Among the key findings in this report:
- The broad numbers about the digital revenue transition are stark. The papers providing detailed data took in roughly $11 in print revenue for every $1 they attracted online in the last full year for which they had data. Thus, even though the total digital advertising revenues from those newspapers rose on average 19% in the last full year, that did not come anywhere close to making up for the dollars lost as a result of 9% declines in print advertising. The displacement ratio in the sample was a loss of dollars by about 7-to-1.
- Only 40% of the papers that provided data say targeted advertising is a major part of their sales effort. Even though many newspapers are not focusing on it, smart or targeted digital advertising—in which ads are customized based on consumer online behavior—is expected to dominate local digital revenue by 2014.
- The majority of papers studied focus most of their digital sales efforts on the two categories of digital advertising that are the largest but are not growing-conventional display (such as banner ads) and digital classified. Those categories account on average for 76% of digital revenue at the papers studied. These are the same two categories that have provided most of their revenue in print. And 92% of the papers studied said display was a major focus of their digital sales effort.
- Daily Deals accounted for 5% of overall digital revenue in 2011 at the papers studied. One of the bigger innovations in the last year, the move toward coupons or daily deals (such as Groupon), accounted in the end for only a small amount of digital revenue in 2011. A majority of all the papers studied-30 of them-have adopted such programs and most created their own programs. But there are widely varying views in the industry on the future of this category. Some executives are convinced it represents a solid revenue source going forward. Others see the deal gold rush as a bubble that has already reached its peak.
- Of the papers sharing private data, advertising on mobile devices accounted for only 1% of the digital revenue in 2011. Executives are generally excited by the prospects of mobile, but for now it accounts for a tiny amount of revenue. Executives also believe that due to its ubiquity in the market, the phone ultimately could be more important to mobile revenue than tablets, a sign perhaps of some growing uncertainty about the ability to charge for apps, though some executives are already skeptical about how much money newspapers can make with smartphones.
- Almost half (44%) of the newspapers sharing data for this study reported that they were trying to develop some form of nontraditional revenue, such as holding events or consulting or selling new business products. In most cases, the dollars involved are minimal-less than $10,000 quarterly. Some executives also expressed concern that their companies don’t have the resources or competencies for such undertakings. Still, there were a few cases of remarkable success here.
- Among the papers that provided data, the number of print-focused sales representatives outnumbered digital-focused reps by about 3-1. A large majority of the newspapers sharing data with us reported that they had implemented a digital sales training program and had made it a priority to hire sales people with digital experience. But the sales force remains more focused on print, reflecting the fact that that print ad revenue, which is shrinking, still makes up the bulk of the overall revenue (on average 92% in our study’s sample).