Archive for the ‘real estate advertising and newspapers’ Category

Voluntary Buyouts and Decreasing Circulation Signal Trouble for Daily Newspapers

0 Comments

What does this mean for real estate advertising today? 

There’s a seismic shift taking place in the newspaper industry right now. Just read Bay Area reporter Sam Chapman’s two-part series in the Mountain View Voice, and you’ll get a good idea of what’s happening not only here but across the country. The issue is obvious. The rise of the internet and increase in the number of news aggregators (blogs, portals like Yahoo! and Google Alerts and other sites like Digg and De.licio.us) have eaten away at the stronghold that newspapers once had on market readership. Dailies everywhere have seen a steady decline in circulation for decades, but that’s been accelerated in the last ten years. Here’s what the Wall Street Journal recently reported:

Long stuck in a slow decline, U.S. newspapers face the prospect of an accelerated drop in circulation. The slide is fueling an urgent industry discussion about whether the trend can be halted in a digital age and is forcing newspaper executives to rethink their traditional strategies. Click here for full article.

The catch 22 is that the majority of bloggers and other secondary news sites still use newspaper articles as their primary source of information from which all the other online properties then generate their writings (just take this blog as an example). What’s changed is how and where we view that information, and the publishers haven’t yet figured out how reshape their advertising model into one that generates revenue online. The result is massive cut-backs and layoffs.

Just look at what’s happening at newspapers owned by Media News Group (this is the Denver-based company that bought out nearly every newspaper in the Bay Area, including the Mercury News, Oakland Tribune, Santa Cruz Sentinel, Tri-Valley Herald, Contra Costa Times and the San Mateo County Times). Story after story is appearing in the media about how Media News is cutting staff and offering voluntary buyouts at many of their properties.

Last spring, the Denver Post reported: “the Denver Post on Monday extended voluntary-buyout offers to about 90 newsroom workers in a move aimed at trimming costs amid an industrywide downturn.” Just last week, an article appeared in the San Francisco Chronicle stating that Media News has offered voluntary buyouts to nearly all of its employees in the Bay Area. They’re not the only ones cutting back. It’s happening across the country, and no paper however large and powerful, is immune. The New York Times just announced a 100-person cut in newsroom staff this February. And, the LA Times also announced a 2% staff reduction.

The problem isn’t a just a slump in advertising.  It’s as much about the revolution in communications that’s taking place and the fact that newspaper executives just haven’t figured it out. They’re still using an old print advertising model to generate revenue when eyeballs and advertising are migrating en masse to the web. According to Editor & Publisher magazine, the trade journal for the newspaper industry, online newspapers aren’t cutting the mustard when it comes to attracting audience share online. From May-July 2006 compared to May-July 2007, most newspaper sites actual lost ground.

The worst performer on the list was MercuryNews.com, the online arm of the San Jose Mercury News, which lost 30% of visitors during that period. Gannett’s network of 100 sites fell 2%. NYTimes.com dropped 12% (it still had its pay TimesSelect still in operation then). LATimes.com was down 3%. USAToday.com declined 9%. (Click here to read more.) 

If newspapers are losing print circulation and they’re not doing a good job with their properties online, why would an advertiser continue to pump thousands of advertising dollars into campaigns that don’t have the same impact they did five years ago? It’s shocking, in fact, that newspapers have been so slow in making the change to an online model.

That same E&P article points out that in a comparison of online revenue as a percentage of total revenue for the top 10 public companies,  only three passed the “’10% threshold’  i.e. at least 10% of their total revenue is derived from online.” When readers are moving online, how can it be that most newspapers still generate less than 10% of their total ad revenue online? It’s no wonder they’re crashing.

Newspaper executives need to acknowledge that the landscape has changed, and adjust accordingly. Perhaps the problem is that most senior publishing execs are 45 plus and simply don’t understand the computer generation that is Gen X, Gen Y and Gen Z (that would be pretty much anyone under 40).  

There are a few shining examples of newspapers that are getting it and as a result are succeeding online. Lee Enterprises, which owns mostly smaller, community newspapers in the west and mid-west, increased their online traffic by 24% from May-July 2006 compared to May-July 2007.

Lee comes up the big winner with an increase of 24%. Outsell attributes the rise in readership to a few factors including the company training journalists to "think online" and the build-out of databases.

What does this have to do with real estate? Daily newspapers have always been the cornerstone for most of the advertising for property listings. But the times are a changin’ and the fact that newspapers haven’t changed too, combined with the rise of powerful online real estate  sites like Realtor.com, Zillow, Trulia and Yahoo!,  that are offering direct listing services paired with powerful tools for consumers looking for homes means that smart advertisers—the ones who want to get in front of the people buying the homes—are starting to rethink their advertising strategy.

If you’re looking to the future in this business, it’s time to start paying attention to the red flags that are going up: the steady decrease in newspaper circulation and accelerating erosion of newspaper rooms. The eyeballs of consumers (particularly those in their prime home-buying years) are turning to the internet for their information. You want to be in front of them? Then you better get online too.

That’s our opinion, but leave your comments and tell us what you think.

Also, read our other posts on this topic: