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Pew study: many US media companies still struggling to adapt to digital

Pew study: many US media companies still struggling to adapt to digital

As Shakespeare might have said, the course of transferring to a digital revenue model never did run smooth...

A report published today by Pew Research Center's Project for Excellence in Journalism highlights the difficulties that many US news organisations are having in adapting their business models to the digital age.

The report states that for every dollar that papers gain from increased digital ad revenue, they lose seven from decreased print ad sales. "In general," asserts Pew, "the shift to replace losses in print ad revenue with new digital revenue is taking longer and proving more difficult than executives want."

The report was based on data from 38 newspapers from across six US media companies, as well as on interviews conducted with the company executives in 2011. This year, Pew also carried out follow-up interviews with executives from the original six media groups, as well as talks with management figures at an additional seven companies. The 13 firms who participated in the study in some way represented a total of 330 daily papers - a pretty comprehensive sample.

However, there are gaps in Pew's information. The organisation conducted its research on the condition that all the media groups involved would remain anonymous, so it tells us about trends in the overall industry, rather than partocular companies. More significantly, it focuses chiefly on advertising, but does not look at paywalls as it says that "the number of papers that have moved in that direction is still small and, in many cases, not enough time has elapsed to draw conclusions."

These omissions aside, Pew's findings show clearly that news organisations are struggling with advertising in the digital age. Not only did the 19% increase in digital advertising revenue fail to make up for the 9% decline in print by a factor of 7, Pew also reported a failure by news companies to exploit more cutting edge forms of digital advertising.

According to the study, 92% of papers surveyed said that their digital sales were focused on display ads. Pew also found that only 40% of the 38 newspapers who handed over their data focused significantly on selling targeted advertising, which the report states "is expected to dominate local digital revenue by 2014".

Both these trends fit with a Pew study from last month, which suggested that many media companies had failed to diversify into new forms of digital advertising such as videos and pop-ups, and that of 22 surveyed US news organizations, only three made "significant" use of targeted ads.

Pew's new report also suggests that mobile ads are a problem area for the news media. Of the papers that gave Pew access to their data, mobile advertising made up a mere 1% of digital advertising revenue. This is matches up with a study published in the Washington Post last month, which suggests only 1% of US ad money is spent on mobile, despite the fact that users consume media via mobile devices 23% of the time.

In general, the report suggests, news organisations were struggling to focus on digital advertising at all: the newspapers in the study had an average of three times more print-focused sales reps than digital-focused ones.

When it came to other revenue streams, Pew also found that 44% of newspapers in the study were trying to earn revenue in non-traditional ways, such as holding events or selling products. But the report suggested that the money involved was "minimal - less than $10,000 quarterly".

Yet despite these discouraging figures, the report was positive that among the gloom there were some examples of great success, which suggested that the right newsroom culture could help media companies thrive, even in difficult times.

Pew gives the example of one paper, which observed a 63% increase in digital ad revenue and an 8% growth in print for the last full year for which it had data. Another created a successful "multi-million dollar a year" consulting service, advising other companies on digital marketing.

Yet the report suggests that, while these success stories are out there, some in the industry as still afraid of change. Pew quotes one executive: "There might be a 90% chance you'll accelerate the decline if you gamble and a 10% chance you might find the new model," he stated. "No one is willing to take that chance." This is a culture that might have to change if newspapers are to survive. Staci Kramer at paidContent sums up the dilemma in her headline "papers' biggest revenue threat is inertia; second biggest is action," she writes.

Sources: PEJ (1), (2), Washington Post, paidContent


Hannah Vinter


2012-03-05 16:20

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