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Plummeting Newspaper Ad Revenue Sparks New Publishing Era

NewsFromThePlatform | November 18th, 2016

All of us know that publishing, and newspapers in particular, are going through a period of great change. An accelerating and seemingly unavoidable drop in print advertising is pushing publishers to consider significant cost cuts and dramatic changes to their print and digital products.

According to estimates from GroupM, the ad-buying firm owned by WPP PLC, the overall global ad market is expected to grow 4% this year to $529.1 billion. However, global spending on newspaper print ads is expected to decline 8.7% to $52.6 billion in 2016. That would be the biggest drop since the recession, when world-wide spending plummeted 13.7% in 2009. This is because printed newspapers are less and less appealing to the modern reader, who prefers to look for news on digital media – indeed there has been a 14% acceleration in digital-ad spending – especially if that means online video. Other factors more recently have come into play, including the growing use of data and analytics in the media-planning process.

As highlighted by the Wall Street Journal, that decline is hitting every major publisher (both in Italy and abroad), many of which have trimmed costs to cope with the worse-than-expected revenue decline. The New York Times Co. and Wall Street Journal-owner News Corp, likely have further head-count reductions on the way, and the Guardian and the U.K.’s Daily Mail recently eliminated jobs. The Wall Street Journal, for instance, is going through an overall reorganization that affects both print and digital media, with the cancellation of some of its traditional sections and the introduction of a more rigid paywall, according to an interview by Niemanlab to Gerard Baker Director.

This situation, however, brings some good news too: editors have finally understood that if they want to overcome this crisis they should boost digital-revenue streams even faster and, in some cases, even reconsider the format of their print products and the types of content they publish. They have made strides, but face challenges on that front, including the dominance of Facebook and Google in the digital market and difficulty making money on mobile products.

To help bolster digital dollars, many publishers are slowly abandoning low-rent display ads and pushing into potentially more lucrative ad offerings such as native ads, video ads and virtual reality. In particular, they are aiming at offering quality online tools that can generate more traffic and, also, more subscribers. We are speaking, essentially, of an optimization of mobile tools and a “reconciliation” with Facebook and its contents. This serious, and widespread, commitment has also been demonstrated by the presence of  publishing giants like the New Yorker, Qantas, Wired, The Economist and many others among the winners of the Digital Magazine Awards, the famous contest that rewards the best examples of digital publishing, now in its sixth edition.

Emphasizing the importance of digital, the Times this week named A.G. Sulzberger—who has focused on the newsroom’s digital transformation—as deputy publisher, putting him in line to become the next publisher. This appointment falls in a watershed moment for the newspaper, which is riding a reshuffle in the leadership and staff reductions, and sees Arthur Gregg prevail over other candidates for his major digital skills and a genuine focus on innovation. The famous Innovation Report that in 2014 helped reshape the new digital course of the New York Times is mainly his creation.

The reader’s interest to the new frontier of interactive and multi-channel digital publishing is leading publishers to adapt and use strategic tools such as customized galleries, video, podcasts, 3D rendering and augmented reality. Without forgetting the positive effects that digital interactive publishing has on e-commerce (with the innovative Paywall system) and on performance analysis.

The future of the publishing industry’s big players also depends on their collaboration with innovative start-ups. Indeed, many are the young start-up companies that are trying to disrupt the industry. For example, JB Lab (Turin, Italy), has created an e-book and mobile application for kids from 0 to 10 years (called G.R.I.M.M. – Grow in MultiMedia) that lets users select the child’s age so that the book will automatically adapt to its needs and skills. Or SPAM, a paper magazine that uses augmented reality and allows users, for instance, to read a film review, watch the trailer and buy the movie. What is more, these start-ups are growing fast: NYC company Odissey has created an online journal for writers aged 18-28 who have a unique perspective. Odyssey seems to have hit upon one formula for distributed growth in media, and has just raised $25 million financing. This is the beginning of a new editorial era, and its future depends on technology and multimedia, on the capacity to communicate in a totally different way, and especially on big publishers and newspapers willing to integrate their traditional knowledge with the innovation of digital start-up companies.