By Marcelo Duran
Associate Editor
Newspapers continue to outpace broadcasters and radio stations in the amount of local ad revenues placed on their Web sites, according to a study released last month by Borrell Associates.
The report, “What Local Media Web sites Earn: 2008 Survey,” stated that, on average, the local newspaper snared almost 12 percent of the online advertising market, while broadcasters and radio stations each captured less than a 1 percent market share.
The report analyzed Web revenues for more than 3,100 media properties, including 741 daily and 272 weekly newspapers, and found that overall local online revenues are growing at a rate of 50 percent this year. Borrell expects revenues from local online ads to reach $13.1 billion this year, up slightly from the $12.6 billion the firm estimated in December 2007.
Borrell said that one factor contributing to the growth in local online advertising is the number of media companies selling advertising on their own sites.
The economic slowdown is also motivating advertisers to abandon more traditional spending patterns as they seek out more economical methods of reaching potential customers.
Newspapers as the aggressors
The study reported that newspapers spent much of last year regrouping and approaching the Internet as attackers instead of waiting to be attacked by competitors such as the Yellow Pages.
Some of the more aggressive moves newspapers took included the formation of the newspaper consortium with Yahoo, Borrell said. The study also credited newspaper associations with providing members the research they needed to combat rivals in the marketplace.
Nationwide, newspapers attracted more than $3.1 billion in online ad revenue in 2007 — $2 billion in local advertising and $1.1 billion in national advertising sales. That number is expected to grow to $3.7 billion this year, Borrell said.
But growth will begin to slow, Borrell said, with compound annual growth rates dropping below 15 percent over the next four years. That’s compared to a 48 percent annualized growth rate papers posted over the past four years.
By 2012, growth will decrease to the single-digit range, the firm said.
New online identities
The study also found that newspapers are retooling their Web sites to become more distinct from their printed counterparts.
The Miami Herald, for example, spun off Miami.com from its Miami.herald.com Web site in a bid to create a local portal that’s separate from its newspaper-branded online operation, Borrell said. The Bakersfield Californian and The Buffalo (N.Y.) News made similar moves.
Finally, the study found that the most successful online newspaper ventures shared common traits such as devoting more resources to online sales forces, launching multiple Web sites and reducing dependence on classified vertical categories.
Still, papers reported that on average, newspapers in 2007 received 41.9 percent of their online revenue from recruitment advertising, 10.7 percent from automotive and 10.4 percent from real estate.
Local online advertising
Revenue
2002: $655 million
2003: $811 million
2004: $1.2 billion
2005: $2.0 billion
2006: $2.6 billion
2007: $3.1 billion
2008: Projected $3.7 billion
Source: Borrell Associates
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