Since mentioning the CF phrase the search traffic to the site has collapsed so we need to get it off the home page quickly. So let’s run one of those retrospective series on the Top 10 myths about the Internet.
We’ll begin with the original myth that we covered at the very beginning. The Internet is responsible for the decline of the newspapers.
So has the Internet disrupted the newspaper industry? Well only if you choose to remove Direct Marketing out of the advertising mix. You see direct marketing (e.g. Direct mail, telemarketing and the other forms of database marketing) was already making significant in roads into newspaper revenues well before the internet arrived. As was TV.
The chart below shows how Newspaper revenues in Australia fell by almost 10% over a 7 year period (2001-07).
At the same time Direct Mail’s share of revenues grew by over 6%. Twice that of online advertising.
- Direct Mail is growing quicker than Online Advertising in Australia
In 2007 direct mail revenues were 5 times bigger than those of online and if the trends continued it was on track to over take the newspaper industry by the end of the decade. Add to those figures the uncharted growth in telemarketing and you’ll probably find that Direct Marketing was already a bigger industry than Newspapers in 2007.
Meanwhile the US advertising revenue figures published by the Newspaper Association of America (NAA) indicates a similar trend in the US.
As you can see in the chart below Direct Mail had an even bigger market share of the Advertising Spend in the US for the period 2000-2007 than it did in Australia. It had already passed newspaper advertising revenues earlier in the decade.
What’s more it was growing more rapidly than the Internet over the same period.
- US Advertising Trends 2000-2007 (Source:NAA)
From the period 1997-2007 Internet Advertising Revenues in the US grew by just $10.5 Billion. Direct Mail Revenues grew by $26 Billion to $60.2 Billion. Add the growth in email marketing into the mix and you can see that it is much easier to position the Internet as an enabling technology that assisted in the growth of Direct Marketing than as the key market disruptor.
The other problem for the Disruptive Internet advocates is the simple fact that by 2007 the online advertising model was proving to be significantly more profitable for the New York Times than the print version even before you factor in the reduced costs of production.
At the Average Revenue, Per User, Per Page, Per Visit (ARPUPPPV) level New York Times.com (Along with many other web sites) delivers more than double the printed Newspaper revenues. More importantly it blows Social Networks, Prime Time TV and the Superbowl out of the water.
This suggested the NY Times did not have a problem making money online. Indeed the represented a significant win:win opportunity for the New York Times. It demonstrated they could be making significantly MORE WITH LESS online. The problem for the New York Times online was and still is that people are just not visiting often enough and when they do they don’t stay around.
Put quite simply, the NY Times , like most traditional media web sites, just isn’t sticky enough to make it work at the moment.
Unlike Facebook and the other Social Media properties who have figured out how to be sticky but have yet to discover ways to monetize all that traffic the New York Times know how to make money. They just haven’t figured out a way to be sticky.
The other “elephant in the room” that the Disruptive Internet advocates often fail to acknowledge is that at the birth of the web the print sector in the US was on track to become a $77.5 Billion advertising engine by 2009. However over the past 15 years the growth in the combined sector has actually shrunk by 10%.
Somewhere in all this market disruption an estimated $14 Billion per annum in online advertising revenue had been lost to the sector by 2009.
Where did it all go? Direct Marketing and TV.
So the really story isn’t that the internet has disrupted the newspaper industry. It is all about how the newspaper industry failed to use the internet to disrupt the growth of the Direct (i.e. Database) Marketing industry.
Posted on May 31, 2011
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