While growth of 21% vs. an industry average of 26% isn't shabby; considering their long head-start and position; its a crying shame. This is 1) a demonstration that the newspapers are failing to deliver for advertisers and 2) an indication that the fragmentation in online sales companies is being successful in chipping away customers.
Problems for the Newspapers include:
- Ability to perform on online product that makes sense for multiple price points
- Salesmanship to demonstrate accurately quote customers
- Reliance on top categories (real-estate, auto and jobs); the real-estate market slow down combined with the fragmentation in online destinations for cars and careers)
- Inability to produce a viable product for 2nd and 3rd tier categories, such as plumbers and dentists.
The newspapers haven't been able to crack an online product that truly works for their local advertisers. It's ironic that the local newspaper can handle an international company such as Toyota versus the local tutor in Orange County.
Therein lies the opportunity that many SEM and SEO companies have fulfilled. I am President of RelevantAds, which specializes in bringing local businesses online. We see first hand that the advertising dollars shifting away from print companies.
Local companies generally invest in just one advertising medium; however when going online they want to be found whenever relevant. The package must be simple; place my business any time there is a potential customer; and that is just what local search lets you do. A newspapers website doesn't have nearly the reach capable to deliver anything of value here.
Online ad sales is also a natural outcome given the fact distribution is also shrinking. Many reports indicate that traditional print media is shrinking in readship. The onslaught of blog feeds and Digg largely replacing the way that people read news. Altogether, the Newspapers have a daunting prospectus; local businesses need to shop for advertising elsewhere.