Global consulting firm Deloitte included the following item in its 2009 Canadian media predictions this week: “4 sale: 1 major city nwspapr—$20 obo.” The mock ad underscores the magnitude of the problems facing the newspaper.
“Print in peril” was among Deloitte’s 2009 media predictions, a list that also predicted triple digit growth for mobile advertising (“cellphone ads are the new billboards”), the emergence of WiFi radio, and the evolution of social media as a business tool.
“We are in the middle of probably the biggest depression since the Great one, and it’s not even finished yet—who knows how bad it will get,” said Duncan Stewart, director of research for Deloitte in Toronto. “There’s a lot of doom and gloom out there. What Deloitte’s predictions this year suggest is, yes there are the gloomier sides, but there are some growth markets.”
Classified advertising is the latest in a long list of troubles to beset the newspaper industry, with Deloitte predicting that revenues in the sector could decrease by as much as 30% worldwide. “Things like Craigslist have been a threat to the classified ad market for some time now, and newspapers and magazines have seen their readership erode—largely as a result of the Internet,” said Stewart.
“Combine that with the economic perfect storm, [and] people are cutting their ad budgets and saying things like ‘I don’t know if print is part of my buying needs this year.’ ”
Deloitte said that ongoing financial problems—which include a potential 10% drop in circulation revenues and 20% in overall ad revenues—could force as many as one in 10 print publications worldwide to either reduce their frequency, adopt an online-only model, or even shut down entirely in 2009.
“The need for new business approaches has become increasingly apparent,” said the Deloitte study. “While publishers have reacted, this has not always been at a sufficient pace.”
Stewart said the malaise is impacting the entire newspaper industry. He cites Hearst Corporation’s ongoing attempt to sell the Seattle Post-Intelligencer, a 140-year-old publication operating in a two-paper market. If a buyer can’t be found, Hearst has said that it will consider moving the Post-Intelligencer to an online-only model or closing the paper.
“The lesson for the print industry is if it can happen there, it can happen anywhere,” said Stewart.
Newspapers are viewing online as a potential saviour, but Stewart said there is an almost insurmountable gap between online readership and revenues. The New York Times’ online readership is 10 times greater than that of its print edition, he said, yet its print revenues are roughly 10 times greater than its online revenues. “If they stopped printing entirely, to make up those revenues, they’d have to have more readers than there are people on the planet—which is challenging,” he joked. “Just going online is not a panacea—if it was everybody would have gone online five years ago.”
While newspapers flounder, other industries like mobile are poised for a breakthrough year in 2009, according to Deloitte. Mobile advertising represented about 0.4% of the total ad spend in 2008, but Stewart predicts it will grow between 300% and 500% worldwide this year.
“We’ve spent five years now saying mobile advertising is going to be this huge thing,” said Stewart. But this year the industry will be bouyed by increased smartphone penetration (20% of the cellphone market by the end of the year, he said), faster networks, bigger screens and even a better understanding of the medium. “[Advertisers] can do graphic-rich, flash-rich feature-rich, media rich advertising,” said Stewart. “When you’re selling just to the standard phone, it’s a little tougher.”
Deloitte also said the emerging WiFi radio platform could bolster the century-old radio industry. There are now an estimated 14,000 Internet radio stations worldwide, although WiFi radios are just beginning to make inroads. The medium’s strength lies in its ability to reach beyond analogue radio listeners, said Stewart.
“If you’re a Newfoundland radio station suffering from declining revenues because half of your population is working in the Alberta oil sands, wouldn’t it be cool if they could listen to your station while they were in Fort McMurray?” said Stewart.
Deloitte also predicted the rise of social networking in business, as both government and small enterprises seek cost-effective ways of distributing information. “This is going to be a billions of dollars a year industry in the next year or two,” said Stewart.
