Online advertising growth is grinding to a halt at newspapers, where many U.S. papers are cutting print and focusing on ramping up their digital offerings, Reuters reported Thursday.
Digital ad revenue increased only 1 percent year-on-year in the first quarter at U.S. newspapers. It was the fifth quarter in a row seeing declining growth, the Newspaper Association of America announced, according to Reuters. The stalling digital ad growth is due to a surplus of ad space, an increasing number of ads being sold at rock bottom prices and the poor U.S. economy.
While these three things are contributing to a poor environment for digital ads overall, “the real culprit is falling prices,” Poynter’s Rick Edmonds opined. The situation would be helped if newspapers would “stop selling through ad exchanges and to use better targeting and other strategies to create premium-priced ad placements.”
And unsurprisingly, print ad revenues aren’t faring so well either.
In 2011, ad revenue for print newspapers dropped to US$20.7 billion. Adjusted for inflation, it’s the lowest annual ad revenue for newspapers since 1951, figures from the Newspaper Association of America show, according to the Oregon Business Report.
Adjusted for inflation, 1950’s yearly newspaper ad revenue was about $20 billion, and in 2000 it reached $63.5 billion. Then, just 11 years later, it was back to the $20 billion mark, the Report explained.
“Revenue declines are relentless, and industry efforts to grow the digital business and reduce costs are not sufficient to offset pricing pressure and print volume losses,” concluded Moody’s senior credit officer John Puchalla, who gave the entire newspaper industry a “negative” outlook, according to MediaDailyNews.