September 02, 2003

The Last Picture Show for Newspapers?

In another measure of the growing competition newspapers face from the Internet for advertisers - and therefore for the readers who consume advertising - AdAge magazine reports that the money movie studios spent on Internet ads "skyrocketed 71.2% in the first half" of this year.

"Some studios have doubled their online media budgets … they are moving money from print into online," says an executive with Yahoo! Entertainment, which AdAge says "claims to command 50% of all Internet movie-ad dollars."

A considerable amount of money is at stake. Reports AdAge: "About 10% to 25% of the average $25 million marketing budget for a wide-release movie is earmarked for newspaper ads."

As distasteful as it may be for most journalists to admit, money matters. Midsize and larger papers spend about 10 percent of revenue on news. (Poynter Institute: "The 2000 Inland survey shows papers above 179,500 circulation spending an average of roughly 9.5 percent of revenues for news editorial. For papers of smaller circulation (50,000 to 179,500) the average appears closer to 11.5 percent.") Put another way, every $1 million in movie ads the Internet siphons from newspapers represents $100,000 that would be spent on journalism - about the salary of two experienced reporters.

Many of the difficulties newspapers have in reaching and retaining audience (the subscriber churn rate averages more than 100 percent) have to do with the antiquated, almost rote forms of journalism practiced in all but the best papers, but the blame lies not only in the newsroom.

Newspaper business managers have betrayed the journalists. It is their job to bring in the money that underwrites editorial and their recent performance has been woeful.

The Internet is a disruptive technology [ Read: Newspapers Disrupted ] that is eroding the revenue and readership base of newspapers. Survival depends on adaptation and innovation. Newspapers can look for ways to partner with the new technology (Tribune Media Services is working with movie ticket-seller Fandango) or disrupt themselves (via their own online operations), which, thus far at least, most companies haven't been very good at. [ Read: A Digital Edge report on how newspapers are missing the sweet spot of online advertising.]

Journalists (unfortunately) may not understand that newspapers are in a battle for their lives, but those whose success depends on the bottom line and not the byline see things differently.

Says Dave Murphy, president of Tribune Co.'s Media Net, to AdAge: "It's a customer-by-customer battle today. Advertisers are doing their best to evaluate the return on investment of all media. And we're up to our neck in it. ... Welcome to the media world."

Newspaper editors, reporters and photographers only need to replace the words "customer" and "advertiser" in Murphy's quote with "reader" to define their own situation.

 AdAge More Movie Advertising Moves from Newspapers to Internet

Posted by Tim Porter at September 2, 2003 09:45 AM