Average visit at newspaper site: 1.1 minutes
Even though two-thirds of American adults visit the digital media published by newspaper companies, the average time spent in each session is an anemic 1.1 minutes per day – notably below the engagement enjoyed by competing media.
The good news for publishers, as reported this week by the Newspaper Association of America, is that the number of unique visitors accessing newspaper websites grew to a record 161 million in March. This represents a 19% increase in unique visitors over the prior year and 66.6% of all adults in the United States, according to data provided to the industry organization by the comScore analytics service.
The bad news for publishers is that the average visitor in March spent only 1.1 minutes per day at a digital newspaper venue, according to supplementary data supplied to Newsosaur by comScore. The data show that the engagement rate at newspapers falls well under the time spent at competing digital destinations.
In comparison to the 1.1 minutes spent daily at newspaper sites, the average time spent on social media is 33 minutes per day and the average time spent at search sites is 3.6 minutes per day, said Andrew Lipsman, a vice president of comScore.
Engagement at newspapers is weaker than the dwell time at other news sites, too. In a group of dozens of sites tracked by comScore that includes the likes of Yahoo News, NBC News, BuzzFeed and CNN, the average visit is 3.8 minutes per day. As illustrated below, even weather sites do better than newspapers, hanging on to visitors an average of 1.5 minutes per day.
Lipsman said the number of unique visitors reported across all categories includes anyone who accesses a digital venue at any time in a month. “All someone has to do is read the news at some point in the course of the month to qualify as a unique visitor,” said Lipsman. “The time on site will vary a lot depending on the person. Some read every day. Some visit once a month. And a lot of people are in between.”
Commenting on the disparity in engagement across media types, Lipsman noted that lots of newspaper content is consumed at portals like Google News and other aggregation services. “There is a lot more consumption of general news content at those sites than there are for specific papers,” he said in a telephone interview. “And, remember, newspapers are read offline, as well.”
The popularity of newspaper articles at aggregation sites doesn’t generate revenues for publishers. This may be one reason that digital advertising sales at newspapers advanced 1.5% in 2013 while over-all digital sales grew by 17%.
Although there is little newspapers can do about aggregators usurping some unknown chunk of their traffic, publishers should not be content with merely celebrating the year-to-year lift in unique individuals visiting their sites.
Now that newspapers are attracting the attention – at least once a month – of two-thirds of the country, publishers need to encourage the visitors to stick around with compelling content, robust utility and the passionate community engagement that rivets users to the social media.
The plight of newspapers in a single chart
The following chart is all you need to know about the breathtaking contraction of the newspaper industry that coincided with the explosive growth of digital advertising in recent years. Take a look and I will tell you what it means.
The reason the above chart starts in 2005 is because that is the year that advertising at the nation’s newspapers hit an all-time high of $49.4 billion, according to the Newspaper Association of America, an industry-funded trade group.
That’s right. Fully a decade after us mere mortals became aware of the Internet, ad sales continued to surge at newspapers, leading publishers to believe this upstart medium was no challenge to the power, prestige and enviable profitability of their brands.
At the same time newspaper revenues peaked in 2005, digital advertising hit a record of its own, surging to $12.5 billion after literally coming from nowhere in a decade, according to the Internet Advertising Bureau, a trade group.
In the intervening years, as we all know, audiences and advertisers increasingly shifted their attention and patronage to the digital media, abetted by improving connectivity, generally falling costs and, most recently, a host of addictive mobile devices.
So, it probably comes as no surprise that digital advertising surged 17% to a record $42.8 billion in 2013, surpassing for the first time the $40.1 billion spent on broadcast television advertising.
At the same time digital ad sales advanced to a new record, print and digital ad sales at newspapers fell 7.1% in 2013 to a bit under $21 billion, according to figures released on Good Friday by the NAA.
As detailed here, print advertising at newspapers last year fell 8.6% to $17.3 billion, representing the lowest level since 1982. Thus, the volume of print advertising, the primary revenue stream for the nation’s newspapers, is barely a third today of the record $47.4 billion in print ads sold in 2005.
Almost as alarming to behold as the ongoing decline in print advertising is how little digital advertising grew at newspapers in the last 12 months in spite of the professed commitment of most publishers to pivot vigorously to the new medium. Digital advertising rose a mere 1.5% to $3.4 billion in 2013 at the same time that digital sales surged 17% across all digital categories in the United States.
The weakness in digital ad sales last year is consistent with the industry’s performance in the last decade.
Between 2003 and 2013, digital ad revenue at newspapers grew from $1.2 billion to $3.4 billion, making for a compound annual growth rate (CAGR) of a seemingly respectable 28%. In the same period, however, industry-wide digital advertising spurted from $7.3 billion in 2003 to $42.8 billion in 2013, representing a CAGR of 59%.
