Hold the front page: Digital growth stymies decline in newsbrand ad revenues

Following the publication of the latest UK adspend forecasts, James McDonald, research analyst at Warc, says national newsbrands have been canny in their adaptation to new technology.

Advertising revenues for national newsbrands fell 4.7% to £1.4bn in 2014, but the rate of decline will ease substantially this year and next, according to the latest data from the Advertising Association/Warc Expenditure Report – released this week.

The rapid rise in digital adspend (+16.4% to £214m) could not offset the decline in print (-7.7% to £1.2bn) last year, the report finds. However, we expect the overall decline to slow in 2015 (-1.8%) and flatten in 2016 (-0.2%), driven by an average growth rate of 14.5% in digital adspend over the forecast period.

Warc receives ad revenue data direct from source, conducting an annual survey of national newsbrands every quarter since 1982. As the survey has a 100% participation rate among newsbrands, it can be regarded as a credible barometer for where the industry is currently at, and where it is heading.

Last year, total print adspend for the sector stood at around 51% of the value recorded at its peak in 2000 (£1.2bn vs £2.3bn). We forecast this share to fall to 47% by the end of next year, although print revenues are still expected to amount to a sizeable £1.1bn at that time.

Within the print total, display adspend came in below the £1bn mark last year, the first time is has done so since 1992. Further, classified revenues stood at under a third of their high point in 2000 (£536m), due largely to a 95% – or £258m – fall in recruitment adspend over the period.

Generally, the ‘quality’ nationals have been hit harder than their ‘popular’ counterparts, in print at least, over recent years. Total quality print adspend peaked in 2000 at £1.1bn, before revenues dipped and plateaued at an average £727m between 2002 and 2008. The recession in 2009 then wiped £160m of ad revenue from the books.

Conversely, print adspend among popular titles remained steady over this period, with mini peaks recorded in 2000, 2004, 2007 and 2010 (coinciding with major sporting and political events). The recession late in the decade had little initial impact on popular print ad revenues, although since 2010 adspend has declined notably (by around £288m).

The fall in print ad revenues for both quality and popular nationals is more pronounced when measured in real terms at constant 2005 prices.

Many sectors would struggle to recover from such a hit to their core business. But national newsbrands have been canny in their adaptation to new technology. Digital ad revenues have been growing rapidly, and in 2016 we expect them to account for a fifth of all national newsbrand adspend, a share which has risen from 7% in 2011.

While the tipping point has yet to be reached, on current trends this will happen soon enough.

“The latest AA figures confirm the overall trend for national and local news media which is one of rapid increases in digital revenues, the fastest growing of all media sectors measured, and a marked slowing in overall revenue declines,” said Lynne Anderson, News Media Association deputy chief executive.

“The UK news media industry has demonstrated that it is highly adaptable, rapidly growing its digital audiences and revenues, while also continuing to sustain print as a powerful advertising medium which continues to provide a unique and highly engaging context for advertisers.”

To find out more about subscribing to the AA/Warc Expenditure Report please visit the website or contact James McDonald for additional information.

Mediatel subscribers can also now gain access to adspend and revenue figures by medium and aggregated forecast trends by medium from AA/WARC, Carat, eMarketer, GroupM and ZenithOptimedia in the Media Landscape tool