"Yesterday's news" seems to epitomize the product that print newspapers deliver these days to their ever declining readership. In this day and age, where online news is delivered live as it happens and 24-hour news channels carry live footage from every newsworthy event, most people really have no reason to wait for the paperboy.
Even those who prefer to read the news leisurely with their morning coffee at the breakfast table now have the modern convenience of getting the latest news through their tablet devices. Is it any wonder why advertisers are pulling their money out of print?
Print is a fixed cost business. To deliver a quality product, even with dwindling readership, you need to have an army of reporters, as well as distribution and printing presses. The result is squeezing margins and profits. The challenge of moving online is the business model. Currently, the industry is replacing print dollars for online pennies and trying to prolong the move online for as long as possible. Sadly, the industry will have no choice but to face the music. Here are six reasons why bits are already the new ink.
More people get their news online
According to a Pew research published in September 2010, more Americans are getting their news online, as compared to print. The study shows that 34 percent of users got their news the day before from online sources, while only 31 percent reported receiving their news from a daily newspaper. Therefore, it is not the newspaper industry that is dying, but rather the printing presses that are becoming silent.
Readers are voting with their feet
New data from eMarketer shows just how quickly the print industry is losing its audience. In 2010, people spent 9 percent less time reading newspapers and magazines as compared to 2009; in 2009, they already spent 12 percent less than in 2008. Assuming that not everyone is taking speed reading classes, newspapers seem to be losing both eyeballs and readers' patience.
The study also shows that the average American spends only 30 minutes reading newspapers and 20 minutes reading magazines per day. It's significantly less compared to more than four hours of TV and video consumption and more than two and a half hours that people spend online.
People are spending more time online
The same eMarketer survey shows that the only two media that are taking more of people's time are mobile and internet. In 2010, mobile usage increased by 28.2 percent, and users now average 50 minutes per day. Time spent online grew by 6.2 percent to two hours and 35 minutes. TV viewing has remained stable. It seems that mobile and internet are crowding out the print industry.
Editorial content boosts the performance of online ads
Browsing specific content is a powerful indicator of the user's areas of interest. For example, visitors of automotive websites are more likely to be looking for a new vehicle, and visitors of a tech site are more likely to be early adopters of new gadgets. In direct response, serving an ad to users exactly when they show interest in a product may be a powerful way to boost performance.
When looking at the performance of different placements and sites in terms of click-through rate and conversion rate, sites with focused content such as automotive, technology, and travel tend to get higher performance as compared to more general sites such as social networks, homepages, or mail. News gets high conversion rates, but close to average click-through rates. This indicates that there are great opportunities to monetize online content.
Unlike print ads, online ads don't have to be "one size fits all"
There is another advantage to online ads as compared to print ads -- they can be calibrated to users' interests. Creative optimization enables advertisers to leverage the wisdom of the crowds to find better creatives that engage users. By constantly comparing the results from each version of the ad, creative optimization will serve the most effective ads.
Automatic creative optimization is a learning algorithm that receives constant feedback from actions that users take while interacting with the ad. The algorithm changes the creative depending on the users' feedback and can display the versions of creatives that are more likely to receive clicks, conversions, interactions, or dwell time.
Creative optimization assists advertisers who don't have to guess which creative is better or which image, copy, or font to consider. Advertisers can upload all of their creative ideas and let the algorithm serve the versions that users respond to the most.
Results indicate that creative optimization actually works. An analysis of campaigns that used creative optimization in the past year indicates that they achieved a 73 percent increase in click-through rate as compared to other standard banners and a 40 percent increase in conversion rate.
People are willing to pay
Print relies on two main revenue sources: newsstand sales and subscriptions on one hand and advertising on the other hand. Online, publishers used to settle only for advertising revenues, while providing their content for free. This is now changing.
The Financial Times and The New York Times have raised pay walls in which heavy users who view more than a certain number of articles per month have to pay for a subscription, while occasional readers can view a few articles for free. According to recent results from The New York Times, this strategy has proved successful. By the second quarter of 2011, paid digital subscribers totaled approximately 224,000. In addition, paid digital subscribers to e-readers totaled an additional 57,000.
Furthermore, by the end of the second quarter of 2011, The New York Times had an additional 100,000 digital subscribers whose fees were paid by Ford, and 756,000 home-delivery subscribers with linked digital accounts, who receive free digital access. This overall accounts for over an impressive figure of 1 million digital users.
What about traffic? The impact of the pay wall on site traffic has not been as gloomy as some have predicted. According to Experian, for the majority of the days, there was a decrease in the overall visits between 5 percent and 15 percent. The pay wall -- that limits readers to a certain number of articles per month -- did have an effect on the number of pages visited. A comparison of a 12-day period before the launch of the pay wall and the 12 days following the launch shows that the number of page views has declined between 11 percent and 30 percent. This indicates that The New York Times is still likely to be able to maintain much of its online advertising revenue.
The shift from print to digital is likely to continue, and publishers should not engage in futile attempts to stop it. Instead, they should focus on monetization. Publishers should perfect the pay walls and advertising to get more out of the content that they are delivering.
As far as advertising is concerned, publishers should make advertising more visible to increase effectiveness. If TV viewers were willing to wait patiently for 30 seconds while a TV spot was playing, why should online ads shy away beside the content? Readers who are willing to view a doublespread ad in print should also be willing to watch a full page ad or a commercial break online ad. To monetize online content, tiny static banners might no longer be enough.
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