In other words, the over-all digital ad market has expanded twice as fast as the category has grown at newspapers. And here’s why that matters:
Back in 2003, newspapers had a 14% share of the national digital advertising market. In 2013, they had barely 8% of the market.
At a time that growth and scale mean everything to the success of a digital publishing enterprise, the ongoing inability of newspapers to compete effectively in this emerging marketplace may be an even bigger problem than the traumatic collapse in print advertising that they have suffered over the last eight years.
FOOTNOTE: Some sharp-eyed readers inquired as to why I say that newspaper print and digital advertising totaled $21 billion in 2013 vs. the $23.6 billion figure used by the NAA in its annual revenue report. The reason I used $21 billion is that the number maps exactly to the way newspaper ad revenues have been reported by the industry for the last decade. The additional revenue cited in the NAA report includes the sale of marketing services and revenues from niche publications. While publishers are benefitting from the addition of these new revenue streams, the apples-to-apples comparison of current and historical performance discussed in this post required the new revenue streams to be left out of the mix.
Print ads fell 8.6% at papers in 2013: NAA
In the eighth consecutive year of decline, print advertising at the nation’s newspapers fell 8.6% to $17.3 billion in 2013, according to statistics released today by the Newspaper Association of America.
This means the primary revenue stream for the nation’s publishers now is barely a third of the record $47.4 billion achieved as recently as 2005.
The 2013 print revenues are the lowest level since 1982, when the industry produced sales of $17.7 billion in revenues, which in today’s dollars would be worth $43.4 billion.
In another key metric released prior to the holiday weekend by the industry trade group, digital ad sales gained 1.5% last year to $3.4 billion.
The increase in digital sales at newspapers compares with the 17% surge in total U.S. digital ad revenues reported recently by the Internet Advertising Bureau.
The IAB, an industry marketing organization, said that total digital ad sales in 2013 reached $42.3 billion, surpassing even the $40.1 billion spent on broadcast television advertising in 2013.
In issuing its annual revenue summary for newspapers, the NAA included not only advertising sales but also the revenues that newspapers are reaping from audience fees, niche publications, marketing services and the production of live events.
Taking all revenue categories into account, the NAA said the industry produced $37.6 billion in revenue in 2013, or a 2.6% decline from the prior year.
Saying that the industry’s business model is “evolving,” the NAA said the industry is taking advantage of “developments in technology, consumer behavior, and advertiser interest, to grow audience and diversify its revenue stream.”
A thoroughly modern digital publisher
When Rafat Ali launched Paid Content in 2002, he created one of the earliest successful digital publishing businesses by, quite cleverly, covering the emerging digital publishing business.
Today, Ali is helping to revolutionize digital publishing again with a new venture that pioneers the use of data to not only develop high-profile, brand-burnishing stories but also to generate fresh, recurring and defensible revenue streams.
In the process, Ali has architected a thoroughly modern digital publishing business. Legacy and digital publishers would be wise to study – and perhaps emulate – it. Here’s the story:
Shortly after selling Paid Content to Guardian News & Media for some $30 million in 2010, Ali took a world tour to dream up his next big idea. As he traipsed from plane to hotel and hotel to plane, Ali realized that the information available to the 260 million people working in the $6.5 trillion global tourism industry was fragmentary, fragmented and hard to find.
So, he launched www.Skift.Com in early 2012 to solve the problem – and, in the absence of significant competition, quickly became a leading news source for the travel industry. Unencumbered by a paywall, Skift sells high-CPM advertising and provides content to the likes of CNN, NBC, Quartz and Business Insider. Positioning itself as an industry thought leader, Skift also publishes two premium research reports each month, which it sells in a $99 package.
Ali isn’t stopping with these well-established revenue streams. He now is embarked on gathering, analyzing and selling data about his readers – so he can sell it back to them through a product called SkiftIQ, which also costs $99 a month.
In the first of what Ali says will be a growing array of datasets, he counted Twitter followers, Facebook likes, YouTube views and Instagram shares to quantify the marketing prowess of dozens of travel brands on the social media. Thus, Skift earlier this year determined that KLM was a more effective social marketer than American Airlines and Amtrak.
While travelers may not care about the social-media mojo of their hotels, the information means a great deal to Marriott, Expedia, Lonely Planet, Airbnb, Norwegian Cruise Lines and all the other brands competing for mind- and market-share in a highly competitive and price-sensitive industry.
Skift’s approach to gathering, crunching and selling data is not unique. It is but one of a growing number of next-generation digital publishers who understand that rich and granular data is the key to (a) personalizing content for busy consumers who only want to know what they need to know and (b) targeting ads for marketers who only want to pursue well-qualified prospects.
Thoroughly modern digital publishers use data to identify and report stories; to understand and build audience; to improve reader loyalty and dwell time; to place targeted, high-value advertising, and to create products, like SkiftIQ, that they can sell to readers, advertisers or third-party services aiming to analyze consumer trends.
