The real digital horror story facing UK newspapers

We all know that UK newspapers are taking a beating from online in the battle for advertising despite all the money they have spent boosting their own digital products.

But the stark truth is laid bare in the following article by the Financial Times’ chief media correspondent Ben Fenton, who’s been doing his homework with some help from online analysts Enders.

In 1950, with television sets in only 9 per cent of homes, a UK street of 100 houses could be relied on to buy 140 newspapers a day and 220 on Sunday.

In 2010, when each of those houses contains an average of 2.6 TVs, the same street bought just 40 papers a day, Monday to Sunday.

Some advertising revenues fled to TV as it developed in the 1950s, 1960s and 1970s, but not in such great numbers as to ruin newspapers, which could still rely on huge circulation sales income.

In 1966, the Daily Mirror sold 5.1m copies a day, the Daily Express 4m and the Daily Telegraph 1.4m. Last month, those titles had circulations of 1.2m, 631,000 and 635,000 respectively.

According to the AA/Warc Expenditure Report, in 1998, the first year it recorded online advertising spend, advertisers spent £2.4bn buying space in newspapers, at today’s prices, and £19.4m online. It projects that by 2012, they will spend £4.7bn online and £1.7bn in newspapers.

Realising that their readers were finding more and more information online, newspapers have in the past decade tried to follow them, and the advertising money they attract, online.

Some have made impressive strides into attracting readers by putting all their content online. The Daily Mail is the outstanding example, with latest figures showing its website had 77m unique users in May, closing in on the New York Times as the most widely read newspaper website in the world. The Daily Mail has attracted readers with a diet of Hollywood gossip and revealing photographs of celebrities.

The Guardian, another champion of free content, had 51.3m unique users and the Telegraph 43.8m.

But the amount of money generated by online advertising is far from compensating for falls in print ad sales. Of UK national titles, only the Daily Mail’s parent releases its digital advertising revenues, which were £12m in the past financial year. Last week, the Guardian Media Group said its total digital revenues for last year were £47m.

In 2011, Douglas McCabe of Enders Analysis estimates, UK national newspapers will take about £1.3bn in display advertising and £220m in classified.

Mr McCabe believes the grand total for this year of all UK digital newspaper revenues, for display, classified and other businesses such as online dating sites, national papers will bring in less than £190m.

So is there any hope for newspapers in the UK?

Well News Corporation’s Sun still makes money as does the Daily Telergraph. And so does the Daily Mail, although that is reducing.

Mail owner Associate Newspapers also publishes the Metro free morning newspaper in the UK and that makes money from advertising. Russian magnate Alexander Lebedev’s London Evening Standard is close to making money for the first time in decades now that it’s free and reaches nearly a million Londoners.

But what seems clear is that online advertising on newspaper sites is unlikely to cover their vast overheads without some sort of breakthrough in online display (maybe by gaining more information on readers to allow better targeting) and a difficult-to-foresee hike in online classified rates.

So will it be paywalls all round as a last throw of the dice?

It might be.

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advertising Alexander Lebedev daily mail Daily Telegraph financial times guardian london evening standard metro Sun tv advertising

About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

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