Ok, so clearly advertising in general hasn’t died. That would be bonkers and it’s pretty clear we are still plagued by pop-up ads and irritating info-mercials. In fact, advertising is probably stronger than ever at least, that is, with regards to providing value and worth to the people who buy the adverts.
No, what has died is advertising as a means of funding the media.
The effects of advertising’s waning power is that the press – notably newspapers and similar websites – are having a helluva time, at the moment. They have been for the last several years. The struggle of newspapers to survive in this tough time is made all the more difficult when media titles are literally haemorrhaging money. In 2013, newspapers saw revenue decline 2.6 percent, representing more than a billion dollars. Much of this was caused by the diminishing of media advertising.
Decline of The Times (and others)
In the fourth quarter of 2016, the New York Times Company’s total advertising revenue dropped 9.7%. Print advertising revenue – that which appears in the daily newspaper – fell 20.4% in the fourth quarter, following a decline of 18.5% in the quarter before that. Now, management at the newspaper giant expects total advertising revenue in the first quarter of 2017 to decline in the high-single digits.
And it’s not just the New York Times that are feeling the strain. Across the entire industry, newspapers and magazines are struggling to keep up with the new reality that is the slow decay of print media, caused by a decline in advertising as a means to fund content operations. Across the industry as a whole, the number of classified adverts has dropped a massive 75%, while advertising revenue has plummeted by around 40%. With many people accessing media sources for free, yet using tools like ad-blockers, the ability for newspapers to leverage advertising revenue continues to fall.
Big brands lose faith
This development has had a significant knock on effect. Namely, big brands no longer have faith in media companies. Journalism schools and businesses are starting to acknowledge – bleakly, powerlessly – what this means for the future of the industry if another way isn’t found.
Nicco Mele, a former senior vice president and deputy publisher of the Los Angeles Times said, in an interview in 2016, that “if the next three years look like the last three years, I think we’re going to look at the 50 largest metropolitan papers in the country and expect somewhere between a third to a half of them to go out of business”.
Similarly, Medium, a social publishing startup and relative newbie when put against the likes of the Times, the Post, and others, has acknowledged that underperformance by advertising as a business model is directly responsible for staff being laid off. According to CEO Ev Williams, the decline in advertising revenue has hit the industry so hard that his company had no choice but to resign itself to making one-third of its workforce redundant.
Digi-giants to the rescue?
Platforms Verizon, Twitter, Yahoo, Google, and Facebook take more than 65% of all digital advertising revenue, at least according to a Pew report in 2016. Similarly, Digital Content Next reported that 90% of growth in digital ad revenue over 2015 went to giants Facebook and Google, and in 2016, all incremental spending went to this duo. This, on the whole, does not encourage confidence in the idea that the closed environment of platforms is beneficial to the long term health of journalism, without dedication on the part of technology companies to make it so. But, luckily, these tech giants are taking note.
Facebook, for example, is now a part of a $14 million effort to save journalism. Known as the News Integrity Initiative – partly because of its desire to combat fake news – the project is led by Craigslist founder and journalism advocate, Craig Newmark. The team behind the NII, of which Mark Zuckerberg counts himself, will use the fund to support research and projects related to improving news literacy and trust in journalism and, additionally, will host events where experts discuss issues related to the media.
But it is important that media groups keep their integrity, too, and this means not relying overly on the donations of others. Mele says that dependance on things like paywalls are not the way forward, and that newspapers and media groups should innovate in order to find newer, different advertising streams that have not been capitalised by the tech giants. Native advertising and other approaches could be a way for local news outlets to win back advertising dollars lost to these well-known competitors. For Mele it’s about taking back what has been surrendered to the tech-industry. He says that Facebook and Google own audiences’ attentions in the way that newspapers used to. He also says news outlets should fight back.
Adapting to demographic shifts in local communities is essential for remaining relevant to both readers and advertisers and is something that newspapers should, in theory, be able to do better than their tech rivals. Reporters know their beats, and this sort of information should be applied directly to advertising and revenue growth in a way that distant tech companies could only dream of. Publishers need to go beyond what counts as ‘native’ advertising today with infomercials, and rethink how they can monetise their very real relationships with their audience.