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Reaching the tipping point: Online ad spend overtakes newspapers in the UK

I guess if this headline didn’t end with “in the UK” this news would be getting a lot more attention than it currently is. I actually don’t know what the online vs newspaper spends are here in the US, I’ll try and research it when I’m not on the client’s time.

However, it’s significant. Really significant.

This week, there’s been a lot of talk here in the US about the future of local newspaper business – reports suggest the San Francisco Chronicle is about to go out of business as it’s in such dire straights. The SF Chron has some interesting opportunities given it’s in a uniquely placed geographic location for technology adoption and pioneering, but it doesn’t seem to be able to capitalize that – that’s another story I guess.

What’s important is that newspapers finally newspapers can begin to ‘move their core focus’ over to Internet. That’s if they have the balls – but the finance people should now be armed with the relevant figures to help them find their balls.

The one issue no one seems to be talking about is whether the combined spend has changed. Is it simply a shift in existing revenues, or has online suddenly found new advertising budget (or newspapers lost out on evaporated budget). That’s important to think about – especially with the CraigsList factor – where advertising is free.

However even if overall budgets are down the opportunity here is the potential cost savings that come from running an online operation. During the SF Chronicle debate, various journalists and editors were arguing with the blogosphere that the cost of keeping a newsroom needs to be paid for.

True, it does. But there are many other parts of the salami that can be sliced without any noticeable loss. Those printers, for example, they’re the bit at the end of the salami that no one wants to eat yet you still have to pay for. In the UK at least, newspaper printing has traditionally always contributed a significant cost to the newspaper business because they have such strong unions – and that could be the case in other markets. So you can chop that end bit off.

Setting – both page and advertising can go – it’s part of the template in the case of the page, and advertising is handled by the fact that the advertiser accommodates your existing space rather than you have to accommodate their space requirements.

Distribution, pah that’s easy too – it’s part of your existing web op. Just scale up.

The new concentration on the Internet means that better relationships with the blogosphere can have them write some of your stories (I don’t buy the whole ‘bloggers will eat your journalists’ argument. Bloggers also make good stringers for new leads.

This is a quickly written post as I’m getting used to writing these in 10 minutes or less during my 30 min lunch break, but I think it’s indicative of interesting times for newspapers. This is an opportunity that is their’s to take – the question is how many will take it. I’m pretty sure in the next 10 years we’ll find one or two of the current ‘big name’ newspaper fall onto hard times as they didn’t embrace the opportunity that’s before them today.

Equally, I predict in the rise of new ‘online-only’ newspapers entering the market – perhaps not first in the UK. These will differ from the likes of BBC News by offering the kind of background and detail-led journalism that the BBC isn’t in the market to do – not with it’s 24/7 news website, anyway. There’s an emerging gap in the market for this kind of proposition, fueled by changing habits in reading – with more consumers owning laptops and PDA’s and a general willingness to read from the screen instead of from a newspaper. And if this foldable e-paper ever emerges, then it’s game-set-and-match IMHO.

Exciting times are a-foot in the world of news media – it’s ultimately all about wrapping the adverts with news that people want to read, and suddenly the majority of those adverts (in terms of $ spend) are now online. What will happen next?

Published in BBC News Website Media2.0 News Thoughts and Rants