Newspapers plow old ground

Gordon Borrell and Clark G. Gilbert have applied great empirical rigor in examining the way newspapers respond to the Internet. Highlights from their access-restricted report:

“In every instance of disruptive technology studied, the disruption causes a net expansion of the marketplace. So, it seems, will the Internet create net growth of local advertising expenditures.” While cable-TV advertising took 11 years to achieve a 2.5% share of total ad spending, the Internet achieved the same share in 4 years.

But, focused on winning yesterday’s battles online, newspapers turn their backs on the real growers. “Our estimate for 2002 is that the newspaper industry is missing out on $289 million in ad revenue by not offering targeted advertising and other high-growth revenue categories that are achievable on the Internet today. By 2005, those missing categories could represent as much as $880 million…”

Newspapers are wired to defend current franchises rather than greenfield, and millennial-era Internet-pioneering losses reinforced this reflex. Currently, 72% of the typical newspaper’s online revenues come from classifieds, with half this only an upsell from print.

Even in plowing old fields, newspapers often undershoot; in Pressflex‘s experience serving newspaper websites, an astonishing number of papers fail even to promote print subscriptions online, something that can work remarkably well.