The Wall Street Journal has an overview piece, basically focused on the Borrell data, that discusses newspapers’ collective predicament and efforts to focus more online and revamp their sales approach to the Web:
Instead of tailoring their sales to local businesses, many newspaper companies initially focused on selling ads to bigger advertisers who were already buying space in their print products.
While this strategy allowed them to quickly and cheaply create a customer base for their online ventures, it also limited their growth, because they weren’t expanding their customer base. Many newspapers also hurt themselves by simply plopping their papers online instead of creating new Web sites that offered advertisers something they couldn’t get in print. Meanwhile, Web companies such as Google and Local.com are growing rapidly because they have made it cheap and easy for local companies to take out ads.
Analysts say newspapers may have maxed out on the amount of ads their existing print customers will buy online. They point to a slowing in the growth of online revenue across the newspaper industry. Online-ad revenues rose 21.1% in the third quarter to $773 million, down from 23% in the same quarter last year. The growth was as high as 39.7% in the first quarter of 2005. For newspapers, this slowing trend is taking place amid steep declines in the sales of print ads.
Print classified revenues are off double digits and overall newspaper revenues are down, as we head into what may qualify as a recession. What that means is more pain and probably layoffs for newspapers. Furthermore, as the article suggests, competition online from verticals, yellow pages and Internet companies puts a squeeze on newspapers’ collective capacity to capture share and ad dollars online.
I still believe however that there are some encouraging signs, including the various partnerships that have been announced with Yahoo! and Zillow, as well as the newspapers’ efforts to “diversify” in some cases into other online businesses. In many markets there is still no authoritative, trusted local site for consumers. There are many sites competing for attention. Newspapers, provided they go further in redesigning their sites, still have a chance in many cases to be that trusted destination with a broad range of local content for consumers. (But they also need to continue with syndication efforts.)
If they focus on consumers and build greater usage and traffic they will gain advertisers. They should also continue to diversify into online businesses and verticals that are not newspapers per se. (Gannett and others are models here.) In the end there are probably three big constituencies in local: yellow pages, newspapers and selected online providers with sufficient wealth and scale. There will always be startups in local as well. But most of the medium-sized players with any momentum will be swallowed up.
Related: Here’s a nice article and roundup about “hyper-local” news sites.