Sunday, November 30, 2008

The ever-dwinding newspaper share of ad dollars

Tim Windsor's post the other day, in which he updated his chart of constant-dollar U.S. newspaper advertising revenue, got me thinking. I commented in his post that perhaps a better way to look at the numbers would be to view them as a fraction of the Gross Domestic Product. But then I realized that total advertising expenditures across all media, as a fraction of GDP, might vary a bit over time, which would skew that approach (although it turns out that total advertising spending is pretty constant at about 2 percent of GDP, ranging mostly between 1.8 percent and 2.3 percent, with few outliers).

So I downloaded 49 years worth of cross-media advertising revenue from the data available at the Television Bureau of Advertising. All of their numbers come from Universal McCann, so they have the advantage (hopefully) of being consistent over time. The newspaper revenue data is identical to that published by the Newspaper Association of America. I loaded it all into a spreadsheet and calculated the "share of total" for each of the media over time. Here's what it looks like:

(Sorry about the fuzziness of that graph; any tips for publishing a sharper image from an Excel file would be much appreciated. The graph labels, reading across, are Newspapers, Magazines & Farm Publications, TV & Cable, Radio, Yellow Pages, Direct Mail, Business Papers, Billboards & Out of Home, Internet, and Miscellaneous.)

For the sake of simplicity I combined Magazines with Farm Publications, as well as TV with Cable. Around 1989 Universal McCann started including "out of home" (ads on buses, etc.), which causes the blip and jump in the Billboards line. And Yellow Pages is included in Miscellaneous prior to 1980, which accounts for the sudden sag in the Miscellaneous line.

[paragraph added 12/01:] In a nutshell: newspapers had unchallenged dominance with about 37% of all advertising (national and local) in 1949. Television grew rapidly during the 1950s, to about 14% in 1960, and continuing to grow thereafter. Starting in the late 1970s, direct mail started a long uptrend from about 20% to more than 25% in 2007. Newspapers were overtaken by TV & Cable in 1992, and by direct mail in 2001. In 2008, they could slide below radio.

My chart stops at year-end 2007, because 2008 projections for all media are hard to come by at the moment. But as discussed already by Tim and by Alan Mutter, the full-year newspaper results for 2008 look rather dismal. Assuming it finishes in the $35 billion ballpark and total ad spending for the year is down just slightly (it was buoyed nicely by the elections and the Olympics), the newspaper share will probably be 13%, or less. So that dark blue newspaper share line will resemble, even more than it already does, the "Phases of a Crisis" graph presented at the recent API Summit for newspaper execs.

Notice that in contrast to Tim's graph, there are no camel's hump peaks in 1988 and 2000, as there are in his constant-dollars view. Newspapers have been on an unrelenting down-trend for a half-century, with very few upticks, and they're now sliding off the cliff. They maintained market share for more than a year or two only from about 1964 to 1974 (at the expense of magazines and direct mail).

For fans of stacked graphs, here's another way to look at the trends:

Once again, I'll ask: Where is the Manhattan Project to reinvent the newspaper business, before it's too late?