TMC product Reduce publishing days per week Outsource distribution operations Outsource printing operations Have com pleted Format reduction to narrower width / shorter cut-off Definite plans Upgrade existing or install new printing presses Considering 60% 40% 20% 0% 20% 40% 60% 80% 100% Only about 20% or less are even considering upgrading presses, (further) format reduction, outsourcing printing or distribution, or reducing publishing days per week.KubasPrimedia 5
    • 2012 Operating Initiatives Planned or Considered Start or improve content delivery on mobile devices Improve our website for online visitors Control or reduce non-staff costs Control or reduce staff costs Charge readers for digital content Start a new specialty, niche, or lifestyle product Reduce current specialty, niche, or lifestyle products Reduce current zone, EMC or TMC products Start a new zone, EMC or TMC product Reduce publishing days per week Outsource distribution operations Outsource printing operations US 100K+ Circultion Format reduction to narrower width and/or shorter cut-off US 25 -99K Circulation US Under 25K Circulation Upgrade existing or install new printing presses Canada 0% 20% 40% 60% 80% 100% While the general line up is about the same, operating initiatives for 2012 vary somewhat among newspapers. The largest U.S. papers (100K+ circulation) are more likely to be considering pay walls, reducing peripheral publications, outsourcing printing or distribution, and format reduction. Mid-sized U.S. newspapers (25K to 99K circulation) are slightly more interested in controlling non-staff costs. The smallest U.S. newspapers (under 25K circulation) are relatively less concerned with cost control, although it’s still among their top 5 issues. Canadian newspapers are more likely to start a new specialty, niche or lifestyle product, and the least likely to reduce their existing line up of these publications.2012 Advertising Sales Initiatives: More Digital Majorities of 65% to 70% have definite plans to expand email, mobile or e-reader digital advertising, to improve website advertising programs and options, and to upgrade their digital sales capabilities. Two other strong areas of attention are upgrading print sales capabilities (53% with definite plans) and to improve ad pricing and rate structures (42% with definite plans). Most initiatives are on the radar for a least a third to a half of newspapers. The one exception is outsourcing ad sales operations, although 10% are considering it.KubasPrimedia 6
    • 2012 Advertising Sales Initiatives Expand email, mobile or e-reader digital advertising Improve programs & options for website advertisers Improve ad pricing and rate structures Upgrade digital sales via training or new hires Upgrade print sales via training or new hires Start or upgrade online self-serve ad sales Upgrade external ad sales technology and processes Increase preprint distribution volume Eliminate or cut back discounts and deals Upgrade the internal ad booking and billing system Offer finer geographic targeting for preprints Adopt modular ad sizing and pricing Have com pleted Outsource advertising production operations Definite plans Outsource advertising sales operations Considering 40% 20% 0% 20% 40% 60% 80% 100% 2012 Advertising Sales Initiatives Planned or Considered Expand email, mobile or e-reader digital advertising Improve programs & options for website advertisers Improve ad pricing and rate structures Upgrade digital sales via training or new hires Upgrade print sales via training or new hires Start or upgrade online self-serve ad sales Upgrade external ad sales technology and processes Increase preprint distribution volume Eliminate or cut back discounts and deals Upgrade the internal ad booking and billing system Offer finer geographic targeting for preprints Adopt modular ad sizing and pricing US 100K+ Circultion Outsource advertising production operations US 25 -99K Circulation US Under 25K Circulation Outsource advertising sales operations Canada 0% 20% 40% 60% 80% 100%KubasPrimedia 7
    • In general, larger newspapers have somewhat more initiatives planned or under consideration than smaller publications. There are also differences in priorities among newspaper types. The largest U.S. papers (100K+ circulation) are more likely than average to be pursuing increases in preprint distribution volume, adopting modular ad sizing and pricing, outsourcing advertising production, and even considering outsourcing ad sales.. Mid-sized U.S. newspapers (25K to 99K circulation) are relatively more likely to be considering finer geographic targeting for preprints. The smallest U.S. newspapers (under 25K circulation) are relatively less likely to be considering finer geographic targeting for preprints. Canadian newspapers are relatively less interested in improving ad pricing and rate structures, upgrading print sales capabilities, and eliminating discounts and deals.About Preview 2012 The survey for KubasPrimedia’s Preview 2012 study was conducted online with newspaper executives and managers in November 2011, when plans and budgets for 2012 would have been substantially in place. Participant invitations were sent to both U.S. and Canadian newspapers. The survey was conducted on a confidential basis. A total of 436 survey replies were received. A normal probability sample of this size has a maximum statistical error of plus or minus 4.7% at the 95% confidence level, or 19 times in 20. A breakdown of survey respondents is as follows. Preview 2012 Survey Respondents Weekday Circulation U.S. Canada Total 100K+ Circulation 98 29 127 25K - 99K Circulation 150 15 165 Under 25K Circulation 101 35 136 Circulation not stated 4 4 8 Total 353 83 436 Relative to the number of publications, survey results under-represent small newspapers, but as a consequence may better reflect advertising revenue distribution by circulation size. Thank you very much to all those who participated in the Preview 2012 survey! Ed Strapagiel (eds@kubas.com) is Executive Vice President of KubasPrimedia (formerly Kubas Consultants), a firm specializing in newspaper pricing structures, revenue development, and publishing strategy. For more articles and ideas on newspaper ad sales and marketing, visit www.kubas.com. © Copyright KubasPrimedia. All rights reserved.KubasPrimedia 8