Although Skift is a business-to-business publisher, consumer-facing media companies like newspapers and local broadcasters also can gather and disseminate data that is useful to their readers and advertisers.
Zillow, which has gobbled up a chunk of the real estate readership and revenue that newspapers have lost in recent years, illustrates the allure of rich local data:
∷ From the consumer point of view, Zillow updates home and rental values on a granular, almost-daily basis. It ranks the schools adjacent to each home. It estimates mortgage payments and property taxes. It even has developed a Walkability score that gauges how often you are likely to need a car to access supermarkets, parks and cafes.
∷ From the commercial point of view, Zillow has tons of pictures and data about homes in a neighborhood, which real estate agents (and consumers) can use to prospect for listings and develop price comparisons. In addition to selling display ads, Zillow sells listings that enable agents to promote themselves in the areas they serve.
With so many datasets available on the web and so many tools available to analyze the information, why couldn’t newspapers combine demographics, crime data, home prices, school scores, air pollution readings and other data to create neighborhood livability indexes? For inspiration (and free tools), take a look at the data-centric reports that ProPublica has developed to explore education quality, dialysis mortality and much more.
With the help of the Census Bureau, local business associations and companies like Pulse Research, publishers can capture data about commercial activity in their markets to track everything from the frequency of chiropractor visits to the volume of lawnmower sales. Beyond using this information to prod individual merchants to buy advertising, publishers or broadcasters can create trend reports that will appeal to consumers and businesses alike.
To the extent local media companies become the leading data repositories in their communities, they will become indispensable to their readers and advertisers. That’s got to be good for their long-term franchise value.
© 2014 Editor & Publisher
Lessons from the Digital First implosion
Schadenfreude broke out among some publishers today when Digital First Media killed an ambitious interactive publishing initiative and commenced layoffs to bolster the bottom lines of its newspapers in a reported plan to groom them for sale.
But no one should be happy that Digital First hit the wall. All this episode proves is that digital publishing – which remains the only imaginable way forward for newspapers and other legacy media – is even harder than we think.
Digital matters, because modern consumers – even those over the age of 55 – prefer to ingest news on a panoply of platforms including computers, smartphones, tablets and smart televisions. Even the American Press Institute, an arm of the Newspaper Association of America, recently concurred that “the majority of Americans across generations now combine a mix of sources and technologies to get their news each week.”
The problem with digital news publishing, as discussed here, is that few, if any, organizations have developed models that come close to successfully emulating the scale and profitability achieved in the best of times by the traditional publishing and broadcasting media.
Sustainable revenues and profitability have eluded digital natives of all sizes, including both for-profit and not-for-profit ventures. And it most certainly has eluded legacy publishers, with newspaper companies like Digital First Media trying to crack the digital publishing code while battling an advertising collapse that has seen their collective revenues plunge by more than 50% since peaking at $49 billion in 2005.
If digital publishing is so tough, then why are so many new entrants coming out of the woodwork? The answer, quite simply, is that content has become a hot area for venture investing. To name but a few examples, Vice Media has raised $70 million, Vox Media has raised $60 million and BuzzFeed has raised $46 million, according to Tech Crunch, which raised $25 million itself. This is not to mention Facebook, the biggest publishing platform of them all with $13 billion in cash, $7.9 billion in sales and a 37% operating margin. The magic of Facebook, of course, is that all the content is generated for free by its users.
Because venture investors favor exponential growth in audience and page views over such traditional metrics as revenue and profitability, they are content to underwrite these new digital ventures in the hopes that they will grow to the point they will merit an IPO or be acquired by a well-heeled player.
Unfortunately for self-styled publishing visionary John Paton, the chief executive of Digital First, he picked the wrong vehicle and the wrong financial backers to pursue his digital quest.
Until he nuked the ambitious Thunderdome interactive publishing effort, Paton enjoyed telling fellow publishers to stop grousing about the decline in print advertising dollars and to start “stacking digital dimes.” Although Paton’s privately held company does not report its financial results, his actions clearly suggest that the dimes did not accumulate as fast as dollars flowed out of the print side of his business, which even in its dissipated state demands attention because it continues to produce the preponderance of revenues and profits for his company. (This, of course, is also the case at every other newspaper.)
Paton ran out of time and resources to pursue his vision because he had the wrong financial backers. Digital First Media is a collection of dozens of newspapers, including the Denver Post and San Jose Mercury News, that had been bought in bankruptcy by Alden Global Capital, a distressed-debt specialist looking to buy properties on the cheap that it could fix and flip for a quick profit at the earliest opportunity.
In other words, the objectives of the Digital First investors were the antithesis of the patience – and multimillion-dollar commitment – required in the slog to identify successful interactive publishing models, whatever they eventually may turn out to be.
It would be a mistake to view the failure at Digital First as a failure of digital publishing or a reason to stop trying to get it right.
The only thing this sad chapter proves is that the pivot from legacy to digital publishing is going to be harder than we imagined.