Five top analysts on newspaper ad spending

By the editors of Media Life

This article is part of a Media Life series “Reinventing the American Newspaper.” Click here to read other stories in the series.

It’s certainly no secret newspaper ad spending has plummeted over the past decade, peaking around $50 billion in 2006 and dropping below $20 billion last year.

The real question is when, if ever, spending will stabilize, never mind start going back up.

And the answer, according to five of media’s most respected analysts, is no time soon.

The forecasts from these five call for further declines this year and into the future. Though they don’t all agree exactly on the numbers, they are uniform in their expectation that spending will drop at least 4 to 8 percent again this year and may not stop for another few years.

Here’s an in-depth look at those five forecasts and what they have to say about the state of newspaper advertising right now.

1. Borrell Associates

Newspapers’ share of local ad spending will fall from 12.5 percent last year to 10.3 percent this year, the Williamsburg, Va., ad tracking firm predicts.

Borrell points to several contributing factors in the declines. One, of course, is the shift to digital – local ad spending will soar 37 percent this year and take a chunk out of many other media.

But Borrell also sees looming issues with circulars, or freestanding ad inserts: “The major problem is the decline in revenue from high-margin circulars. Circulars deliver, on average, about 30 percent of a metro newspaper’s revenue but 40 percent to 50 percent of its profits.”

2. Pivotal Research Group

Pivotal senior research analyst Brian Wieser foresees local newspaper ad spending’s woes getting worse. He pegs 2016 to see the biggest year-to-year drop in the past four years.

And he doesn’t anticipate things getting better. His forecast runs through 2020, when he says papers will see a 16 percent dip, the biggest since at least 2012, with revenue all the way down to $6.4 billion, or a third what it was in 2015.

3. eMarketer

Like Borrell, eMarketer notes that the gains in digital, including a 38 percent surge for mobile this year, will contribute to newspapers’ continued declines.

It does see the decreases easing, though, falling to just a 1 percent decline by 2019.

Still, by then it will be bringing in just $12.8 billion, or roughly a fifth of what mobile will tally that year.

4. ZenithOptimedia

The global agency projects steady declines for newspapers throughout its forecast period, increasing to an 8 percent drop by 2018.

It notes efforts to make up for lost ad revenue through digital has been admirable but largely ineffective. Papers are moving into areas such as video and native advertising, yet they can’t offset the money that’s being lost.

“As the population continues to age and Millennials find alternate news sources (Twitter, Reddit, etc.), newspapers will continue to suffer these strong declines year on year,” ZenithOptimedia predicts.

5. Magna Global

Magna Global has pegged newspapers for similar decline rates for 2014-2016.

But it says that while for years newspapers were in free fall by themselves, now most other traditional media have joined in those dips.

Out of home is the only traditional medium that gained last year, and television would be down this year were it not for political and Olympic spending.

Tags: borrell associates, emarketer, forecasts, newspaper forecasts, newspapers, reinventing the american newspaper, zenithoptimedia