The Newspaper Association of America press release has the good news that advertising with US newspaper websites increased 35% in the fourth quarter of 2006 compared to 2005. This is the 11th quarter of such double digit growth from online advertising. The same release records that print advertising fell in the fourth quarter of 2006 – retail down .9% and classifieds down 7.1%.
While publishers will drive newsagents and other retail and distribution partners to increase sales of their print editions, their main game now, in terms of investment and senior management focus, must be online. One cannot ignore the growth.
My concern is for the pressure by publishers on small business newsagents. Pressure such as where newspapers must be located in store – the best retail positioning; opening more competing retail outlets; running labour intensive over the counter promotions for little or no margin; and, driving down the real margin achieved from home delivery.
I’d prefer publishers to engage more openly with newsagents so that these small business operators can appropriately adjust their businesses now. There is a win win opportunity here for the publishers. Their denial to newsagents of any threat to paid sales is beginning to ring hollow based on the US numbers.