Online Newspaper Growth Is a Question
Borell Associates predicts aggressive growth in local advertising for online newspaper sites. The potential is there, but the assumptions and preconditions behind the prediction may not come to pass.
According to an article in Editor & Publisher, there are two factors driving the prediction:
- Local advertisers spent only a fraction of their budgets online
- Local newspaper sites dominate the local online ad marketplace
The first statement we agree with. The second, however, is very much a question mark and more so going forward.
Online certainly represents a significant growth opportunity for local newspapers. But currently they face competitors on all sides.
It is by no means clear that they will withstand the competition from news aggregators and alternative classifieds marketplaces such as Craigslist and newer sites such as LiveDeal.
There's enormous price pressure on the current ad model (especially print) from such "free" classifieds sites. Whether the current classifieds pricing model can be sustained over time is unclear. But the more immediate question concerns consumer usage.
New jobs and other classifieds aggregators (such as Oodle and Indeed) represent powerful alternatives to individual newspaper sites (adding to historical threats from eBay and verticals). In addition, newspaper sites are generally poorly designed and bury their unique local content and advertisers. Aggregators represent "one-stop shop" convenience for consumers. Even Craigslist is potentially threatened on the usage side by the emerging aggregators.
Newspapers clearly have unique brands, content and other local assets that they can leverage. It's not clear that they will succeed in doing so in the face of formidable competition on both the advertiser and consumer sides of the equation.
Thus growth is certainly possible, but by no means certain over the long term.
Newspapers are in a tough spot. They have an opportunity and some signs of hope online (re consumer usage — e.g., among young people) but they're faced with intense competition and they need to take action — fairly radical action — sooner rather than later.
I have trouble understanding what planet Borell is on. I doubt that even the NAA would say "Local newspaper sites dominate the local online ad marketplace". Only in their dreams. Reality is a nightmare for newspaper web sites as verticals and search engines are running away from the old print guys who are still hoping the Internet will go away. They need to embrace local search, one way or the other, to have a chance to compete in the future.