Pew: Newspapers can boost online sales with focus

March 5, 2012 - 1:45 AM

LOS ANGELES (AP) — Newspapers need to prioritize digital advertising sales if they expect to thrive, according to a Pew Research Center study released Monday.

As advertisers shift spending from traditional print media to the Internet, newspapers are failing to make up for the decline in print advertising revenue with gains in online ads. Pew studied 38 large and small newspapers and found that for every $7 in print ad revenue declines, the companies only generated about $1 in new digital advertising sales.

The study suggests, however, that newspapers have the power to change —if they alter their approach to advertising sales. Papers with the largest circulations and biggest sales forces do a better job increasing online ad sales. But even newspapers with a daily circulation of less than 25,000 printed copies show hefty digital gains with a properly aligned sales force, training and commissions that encourage online ad sales.

"The notion that you can only have success in digital if you're bigger is not what we found," said Tom Rosenstiel, director of the Pew's Project for Excellence in Journalism. "You can have success even at small papers if you're willing to change the culture."

The newspapers provided Pew with financial data for its study, on the condition that they would not be identified. One newspaper, with a circulation of about 20,000 copies and over $8 million in annual print revenue, managed to boost its annual online ad revenue by 63 percent to more than $500,000 in 2010. In 2011, its digital ad revenue grew about 33 percent.

The newspaper's publisher told Pew researchers that the company had aggressively sought to hire ad salespeople who focused on online ads — mainly display and classified ads. Now, "almost everything we sell has a digital component," the publisher told the center.

For all the newspapers that participated, print ad revenue fell 9 percent while digital ad revenue grew 19 percent. Since print ads still account for about 92 percent of ad revenue, the small decline in print has had a much bigger impact on than the digital gains.

The huge chunk of revenue that still comes from print ads can also skew the behavior of salespeople, many of whom work on commission.

Many newspapers are attempting to transform. Pew found that three quarters of the newspapers it studied had changed their commission structure to encourage more digital ad sales. One newspaper now pays a 20 percent commission on digital ads but just 8 percent on print ads.