Newspaper Sites Profitable with Online Advertising

A study by Borrell Associates found that almost all newspaper web sites are profitable – thanks to online advertising. Advertising revenue accounts for over half of revenues locally, and 57.3 percent, goes to online advertising like Google.

They studied 3,100 sites owned by newspapers, radio stations, TV stations and independents to find out where they are making the most ad revenues.

According to Borrell, there are some important “firsts” in the newspaper industry. For the first time, newspaper online local ads topped more than $2 billion. Also, web sites of the biggest newspapers have switched from print or radio ad revenue to more than half of their revenues coming from non-print advertisers.

Local newspaper websites are getting the largest share of local ad spending among media companies. The study, called “What Local Media Sites Earn” found local newspaper websites capture an average of 11.7 percent of local advertising dollars. The highest earner in the top 200 papers generated over 78 percent of local spend in its market.

“Local Web sites continue to ride a wave that defies even the most optimistic forecasts,” Borrell says. “Local online revenues are growing at a phenomenal rate of 50% this year — even more astonishing considering that retail sales have suffered such a sharp drop.”

Other forms of advertising revenue for newspapers keep falling. Broadcast Television sites brought in 6.9 percent of local spend and local radio gets just 0.8 percent. It’s probably going to get worse:

“We expect revenue for print directories to decline more than any other local medium — 39% — over the next four years, from $12.7 billion this year to $7.7 billion by 2012.”

In the past newspapers depended on classified ads, but the Internet (including sites like Craigslist.org) has cut into their profit. The study advised newspapers to not depend so heavily on the revenue and focus more on building online ad revenue. Newspapers who’ve done so have been more profitable.