New research claims that the newspaper industry has underestimated the threat posed by the web, reports Mediapost.
A study, conducted by Gordon Borrell of Borrell Associates and Clark G. Gilbert of the Harvard Business School, has warned US newspapers that they have become complacent and need to adapt to the changing media landscape. “They’re not going to die anytime soon but they will be transformed, and we think significantly, by the disruption caused by the internet,” said Borrell.
The report alleges that because new media only accounts for about 3% of advertising revenues, it is not regarded as a force. However, Borrell places the emphasis on the ‘new’ and indicates that there is huge potential for growth. Despite teething problems, he claims that the internet is developing faster than cable TV which took twelve years to become widely accepted.
One area where the web has already encroached on newspaper revenues is classifieds which were once the preserve of the printed press. The benefit of online classifieds is that they are cheap and have the potential to reach a large audience. Income from newspaper classifieds has been falling since the late nineties and Borrell envisages a day when they could disappear altogether.
Future strategy The study estimates that the newspaper industry’s online advertising revenue will total $550 million this year, equivalent to 40% of local internet ad spending. It is suggested that this could rise as high as $650 million by 2005, if new tactics are employed. Newspapers are advised to manage their online activities separately and make greater use of targeted advertising, either through the web or by making use of collectible user demographics.
“Newspapers are exhibiting the classic symptoms of an industry faced with disruptive technology,” said Borrell. “They’ve invested in websites, sometimes heavily, but they have remained dangerously over-reliant on their traditional customers. The disruptive technology of the internet opens up new classes of potential customers that newspapers must pursue.”
It is suggested that an outlay of $1 million is required to develop a database that can collect and store demographic information for targeted online campaigns. However, Borrell asserts that newspapers could expect to see a return on this investment within six months to two years.
