Print Advertising Continues To Fall

Expenditures for advertising in major newspapers decreased between 17% and 20% depending on the paper in 2007.  This continues a several year trend of downward sales which are only partially being offset by increases in online advertising sales.

Gannett Co. saw a 17% decrease in print advertising sales compared to 2007 and a dramatic 20% plummet in real estate classified ads.   Tribune Co. watched help wanted classifies drop 19% and real estate 24% indicative of the growth in online marketing for both of those items.  McClatchy witnessed real estate classifieds collapse by 26% and automobile advertisements dropping 20%.  The drop in automobile advertisements is particularly troubling for many of the papers as that was long a major reason customers purchased the profitable Sunday Editions.     Rounding out the trend Dow Jones & Co.’s ad volume dropped 20% with a 75% decrease in technology related advertisements.

 The numbers themselves are staggering are only partially offset by the 20% increases seen in online ad sales.  The major problem for the newspapers is that online sales are still only about 5% of traditional paper print ads so even a major increase in online sales can only partially offset the decreases in paper advertisements.   The result has been layoffs across the industry and decreases in paper sizes.   The trend will likely continue in 2008.

Meanwhile on the internet Google watched the rate of growth at AdWords slow later in 2007.   Nobody is quite yet sure what to make of the ebbing in growth but it is very likely the result of saturation within the market.   These ads were once new and exciting to web surfers while now they are becoming so recognizable they are being ignored.   Worse for many online advertisers there is a limited understanding among actual users of the expense involved.   This results in high click rates but low conversion rates or repeated clicks on the same ads over the course of days rather than bookmarking the site.  In some categories rates have gone so high as to make the ads no longer appealing from an advertiser point of view and the problem of click fraud still exists.   Google has gotten much better at addressing click fraud with automatic refunds of clicks they view as fradulent but the perception among many bloggers and many advertisers is that the click fraud rate is still exceedingly high.  In one online non-scientific study roughly 40% of all clicks were competitive in nature during a 24 hour period.   Though not truly fraudulent clicks it’s hardly conceivable that the advertiser is getting their money worth.   Google is a brilliant company and going forward it is likely that they will continue to modify their processes to take into consideration not only the quality but the source of such clicks.

Yahoo meanwhile is continuing the down-slide.  Microsoft has made it clear that they will not raise their offer for Yahoo and this spells continued trouble for the former internet giant.  The only real chance either of the two had to be competitive was through a joint venture combining technology.   It now appears that is off the table for the time being.